Beverage alcohol retailers and marketers predict that this will be the summer of seltzer. “We were quick to jump on the hard seltzer trend two summers ago, but the category really didn’t hit its stride until last summer,” says Matt Bardill, senior manager for beer at Total Wine & More, which has 182 stores in 22 states. “With the success the category saw last summer, more and more wholesalers and retailers have gotten behind it, and that should lead to a banner year.”
Last year was indeed a boom year for the RTD hard seltzer segment. Nick Shields, co-founder of the SpikedSeltzer brand, now owned by Anheuser-Busch InBev (A-B InBev), says the segment is now a $500 million category, and projections suggest it will double in 2018. Some 15 brands are now competing in the category. Shields and others point to the growth non-alcoholic seltzers and sparkling waters are enjoying and believe the same will be true of spiked options. “People are getting into all things sparkly,” says Christian McMahon, president of Wachusett Brewing, which markets Nauti hard seltzer. Moreover, with continued consumer interest in leading healthier and fitter lifestyles, alcoholic seltzers—with little sugar or carbohydrates, and generally lower in calories and alcohol than other RTDs—are poised to capitalize.
Slim cans and variety packs are particularly driving interest, according to marketers and retailers. Casey O’Neill, a member of the innovation team at Boston Beer Co.—which launched Truly Spiked & Sparkling, the category’s leading brand, in 2016—says that while the product was originally introduced in bottles, it’s now packaged in slim, 12-ounce cans. “We heard from many drinkers that they enjoyed slim cans because they could take them places where bottles aren’t convenient, like the boat, beach, or golf course,” O’Neill explains. In San Diego, Jason Clark, general manager at Crest Liquor Co., agrees that cans make seltzers appealing. “We’re near the beach, so the can is an easy package, with no mixing necessary,” Clark says. For now, the store stocks just one seltzer—White Claw, at $10 a 6-pack—but Clark notes, “If sales really take off, I’ll add more.”
O’Neill and McMahon both note that consumers often opt for variety packs of the seltzers as they may be trying the products for the first time and prefer to sample a range of flavors. As with other beverage categories, the rosé craze is now making its mark on hard seltzers, with brands like Nauti and Diageo’s Smirnoff Spiked debuting rosé-inspired expressions.
Sales of leading hard seltzers surged at double- and triple-digit rates last year, albeit on small bases. According to Impact Databank, Truly’s volume more than doubled to 2.1 million 2.25-gallon cases, from 915,000 cases in the year prior. The Boston Beer product is available in eight flavors, including the new Wild Berry. “We’re focusing on associations with active lifestyle events,” O’Neill says of the brand’s marketing plan. Truly is also sponsoring the Association of Volleyball Professionals (AVP) beach volleyball tour this year. Mike’s Hard Beverage Co.’s White Claw hard seltzer, meanwhile, surged fivefold last year, with volume reaching 1.7 million cases, up from just 300,000 cases in 2016, according to Impact Databank.
Consumer response to Smirnoff Spiked has been strong, with volume reaching 660,000 cases last year. The brand is available in four flavors, including Raspberry Rosé. Diageo is “doubling its investment in the brand this year,” says brand director of flavored malt beverages Krista Kiisk. Marketing support will range from out-of-home and transit ads to sampling events to digital and retail p-o-s. Kiisk adds that the hard seltzer isn’t cannibalizing sales of Smirnoff Ice, as the two products attract different consumers. Rather, she calls Smirnoff Spiked volume “internally incremental.”
The Svedka vodka franchise has also expanded with the introduction of Svedka Spiked seltzer, which Constellation Brands’ beer division launched in ten eastern states this spring. Svedka Spiked is available in two flavors—strawberry elderflower and tangerine hibiscus—in 6-pack cans, while a third expression, cucumber basil, is available as part of 12-count variety packs. “We’ve talked a lot about entering this category with our own unique brand proposition,” says Mallika Monteiro, vice president of marketing innovation for Constellation’s beer division. “Svedka Spiked seltzer offers a new alternative with cocktail-inspired flavors from an established brand.”
According to Shields, sales of SpikedSeltzer nearly quadrupled last year, following A-B InBev’s 2016 acquisition and subsequent national rollout of the brand. SpikedSeltzer was first introduced regionally in the east five years ago, and is considered one of the category’s pioneers. Today, the brand is available in 6-packs of six different flavors, as well as 12- and 24-count variety packs. Shields says that more flavors will be unveiled next year. In the spring, A-B InBev launched national advertising for SpikedSeltzer under the “Follow Your Siren” tag line, with support including television and out-of-home ads.
A-B InBev rival MillerCoors is also stepping up support of its entry, Henry’s Hard sparkling water. Launched last year in bottles, the brand has been reformulated and repackaged into 12-ounce cans this year. Henry’s Hard sparkling water is available nationally in lemon-lime and passion fruit flavors in 6-packs, and in a new 12-count variety pack with a third, variety pack-exclusive flavor, strawberry kiwi. The brand is supported with national TV ads accompanied by the tagline “Good. Light. Fun.” According to associate brand manager Katie Feldman, additional support includes out-of-home ads, digital and social media, and sampling events at regional and national chains, including Publix, Target, Kroger, and Jewel. “We’re in discussions with many other retailers to bring Henry’s Hard sparkling to more shoppers,” Feldman says.
Regionally distributed hard seltzers include the Nauti and Press brands. First launched two years ago, Nauti is marketed primarily in New England and the mid-Atlantic. It’s available in six flavors and is packaged in 6-packs and 15-count variety packs. “Sampling is key,” McMahon says. Support for the brand also includes tastings in-store and at area festivals. Press, meanwhile, is marketed by Milwaukee-based XYZ Beverage Co., and is currently sold in 30 states. The product is available in four flavors—with more to come in the fall, according to founder and CEO Amy Walberg—in 4-packs of 12-ounce cans, along with an 8-count variety pack. Support for Press includes sampling and p-o-s.
By all accounts, the hard seltzer consumer is focused on health and wellness. “Health-conscious drinkers seek balance in their lives,” says Boston Beer’s O’Neill. “They care about their health and wellness routine, but are also looking for options that fit into their social lifestyle.” Walberg and Kiisk cite women as the more prevalent consumer of spiked seltzers, and Shields and O’Neill say the drinks appeal to consumers of non-alcoholic seltzers. Most hard seltzer marketers agree that consumers of the products are typically wine and spirits drinkers. “SpikedSeltzer is popular with white wine, rosé, and clear-spirits drinkers,” says Shields.
That’s an ideal consumer for Ohio-based Buehler’s Fresh Foods, according to beer, wine, and liquor director Ron James. “Hard seltzers appeal to consumers who are looking for lower-calorie products,” he says. “They tend to be more popular with women than men, so as a grocery store, it’s a good segment for us.” The 13-store chain offers four different seltzers, generally priced at $8 a 6-pack and $15 a 12-pack, with Truly and White Claw ranking as the top sellers. To merchandise, Buehler’s is featuring floor programs throughout the summer.
Total Wine, meanwhile, stocks 20-30 hard seltzer SKUs, priced at $9-$11 a 6-pack and $15-$17 a 12-pack. According to Bardill, White Claw and Truly are the top performers, but SpikedSeltzer and Smirnoff Spiked are growing as a result of increased distribution. “We have several in-store displays and promotions scheduled this summer, focused on the active, outdoors lifestyle and the convenience the cans present,” he notes. “We’re also working on developing cross-merchandising opportunities with spirits and wine products.”
Expanding The Opportunity
Like other RTDs and beer itself, hard seltzers perform best in the warm weather. As a result, Boston Beer’s O’Neill advises that retailers “increase visibility of hard sparkling waters over the summer.” But she and others believe that there’s still opportunity for the category year round. “We encourage retailers to keep an open mind to the possibilities of the category in the shoulder seasons and holiday spikes,” says MillerCoors’ Feldman. Indeed, Chris Cook, beer department manager at Merchant’s Fine Wine in Dearborn, Michigan, says hard seltzer sales at his store fared well last New Year’s Eve. The retailer stocks about 12 hard seltzer SKUs, generally priced at $10 a 6-pack. “Seasonality hasn’t been a cause for concern yet for hard seltzers,” adds Bardill at Total Wine. “People drink non-alcoholic seltzers year round, and I think that’s what’s going to help the hard seltzers combat seasonality.”
Mixology and on-premise usage also present opportunities for the burgeoning segment. “I recently saw a customer purchase Truly Pomegranate, a bottle of vodka, and fruit—consumers are building cocktails around hard seltzers,” says Cook. A-B InBev promotes the usage of SpikedSeltzer as a cocktail mixer, and according to Shields, the company has partnered with Wölffer Estate winery on Long Island to create drinks with its Pink gin. “Expect more brand partnerships in the coming year,” Shields adds. While hard seltzers have little presence in on-premise accounts to date, marketers aren’t ruling out the channel. Feldman says the company is investigating test markets for an on-premise sampling program for Henry’s Hard sparkling water.
Despite marketer enthusiasm over spiked seltzers, at least one retailer says he’s pursuing the category cautiously. “I’m not going as crazy with them as I did with hard sodas,” says Buehler’s James. “I don’t know if they’re long-term or short-term items. If I see that they’re going to last longer than the sodas, I can always adjust my sets.” Bardill and marketers of the products, however, believe that hard seltzers are sustainable, pointing to continued gains by their non-alcoholic counterparts. “We believe the category is here to stay,” says O’Neill. “Non-alcoholic sparkling water continues to grow, and health and wellness isn’t a trend— it’s a lifestyle.”