Just how big a part of the beer category could hard seltzer be by 2025? It depends on who you ask.
During this month’s Beverage Forum, Anthony Von Mandl and Jim Koch, the leaders of the companies that produce the two largest hard seltzer brands, White Claw and Truly, respectively, offered differing projections, according to analysts’ reports.
Von Mandl is a bit more bullish than Koch, projecting the segment could account for 25% to 30% of the beer category in the next five years, according to Kaumil Gajrawala, an analyst with Credit Suisse.
Through the first quarter of 2021, hard seltzer accounted for 8.7% of total beer dollar sales, according to NielsenIQ data shared by Jefferies.
Even slightly more conservative in his projections, Koch believes the segment will double again over the next three to five years.
Boston Beer execs have previously said they expect the segment to grow between 60% and 90% by the end of 2021, with Truly outpacing those projections. That would add up to another impressive year for the Truly brand, which sold more than 40 million cases (more than 2.9 million barrels) in 2020, Koch said, according to Nik Modi of RBC Capital.
Even as hard seltzers’ biggest players foresee even more growth, the $4.5 billion segment has already hit some turbulence this year as it cycles the pandemic’s stock-up period.
Danelle Kosmal, VP of NielsenIQ’s beverage alcohol practice, noted that sales of hard seltzers are “nearing flat” and “contributing less to overall category growth” this year.
“Now at single-digit growth rates, hard seltzers are up 7.4% for the latest four weeks and up only 1.6% for the latest week,” she wrote about the period ending May 8.
During last week’s Brew Talks virtual event, Boston Beer CEO Dave Burwick shared that he believes the fall resets will see retailers begin to cut slower moving brands. At the Beverage Forum, Koch had indicated that a shakeout is expected to happen with the 2022 shelf resets.
Burwick added that he doesn’t anticipate the pace of innovation to sustain, as successive innovation products are “more dilutive” that previous offerings.
As for the recent slowdown, Burwick said it’s unclear if it’s just a “blip,” given the sharp shifts in consumer behaviors over the last year and now consumers are getting vaccinated and becoming more mobile.
“We’ll definitely know by Labor Day where it’s going to end up,” he said, adding that the company still believes 60-90% is “doable.”
Even as the leaders peer into the not-too-distant future, Burwick said Boston Beer is focused on the next three, 12 and 18 months. He stressed patience with the segment, rather than weekly dissection of scan sales data.
“The question is who is going to end up with more share when it’s over, what’s the category going to look like,” he said.
Brand building remains important, and Burwick believes Boston Beer has found incremental offerings, with Lemonade, Iced Tea and now Punch. He said it typically takes six months to know whether a line extension was successful, while building brands takes several years.
“Right now, it’s a feeding frenzy of trial,” he said. “In a way, it’s kind of fun to watch.”
As hard seltzers’ biggest brands fight for market share, the segment’s next frontier will be in reopening bars and restaurants.
Burwick expects the on-premise to be a major channel for hard seltzer this summer. However, he anticipates only one or two brands to get into retailers.
“It’s going to be a great way for people to trial the product as well,” Burwick said, with expectations of both package and draft in the channel.
Mark Anthony president Phil Rosse shared at the Beverage Forum that White Claw grew in the on-premise in 2020 and “owns more share on-premise versus off-premise,” according to Gajrawala’s report.
During Brew Talks, Ed McBrien, chief operating officer of Manhattan Beer Distributors, said while the New York wholesaler sells a lot of hard seltzer in “suburbia,” he believes welcoming in more multicultural consumers will be a key part of the segment’s future.
“I sell a lot of it and it’s spectacular,” he said. “I haven’t figured out yet how to sell it yet in markets where there are lots of people of color, specifically Latinos.”
Some brands, such as Ranch Water maker Lone River Beverage Company, have already found success in reaching those consumers. Founder Katie Beal Brown said her brand over indexes with a more diverse drinker base, including Hispanic consumers, reaching them through her Ranch Water’s flavor profile that is agave tequila-inspired and leans into flavors such as spicy
“We’ve worked to really lean into it further again by adding some feel to some of those organic consumer behaviors with … flavors such as flavors like Chamoy and Tajin,” she said. “So those are things we’ve tried to do to further embed ourselves with those audiences and really communicate with them in the flavors that they’re interested in consuming.”
In other hard seltzer news …
Boston Beer Strikes Truly Sponsorship with Dua Lipa
Boston Beer announced a Truly partnership this week with pop star Dua Lipa for its “No One is Just One Flavor” campaign. Dua Lipa’s “Physical” plays during the 30-second spot directed by David LaChapelle, which kicks off Saturday. The campaign is backed by Boston Beer’s largest media investment ever behind the Truly brand, which includes out-of-home, point-of-sale, digital and social media.
Trillium Launches Hard Seltzer Line
Boston-based Trillium Brewing Co. announced the launch of its own hard seltzer brand, SOAK, on Friday. SOAK is available in three flavors — Raspberry Lime, Pineapple and Mango — for curbside pickup and UPS shipping.
The company said SOAK (4% ABV) was under development for a year, and the final product is “clean, crisp, and highly bubbly” and made with real fruit and no “flavorings, extracts, concentrates, artificial sweeteners or colors.” SOAK is sold in 16oz. 4-packs for $15.20.
Molson Coors Launches Proof Point
Molson Coors has launched its spirits-based hard seltzer line, Proof Point, in 27 states. The line comes in four flavor combinations: whiskey seltzer with blackberry lemon; rum seltzer with mango pineapple; vodka seltzer with lime; and tequila seltzer with grapefruit. Each 12 oz. can is 5% ABV, 100 calories and zero sugar.
The launch comes as Molson Coors announced it would expand capacity to produce hard seltzer at its Canadian facilities by 300%. The company said the expansion is part of a $100 million investment in its Canadian hard seltzer portfolio, primarily focused on its Toronto production brewery. The company said it expects to produce and co-pack Vizzy and Coors Seltzer in-house at the Toronto facility as early as winter 2022.
Molson Coors previously expanded its U.S. hard seltzer production capacity by about 400%.