Posted: Jun 29, 2020
Hard seltzer is one juxtaposition after another—and that’s what’s driving its overall success.
For starters, while hard seltzer is generally categorized within the flavored malt beverage (FMB) category and the broader beer category, a majority of U.S. hard seltzer buyers (60%) and 70% of legal age Millennial drinkers—a core demographic for hard seltzer—consider hard seltzer as its own category. Fewer than 10% think of it as a ‘type’ of beer.
By successfully carving out its own identity, hard seltzer poses a threat to traditional FMB and core beer options, and even the broader alcohol category, largely because overall alcohol budgets and tolerances are finite. In comparing March and April 2020 with the same two months in 2019, hard seltzer buyers decreased their share of spending on beer and wine, with beer losing 5.6 share points and wine losing 4 share points among this consumer group, while spirits were relatively unaffected. Seventy-five percent of hard seltzer drinkers, however, also buy beer, and many of the beer brand extensions we’re seeing (Bud Light Seltzer, Corona Seltzer, etc.) reflect a potential opportunity for cross-pollination, as well as a potential risk to the mainstream beer brand.
No matter the branding strategy, the phenomenal growth of hard seltzers affords opportunities not to be missed. While brand name extensions from mainstream beer manufacturers represent a little less than 20% of the hard seltzer market as of June 2020, hard seltzers with brand names not affiliated with beer still command the lion’s share of the category; White Claw and Truly led the pack, with supplier owners (Mark Anthony Brands and Boston Beer) that elected to go to market with their own identities that were separate from their beer (Sam Adams) and flavored malt beverage (Mike’s Hard) brands. Combined, they maintained a combined market share of just over 75% as of the week ended June 13, 2020.
The explosion of the hard seltzer segment has caught the attention of many companies eager to grab a piece of the rapidly expanding pie. At the beginning of 2018, just 10 hard seltzer brands were on the market. That number rose to 26 brands by the beginning of 2019, and more than 65 brands are now fighting for consumers’ attention and purchase—with about half using a unique brand name, and the other half pivoting off an existing beer brand name.
PANDEMIC PURCHASING AND SEASONALITY PROPEL HARD SELTZER
Since hitting the market, hard seltzer has proven to be an unstoppable force. It’s also proven to be the most resilient segment within the entire alcoholic beverage industry, which has felt the sting of sudden bar, restaurant, and on-premise tasting room closings amid the COVID-19 pandemic. Retail sales, however, haven’t missed a beat, particularly as consumers quarantined to avoid the risk of exposure to COVID-19. Since the week ending March 21, 2020, each week’s dollar sales of hard seltzer within the U.S. off-premise market has exceeded the week of July 4, 2019, which was previously the highest individual week of sales. Moreover, the week ending June 13, 2020, represented the fourth consecutive week during which hard seltzer drove more than $100 million in retail off-premise dollar sales, and the 10th consecutive week during which annual retail hard seltzer dollar sales increased by at least $50 million.
CPG, FMCG & RETAIL
June 25, 2020
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