About five years ago Bay Ridge Wine & Spirits in Annapolis, Maryland, added two 3-door reach-in cold boxes to its cold beverage section to make room for hard seltzers, which had recently emerged in the market. This year, co-owner David Marberger says that due to the growth of malt- and spirits-based ready-to-drink (RTD) beverages, he’s adding two more doors, bringing the store’s refrigerated space to a total of 30 doors. “In 2016, we did only about $5,000 in hard seltzer sales,” the retailer notes. “Five years later, they accounted for 10.5% of my beer business.” Although sales of hard seltzers have waned a bit in recent years—accounting for 7% of the store’s beer sales last year—“they’re still a significant part of our beer sales,” Marberger says. And while it’s uncertain if flavored malt beverages (FMBs) and RTDs will continue to grow, he adds, “I don’t want to miss out if they do.” 

Indeed, while performances of hard seltzers are weighing the segment down, some FMBs are on a tear. According to Impact Databank, FMB volume (including hard seltzers, kombucha, hard soda, and other alternatives) fell to 288 million (2.25-gallon) cases last year from 306.5 million in 2022. The peak year for the category was 2021—the height of the hard seltzer boom—when volume reached more than 321 million cases. 

Brand performances among FMBs were a bit of a mixed bag in 2023, with some brands surging at double- and even triple-digit rates, while others posted sizeable declines. Boston Beer’s Twisted Tea overtook portfolio mate Truly as the No. 2 FMB last year as volume soared 29% to 42.5 million (2.25-gallon) cases. “Twisted Tea is driving the growth within the FMB category,” says senior brand director Erica Taylor, pointing to expanded distribution, the brand’s advertising, increased media investment, and a focus on underdeveloped markets and consumers last year. And Boston Beer sees even more room for advances for Twisted Tea and line extensions Twisted Tea Light and Twisted Tea Extreme via shelf space gains and “underrepresented channels,” including on-premise accounts, Taylor says. 

The success of Twisted Tea has prompted an onslaught of new products into the hard tea space, including those from established non-alcoholic brands like Arizona, Lipton, and Monster. But Boston Beer founder Jim Koch isn’t worried about the competition. “I don’t see much traction for the vast majority of them,” he told beverage analysts this winter. “They have a high hill to climb.” Boston Beer expects Twisted Tea to continue growing at a double-digit rate this year, and even into 2025. Hard tea is “the biggest growth pocket outside of Mexican imports,” Koch says. “We’re overinvesting to maintain that leadership.”

Non-Alcohol Players Enter Fray

In addition to hard tea, non-alcohol brands such as Mountain Dew, Sunny D, and Simply have penetrated the overall FMB segment. Sales of Molson Coors Beverage Co.’s Simply Spiked surged 140% last year, according to Impact Databank, prompting the release of Simply Spiked Limeade earlier this year, joining its lemonade and peach flavors. The Chicago-based company furthered its investment in FMBs at press time with the national introduction of the non-carbonated Happy Thursday spiked refresher, which it said is targeted to “younger legal-age drinkers.” In announcing the launch, Amanda Devore, senior director for marketing innovation at Molson Coors, said the brand will be backed with “significant investment.”

Other notable entries into the FMB space include The Beast Unleashed hard beverage and Nasty Beast hard tea from Monster Brewing Co. (formerly Canarchy Craft Brewery Collective). With distribution is as many as 49 states by this month, The Beast Unleashed “resonated in a big way with consumers because its flavors replicate the OG Monster lineup,” says Chris Russell, chief commercial officer at Monster Brewing. Brand support to continue the growth is tied to music, action sports, and motor sports, while point-of-sale materials feature Monster’s “unmistakable claw insignia,” Russell notes.

Diageo Beer Co., meanwhile, recently expanded its FMB offerings with the national introduction of Captain Morgan Sliced. Packaged in 12-count variety packs of 12-ounce cans ($20), Sliced comes in at at 5.8% abv and is produced in four flavors—Pineapple Daiquiri, Strawberry Margarita, Passionfruit Hurricane, and Mango Mai Tai. Stronger proof (8% abv) Captain Morgan Sliced Up is now available in 23.5- and 16-ounce cans in flavors like Long Island Iced Tea and Tropical Hurricane in convenience and liquor stores. “We’ve seen that RTD shoppers are shying away from traditional seltzers and turning towards full-flavored RTDs, and more specifically, FMBs,” says Diageo beer chief marketing officer Laura Merritt. With a malt base rather than a spirits base, “our brand is now more accessible to LDA-plus consumers than ever before,” and allows Captain Morgan Sliced to be sold in more retailers around the country, including grocery and c-stores, she explains. The brand is being supported with a “Sliced is Better” creative campaign, highlighting the convenience of an FMB for cocktail-loving consumers. Diageo’s Smirnoff-branded FMBs, meanwhile, declined 2% to 24 million cases, according to Impact Databank.

Hard Seltzers Suffer

With so many new FMB and RTD brands, most leading hard seltzers declined at double-digit rates during the period. Segment leader White Claw was one of the best performers, with just a 4% drop in volume to 82 million cases. Marketed by Mark Anthony Group, White Claw entered the non-alcoholic space earlier this year with the introduction of White Claw 0% Alcohol.

Boston Beer’s Truly saw volume plunge 26% to 35.5 million cases, according to Impact Databank. Speaking to analysts earlier this year, recently retired CEO Dave Burwick said that the company is “recrafting a new Truly brand to stand for light refreshment,” rather than its previous platform of “bolder flavors.” Any growth for the brand will take “patience and time,” he continued. In the first quarter of this year, Boston Beer launched the Truly Unruly variety pack ($23 a 12-pack of 12-ounce cans), along with Truly Tequila Soda ($23), which joined Truly Vodka Soda in the RTD space.

Among leading hard seltzers, the relatively new Happy Dad brand was a star performer, as its volume more than doubled to 2.4 million cases. Launched in 2021 and packaged in standard beer cans rather than the slim cans that have come to define the category, Happy Dad was initially targeted at “male beer drinkers who weren’t converting to seltzers,” explains CEO and co-founder Sam Shahidi. Produced under contract, lightly carbonated Happy Dad is now available in 34 states and Washington, D.C. A hard iced tea was added in March ($22 a 12-pack of 12-ounce cans). Support for the brand is largely built around social media, as Shahidi and his brother and co-founder John founded Shots Podcast Network, with partners including Justin Bieber and the Nelk Boys. 

Retailers say that while sales of hard seltzers have slipped—and they’ve adjusted their shelves accordingly—the products still command a presence. “Changing consumer preferences 

have had the biggest impact on hard seltzers,” says Cody Thornhill, beer category manager at the Raley’s grocery chain, with stores in California and Nevada. “A large percentage of the consumers who prefer light and refreshing beverages have moved on to High Noon,” while others have returned to FMBs like Mike’s Hard Lemonade, Smirnoff Ice, and Twisted Tea, and still others have shifted to spirits-based RTDs, the retailer says. Andrea Starr, senior director of merchandising at Total Wine & More, agrees. “It’s true that spirits-based seltzers have certainly taken share from malt-based seltzers over the past 18 months,” she says, “but there are still strong, growing brands within malt-based seltzers.” 

At Bay Ridge Wine & Spirits, White Claw and Truly—generally priced at $20 a 12-pack of 12-ounce cans—drive the majority of hard seltzer sales, Marberger says. With hard seltzer sales at the store up 40% from five years ago, the retailer believes, “seltzers are still relevant. They’re not going anywhere.” Boston Beer’s Koch concurs. “The fundamental trends that drove the long-term success of hard seltzers—flavor, lower calories, a drinkable, refreshable alternative to beer, spirits, and wine—are still out there,” he told analysts earlier this year. “Long term, there could be a second act for seltzers, very much like craft beer had.

Merchandising Musts

Well-developed and impactful merchandising practices are necessary to drive sales of FMBs, retailers say. Sales of hard seltzers, for example, tend to be seasonal, Thornhill notes, so extra merchandising and discounts aren’t necessary during the fall and winter. “We see a better return on promotion and the need for extra displays during the summer months,” he says. Total Wine, meanwhile, began featuring “hard beverages” sections at its stores a few years ago, and according to Starr, “within that space, we’ve continued to make changes based on the growth and interest in various subcategories like seltzer, FMBs, and canned cocktails.” The stores have also started to add the products to their cold spaces, she continues, as “more customers are looking to enjoy these beverages the same day of purchase.” Indeed, at Bay Ridge, FMBs sometimes sell so fast that the store can’t keep them cold enough. “In that case, I give customers a bag of ice with their purchase,” Marberger says.

Despite efforts by marketers at expansion, FMBs still have little presence in the on-premise. But that could change as the products continually move mainstream. Tampa Joe’s Restaurant and Sports Bar in Tampa, Florida, already features brands like White Claw and Twisted Tea, both priced at $6 a 12-ounce can or $20 for a bucket of five. Bar manager Elly Evans says the products have become a standard bar call during events like NFL football games. “Customers now expect to find these drinks at a bar,” she says.

With FMBs dynamically changing, it’s difficult to determine what the category will look like long term. But for the immediate future, retailers are optimistic. Raley’s Thornhill projects that FMB sales at the chain will grow between 10% and 20% this summer, “on the back of Twisted Tea.” Total Wine’s Starr also expects strong category sales. “There are great brands that have cemented their place in the category and in shoppers’ carts,” she says. “And exciting new entries will give people even more choice and more flavors to try this summer.”