For four years, hard seltzer has reigned supreme. Although the category’s history stretches back to 2013 with the release of Bon Viv seltzers—then marketed as Spiked-Seltzer—it wasn’t until the summer of 2019 that the world took notice. Brands like White Claw and Truly saw major growth as consumers, especially younger legal-drinking-age ones, flocked to stores around the country to get their hands on these low-calorie, low-abv beverages. In a craze that seemed to happen overnight, suddenly everyone had a hard seltzer in hand, and brands everywhere were releasing their own versions of the drink to capitalize on the momentum. Originally, portability was what brought consumers to the segment; it was an easy and refreshing option to pack up and bring along to the beach or the pool. But when 2020 came and brought a worldwide pandemic with it, the appeal shifted to seltzers’ ease of consumption.
“For the last couple years, we’ve sold a lot of what we call ‘pantry fillers,’” says Ryan Maloney, owner of Julio’s Liquors in Westborough, Massachusetts. “Everybody’s making sure that they have alcohol in the house.” But as mandates surrounding the Covid-19 pandemic begin to ease and the world returns to normal, Maloney speculates that the spotlight on hard seltzer may dim. “With some of the Covid-19 restrictions lifting up, I think people will start getting out and searching for other things to drink,” he says.
The market seems to be confirming Maloney’s prediction. Although hard seltzer started off strong in 2021, by last July the excitement around the segment was fading. In Boston Beer’s 2021 second quarter earnings report, founder Jim Koch reported that the results for No.-2 brand Truly and the hard seltzer category as a whole were “softer than we had anticipated.”
Halfway through 2022, the category hasn’t exactly made a comeback. Growth is down for top brand White Claw, while the smaller players are beginning to fall by the wayside. Supply chain issues have impacted everyone in the industry, and hard seltzer certainly has not been spared. So now the question many are asking is: What comes next for hard seltzer? Will this once white-hot trend cool off completely, or will growth rebound?
“I think we’re close to maximum saturation, and are due for a shakeout,” says Maloney. “We’re going to see who’s here to stay and who’s going to drop by the wayside. There is still definitely growth to be had in the category, but I think it will be more limited growth and only certain players are going to survive.”
Mark Anthony Brands’ White Claw is the behemoth of the hard seltzer industry. Originally launched in 2016 with a range of 15 flavors and with 5% abv, the low-calorie beverage was the first to capture viral consumer attention. It’s kept that attention with the release of new products such as White Claw Surge, White Claw Surf, and, most recently, White Claw Lemonade and Iced Tea. The brand has seen remarkable growth over the past six years and has made itself a household name.
White Claw depleted 3.5 million cases in its first full year and has seen consistent gains ever since, growing until 2020 when it rose 107.5% to 95.5 million case depletions, according to Impact Databank. But in 2021, White Claw reported its first loss, dipping 1% to 94.5 million cases. And it’s not the only brand to see a dip in sales. Its biggest competitor, Boston Beer’s Truly, has similarly struggled to maintain its previously strong growth pattern. Also launched in 2016, Truly experienced a similarly positive start and consistently grew 100% year-over-year. “Truly and White Claw came bursting through the doors a couple years ago and we saw them gain crazy traction,” says Mat Dinsmore, owner of Wilbur’s Total Beverage in Fort Collins, Colorado. “They still dominate the category. There have been so many other seltzer brands, but they haven’t managed to gain the traction that the first to market did.”
But even the top brands are falling behind due to the sudden lack of consumer interest in malt-based hard seltzer. While Truly Hard Seltzer did not see the decline White Claw did in 2021, the rate of growth has significantly slowed in the last year, according to Impact Databank. “The unexpected rapid slowdown of hard seltzer’s growth significantly impacted our business,” says Dave Burwick, president and CEO of Boston Beer. “Despite this, Truly has continued to gain market share and solidify its long-term position as a brand. But certainly, the capacity and inventory we’d built up while anticipating higher growth has resulted in significant temporary costs.”
At the end of 2021, Koch announced that the company destroyed millions of cases of Truly hard seltzer inventory because of overstocking, resulting in a significant financial setback. “Frankly, we overbought,” Koch said in a recent interview with CNBC. “And when the growth stopped, we had more than we were able to use, because there is a shelf life.” The company reportedly chose to dispose of the product rather than sell it at a discounted price.
Beer Brands Get The Boot
When hard seltzer caught fire in 2019, the industry saw traditional beer brands like Budweiser and Corona jump into the ring and release their own versions of the malt-based beverages. Back then, it was alluring to consumers to see their favorite beer brands innovating to get behind the new trend. It also brought a new age demographic into the category, as it was mostly embraced by younger legal-drinking-age women at the start.
“You might not have seen some of the older drinkers partake in hard seltzer at first,” says Julio’s Maloney. “Let’s say we’re talking about someone who has always enjoyed Budweiser. They may not have looked twice at hard seltzer. But then suddenly Budweiser comes out with one and they’re saying, ‘well, wait a minute. What’s that all about?’”
It was a smart move for Anheuser-Busch InBev (A-B InBev), parent company of Budweiser, which needed a boost after seeing many of its drinkers start to migrate into the craft beer space. The same thing is true of traditional beer brands like Corona and Molson Coors. Hard seltzer was an exciting new way to bring life to an otherwise stagnant category and bring growth to their respective companies.
But with the flood of hard seltzers hitting the market, consumers were faced with an overload of options. In those situations, shoppers typically reach for top-sellers like Truly or White Claw, leaving smaller brands to fall by the wayside. While Corona Seltzer and Bud Light Seltzer are still hanging in there, Molson Coors made the decision to pull its Coors Seltzers off the shelves in July 2021 after less than a year on the market, citing the poor performance of beer brands venturing into seltzer.
Bon Viv, another A-B InBev brand, has also fallen off, making up just 0.5% of hard seltzer and declining 70% in 2021, according to Impact Databank. This comes in spite of the company’s focus on marketing, which included bringing actress Priyanka Chopra Jonas on as the face of the brand and launching the pro-female campaign “#TogetherWomenRise” in an attempt to connect to hard seltzer’s main gender demographic.
Making The Shift
Some speculate that the decline in malt-based hard seltzer sales is due in part to the influx of canned cocktails, which utilize actual spirits like vodka and Tequila rather than malt liquor, which relies heavily on fermented sugars to supply the alcohol content for the seltzers. Spirits-based RTDs have seen their own wave of releases, from specific RTD brands like Spirit of Gallo’s High Noon Sun Sips to releases from popular producers like Svedka and Smirnoff vodkas and Jose Cuervo and Sauza Tequilas.
The draw to spirits-based RTDs is largely the ingredients they utilize. Consumers seem to appreciate the more natural taste these RTDs offer. “High Noon meets consumers where they naturally want to go when they’re ready to move beyond entry-priced seltzers,” says Britt West, vice president of Spirit of Gallo. “Consumers also care about ingredients, which is how High Noon got established versus malt-based beer: High Noon consumers appreciate real vodka.”
Retailers like Julio’s Maloney seem to agree with that sentiment. “I’m not a big advocate for vodka,” he says. “I call vodka an alcohol delivery system, but is it a better alcohol delivery system than fermented sugars? Absolutely. It doesn’t have an after taste. It’s cleaner. It’s pure. So, I think you’re going to see people making the switch from hard seltzer to those vodka-based RTDs.”
Spirits-based RTDs don’t have the shelf access that malt-based hard seltzers do, however. “The malt category does have the advantage in that they can be sold at beer and wine outlets, whereas the hard liquor or distilled spirits RTDs would not be able to gain in that market share,” says Maloney. Gallo’s West says the spirits-based RTD segment will “never override malt and sugar-based seltzers” because of market access, but that’s not to say they can’t take some of hard seltzer’s share.
What Comes Next?
Many agree that while the craze for malt-based hard seltzer is dying down, it’s not dying out. While some smaller companies will inevitably be overtaken by the “survival of the fittest” nature of the market, the big players aren’t going anywhere. New releases are hitting the shelves on a regular basis, inciting consumer excitement. Brands like Truly are hopeful such releases will restore positive growth for their companies in 2022.
“While our first quarter declines were not unexpected, they’re not reflective of the trends we see for the full year,” says Boston Beer’s Burwick. “We expect depletion and shipment volumes to improve, both in absolute terms and against less difficult prior year volume comparisons.” The company is confident that the release of Truly Margarita, a new malt-based seltzer that it claims is “the most successful new product launch thus far in 2022, as it’s the No. 1 new SKU in all of beer,” will help Boston Beer achieve that growth.
Wilbur’s Dinsmore agrees that hard seltzer is ultimately here to stay. “We still have four cooler doors full of hard seltzer, and that goes to show that there are trends that prevail,” he says. “I don’t think this one is going anywhere. We’ll just have to see which brands are here when the dust settles.”