Ron James, director of beer, wine, and liquor at 13-unit Buehler’s Fresh Foods in Ohio, speaks for many beverage alcohol retailers when expressing enthusiasm about the red-hot hard seltzer segment. “Hard seltzers have been fabulous for our department,” he says. “They’ve brought in new customers, and I’m excited about the future of the category.”
According to Nielsen, hard seltzer sales in virtually all off-premise channels combined for a gain of 213% last year to about $1.5 billion—up from $496 million in 2018, when dollar sales registered a 169% gain over the previous year. And early forecasts for 2020 call for continued triple-digit growth, driven by surging consumer demand, expanded availability of established brands, and a plethora of new products.
While Mike’s Hard Beverage Co.-owned White Claw has emerged as the category leader, the entry of numerous new hard seltzers this year—including those from major beverage alcohol players—could serve to blow the market wide open. According to Impact Databank, White Claw volume skyrocketed 322.5% in 2019 to 47.7 million (2.25-gallon) cases from 11.3 million in the year prior. The impressive growth came even in spite of White Claw’s supply challenges—a situation Mike’s Hard Beverage is working to rectify in 2020 with new production facilities.
No.-2 seltzer Truly posted a 188% gain in volume last year to 22.9 million cases—up from 8 million cases in 2018—according to Impact Databank. Dave Burwick, CEO and president of Truly parent company Boston Beer Co., says a brand overhaul in late 2019 contributed to the strong performance. “Since the new flavors launched in November, both our sales growth and rate of turn in stores have accelerated despite increasing competition,” he notes. Truly Lemonade, introduced in January, is off to a fast start, Berwick adds, and “has welcomed a whole new category of drinkers.”
Anheuser-Busch InBev (A-B InBev), meanwhile, is placing big bets on the hard seltzer category with three entries at a range of price points. Premium-priced Bud Light Seltzer joined super-premium Bon & Viv earlier this year, while budget-priced Natural Light Seltzer launched last summer. According to Lana Kouznetsov, vice president of beyond beer marketing at A-B InBev, Bon & Viv, the No.-3 hard seltzer, saw a volume gain of 65% in 2019. This year, the brand—which is primarily targeted to women in their 30s—is being repackaged as Bon V!v and will be supported with “a fully loaded marketing campaign,” Kouznetsov says. Natural Light Seltzer, meanwhile, is most popular with young, 21-plus consumers, notes A-B InBev vice president of marketing for core and value brands Ricardo Marques. “The Natural Light family prioritizes flavor, affordability, and fun,” he says. “Natural Light Seltzer was created to meet that gap in the market.”
Constellation Brands’ beer division is also ratcheting up its involvement in the hard seltzer category. Corona Hard Seltzer, which comes in a variety pack (about $16 a 12-pack of 12-ounce cans), launched nationwide in March. “Corona’s carefree lifestyle will emotionally connect with hard seltzer consumers,” says Corona vice president of brand marketing Ann Legan, who notes that the offering has 90 calories a serving, with no sugar or carbohydrates. “We’re tapping into the betterment trend to allow us to deliver.” Corona Hard Seltzer will be backed with more than $45 million in marketing support, Legan notes, including TV, digital, out-of-home, and on- and off-premise sampling.
Smirnoff Spiked Sparkling seltzer is also receiving significant support. The popular Smirnoff Red, White & Berry vodka expression is being extended to the seltzer brand this summer in a limited-edition, cold-activated can featuring an Americana theme, according to Krista Kiisk, Smirnoff brand director at Diageo North America. And at press time, TV commercials for Smirnoff Spiked were set to launch. “We’re committed to investing in the category,” Kiisk says. “Consumers are still discovering hard seltzers. There’s a lot of runway.”
But it’s not just traditional beer and flavored malt beverage (FMB) companies that are marketing seltzers. Many craft brewers have jumped in, as have wine and spirits marketers. Colorado’s Ska Brewing launched Ska Hard Seltzer late last year and, according to president and co-founder Dave Thibodeau, response has been great, with volume already comparable to that of the brewery’s flagship brands. Oskar Blues was one of the first craft brewers to introduce a hard seltzer when it launched Wild Basin Boozy sparkling water in late 2018, and the Colorado company says sales are going well.
E. & J. Gallo Winery is also bullish on hard seltzer. Barefoot Hard Seltzer ($8 a 4-pack of 250-ml. cans; $20 a variety 12-pack) was introduced nationally in February, while vodka-based High Noon Sun Sips, packaged in 4-packs of 355-ml. cans ($10), as well as variety 8-packs ($19) and 12-packs ($28), first launched in May 2019. Britt West, vice president and general manager of spirits at Gallo, says the 4.5% abv brand is ideal for independent spirits retailers, particularly those that don’t stock beer or other hard seltzers. “High Noon is the perfect fit to help the independent capture the opportunity,” West notes. The Barefoot Hard Seltzer brand, which is made with Barefoot wine, seltzer water, and natural flavor, is designed to appeal to the brand’s established consumers, “as well as those who are new to the brand or to wine,” notes Anna Bell, vice president of U.S. marketing for Barefoot. She adds that the brand’s Barefoot Spritzers are more fruit-forward than Barefoot Hard Seltzers, so there’s little overlap. Rival Trinchero Family Estates, meanwhile, launched Del Mar wine seltzers ($9 a 4-pack of 355-ml. cans) nationally in April. And Molson Coors is expanding its presence in the category with Vizzy, introduced last month, and Coors Hard Seltzer, set to launch this summer.
Hard seltzers have particularly exploded in grocery stores. “We’ve seen three years in a row of triple-digit growth,” says Charles Slezak, beverages director at Lowes Foods, which has 74 stores in North Carolina, South Carolina, and Virginia. “These products are really filling consumers’ desires for healthier options.” Indeed, for Lowes’ spring beer reset, Slezak says 50% of the new items are hard seltzers, adding that brands like Truly and White Claw are typically priced at $10-$14 a 12-pack of 12-ounce cans. Giant Food—with 67 stores in Maryland, Virginia, and Washington, D.C. that sell beer—is doubling its hard seltzer selection to 35 SKUs this year, according to beer and wine category manager Jeffrey Pygott. As with other retailers, Pygott says White Claw and Truly variety packs ($18 at Giant’s Hanover, Virginia stores) are the chain’s top sellers. At Buehler’s, where the variety packs are generally priced at $15, James expects Bud Light Seltzer to join White Claw and Truly as a top-three brand this year. Buehler’s, Lowes, and Good Food stores all promote hard seltzers in their circulars, and in-store sampling of new products is featured where allowed by law.
The burgeoning category is also making its mark at beverage alcohol retail. “We’ve seen explosive demand and growth for seltzers,” says Dawn Slater, purchasing and operations supervisor for Big Daddy’s Wine & Liquors, which has 12 stores in south Florida. White Claw and Truly (both $18 a 12-pack) are the chain’s top sellers and, according to Slater, the Boston Beer brand benefited from White Claw shortages last year.
While on-premise accounts haven’t been a big focus for hard seltzer brands yet, that appears to be changing. Diageo, A-B InBev, and Boston Beer are all putting a bigger push behind on-premise this year. “Accounts that carry Truly both on tap and in cans are seeing higher pull and sales per distribution point, which tells us it’s better to carry both,” Burwick says. Wellington Pub in Buffalo, New York offers both White Claw and Truly in cans ($5), and last summer and fall added Truly on draft for $6 a 16-ounce pour. “We couldn’t keep it in the building,” says chef and general manager Jim Frankhauser, noting that the hard seltzer was often served over muddled lemons and limes.
Retailers and marketers have no concerns that hard seltzers skew seasonally. “Truly, and hard seltzer in general, have become an alternative beverage of choice for drinking occasions far beyond the summer,” says Burwick. “As 2019 went on and we moved farther away from the summer months, we actually saw an acceleration in growth.” Yet the emerging category appears to be impacting sales of other products. “Last year was a big year for hard seltzers; that certainly impacted sales of other beverages like beer, wine, and hard ciders,” says Giant’s Pygott.
While hard seltzers first found favor with millennial and Generation Z consumers, today’s consumer base is broader. “I’m seeing more of a crossover to older consumers,” says Big Daddy’s Slater. “Seltzer is a broadly appealing category,” agrees Kiisk. “Consumers are evenly split between men and women, and the products are particularly attractive to those looking for low-sugar products.”
With retailers preparing their stores for the summer season, marketers advise stocking a variety of seltzers. “The consumer is still looking to experiment,” Kiisk notes. “Retailers should have a broad range of flavors and brands.” A-B InBev’s Kouznetsov suggests that retailers place hard seltzers in aisles other than beer. “These consumers are making choices based on their lower-calorie and lower-sugar preferences in more than just the beverage aisles,” she says. “More and more consumers are choosing hard seltzers over wine and spirits.”
While some retailers express concern about oversaturation, there’s widespread agreement that hard seltzer sales will continue surging in 2020. Burwick notes that category velocity increased in the fourth quarter as well as in January of this year. “We’re fully expecting the category to at least double in 2020 as established brands get more distribution and new ones enter the market,” he says.
Pygott says that Giant Food is projecting category growth to continue for several years. “We don’t see it as a short-term fad,” he says. “Hard seltzer continues to sell, curving upward with no plateau in sight.”