Despite recent slowdowns in hard seltzer sales trends, Boston Beer chief marketing officer Lesya Lysyj remains confident that the bubbly beverage and Truly Hard Seltzer are not going anywhere.
“The category has become a mega category, and the growth is not done yet,” she told Brewbound.
For the four-week period ending August 8, off-premise dollar sales of hard seltzer increased +5.4% in multi-outlet food and convenience stores tracked by market research firm IRI. Despite the 5% growth, this marked a distinct deceleration from the segment’s +11.1% growth over the last 12 weeks, according to the firm.
Truly’s dollar sales have increased +20.4% over the last four weeks, and +29.6% over the last 12 weeks, according to IRI. In the same time frames, dollar sales of Mark Anthony Brands’ White Claw, the segment leader, have declined at high-single digit rates (-8.6% L4W, -8% L12W).
“Our competitor’s down significantly, so we’re feeling good about that,” Lysyj said.
Truly’s growth in 2021 can be credited to its seemingly indefatigable innovation pipeline. The brand launched Truly Iced Tea in January, Truly Punch in May and Truly Lemonade Freeze Pops in select markets in June.
“At the time, we were thinking, should we be doing all this innovation and throwing it all out?” Lysyj said. “But we are so glad we did, because this consumer really wants to find the next thing — they want adventure, they want innovation.”
With the introduction of Truly Lemonade in 2020 and Iced Tea and Punch this year, Truly has recruited more millennial, Gen Z and Latino consumers, Lysyj said. She added that the average age of Truly drinkers “is younger than the White Claw consumer.”
However, during Boston Beer’s Q2 earnings conference call for investors and analysts, founder and chairman Jim Koch pointed out that Truly Punch has cannibalized the brand’s other SKUs. That trend continued during the four-week period ending August 8, as off-premise dollar sales of Truly’s older variety packs declined double-digits, according to IRI:
- Lemonade variety pack, -12.5%;
- Berry variety pack, -19.3%;
- Tropical variety pack, -25.8%;
- Citrus variety pack, -48.9%.
Nevertheless, the Iced Tea ($100.5 million in off-premise sales year-to-date through August 8) and Punch ($94.5 million in off-premise sales from its May launch through August 8) variety packs have buoyed not just Truly, but the overall beer category, Lysyj said.
According to IRI data provided by Boston Beer, the company’s brands accounted for 4% of total beer category off-premise volume year-to-date through August 15, and contributed 44% of all beer category volume growth this year.
Lysyj added that there are several reasons to believe in Truly and hard seltzer in general: dollar share within the segment, household penetration, and drinkers’ monthly consumption rates and their outlook on the segment’s future.
“The [dollar] share [of the beer category] has gone up; so it was 9.8% a year ago of beer, it’s now 12%,” she said. “It’s continuing to grow even right now. Even with the slowdown, it’s still growing share within total beer.”
The country’s two largest hard seltzer brands — White Claw and Truly — are among beer category leaders in household penetration, indicating that hard seltzer has entered the fridges of mainstream consumers, rather than just the health-and-wellness minded drinkers the segment targeted in its infancy.
“Truly is actually the No. 2 penetrated brand in all of beer,” Lysyj said. “Bud Light [beer] is No. 1, Truly is No. 2, White Claw is No. 3, so we’re like, holy shit, we are capturing two of the three top penetrated brands in the entire beer category.”
In Boston Beer’ proprietary research, the company has found that a majority of hard seltzer drinkers it surveyed (54%) agreed with the statement that hard seltzer is “a staple category for me, I will be drinking it for years to come,” up from 45% when the same question was asked last year.
“It’s really establishing itself as it’s here to stay,” Lysyj said of the segment. “It’s actually really becoming part of people’s repertoire.”
Drinkers surveyed by Boston Beer also reported their hard seltzer servings per month has increased to 7.2, up from 5.7 last year. In the same survey, respondents reported consuming 4.1 spirit-based, ready-to-drink canned cocktails per month, which Lysyj said indicates hard seltzer is “a sessionable category and people are drinking it more often.”
Spirit-based hard seltzers account for 4.7% of the hard seltzer segment and gained 41 basis points in the four weeks that ended August 14, compared to the prior four-week period, according to a report from financial services firm Jefferies, which cited NielsenIQ data. Most of that can be attributed to E. & J. Gallo’s High Noon Sun Sips, which holds a 4% share of the segment, according to Jefferies.
As the calendar turns to autumn, when hard selter sales have typically slowed, Truly is pulling two levers to avoid a fall slump: a football-themed campaign featuring former New England Patriots wide receiver Julian Edelman, and a holiday party-themed, cocktail-inspired variety pack.
Edelman will star in a TV commercial as a sports broadcaster stationed near a convenience store cooler, convincing shoppers to “go for two.” The campaign will also include on- and off-premise point-of-sale pieces and a sweepstakes to win a trip to the Super Bowl (referred to as “the Big Game” on all marketing material, of course).
“We’re a sponsor of Monday Night Football and we’ll be advertising over the fall,” Lysyj said. “We really wanted to do something that’s contextual for the fan.”
Boston Beer has prioritized C-store sales over the past six months. As a result, the Truly brand family’s dollar sales in C-stores have increased +82.5% year-to-date through August 8, according to IRI.
The Truly Holiday Party Pack is scheduled to roll out November 1 and features four cocktail-inspired flavors: Cran Orange Sparkler, Pom Ginger Fizz, Holiday Sangria Style and Spiked Apple Spice. With the new pack, Truly aims to attract drinkers across beverage alcohol categories.
“Wine and spirits is still a big category where we can still source growth from, and that’s really where this holiday pack comes in,” Lysyj said. “It is designed to bring people in from spirits and wine during the holiday period.”
The variety pack scored well with consumers surveyed by Boston Beer. A majority (85%) of drinkers said they would be “excited to bring it to a gathering.”
The variety pack is Truly’s first seasonal offering and is planned to be an in-and-out SKU for now, but other seasonal packs could follow.
“We really want to make sure that this works, like the consumer loves it, the drinker loves it, and we’re going to get incremental displays and all those things, which it seems like we will be able to,” Lysyj said. “The retailers are very excited about it.”
Asked if Truly could discontinue some of its other SKUs to make room for a future seasonally rotating pack, Lysyj said no.
“If I were a retailer, I’d be looking to a lot of other SKUs before I look to our SKUs. There’s a huge, long tail,” she said. “There were 100 brands launched in the last year. I think those are going to be the first to go. Some of even our slower moving SKUs are much bigger than some of the other SKUs that are out there right now.”
Boston Beer’s top competitors in the hard seltzer segment will also be gunning for that shelf space. Anheuser-Busch InBev’s Bud Light Seltzer, the third-largest hard seltzer brand, will roll out a fall-inspired variety pack next week featuring four autumnal flavors: Apple Crisp, Pumpkin Spice, Maple Pear and Toasted Marshmallow. Not to be outdone, White Claw is also releasing a variety pack of its 8% ABV White Claw Surge brand, including Blackberry, Lime, Cranberry and Blood Orange flavors.