The hard seltzer segment is on pace to capture 10% of the beer category dollar sales by this summer, according to Cowen analyst Vivien Azer.
Last week, hard seltzer segment’s share of beer category dollar sales reached 8.8%, according to market research firm Nielsen. And there are no signs that the segment is slowing down.
In fact, Azer estimated that hard seltzer could reach 10% of beer category dollars as early as next month. For the week ending May 2nd, the segment increased dollar sales 362% over the same one-week period in 2019, Nielsen reported. The segment’s meteoric growth accounted for nearly a third of the beer category’s growth that week, with category leader White Claw alone contributing 18% of the beer category’s total dollar growth.
White Claw maker Mark Anthony’s plans for two new production facilities to increase production appear to be moving forward quickly, even pursuing a new lead brewer at its planned facility in Newark, New Jersey, signifying that the project could be close to coming online after being announced last fall.
White Claw and Boston Beer Company’s Truly Hard Seltzer continue to dominate the market, holding more than 70 share of the segment. Anheuser-Busch InBev’s Bud Light Seltzer, which launched in the first quarter of 2020, is now a distant third.
“Truly and White Claw certainly established themselves as the two leaders in the category,” Azer said. “ABI had some initial success with Bud Light, but the share peaked in February, right? Basically, it seems like they got a lot of trial on the Super Bowl, but then in the last few months, their share has been down.”
Boston Beer reformulated Truly last fall, which Azer said has helped the brand, and introduced a lemonade hard seltzer offering.
With the biggest players commanding most of the attention, it can be difficult for newer brands to break through. Although many are trying, Azer doesn’t see this changing.
“I’m still inclined to think that the category is largely going to be consolidated,” she said.
Not all hard seltzer brands will be winners. Last week when the maker of Sup Hard Seltzer filed for Chapter 11 bankruptcy — perhaps a first in the segment. Denver, Colorado-based Liquid Collective, the parent company of the organic hard seltzer brand, filed a voluntary petition for bankruptcy in the U.S. Bankruptcy Court for the District of Colorado on May 7th.
Milwaukee Brewing Company, which produces Sup, has failed “to provide product pursuant to a contract,” according to BusinessDen. Sup launched in Boston and New York City last June, and at the time, planned to expand distribution to nine more markets before the end of 2019.
Recent innovation in the hard seltzer segment has pointed to “a more fulsome category evolution that really mirrors what you’ve seen in the beer category,” Azer said. The three largest hard seltzers adhere to the 100 calorie, 5% ABV standard that drinkers have grown accustomed to over the last two years. But new introductions, such as White Claw 70 (3.7% ABV and 70 calories) and A-B’s new Social Club Seltzer (7% ABV and 150 calories), which boast specs outside of that territory.
“You’ve seen this in the beer category — you’re starting to create more nuance around calorie segmentation and potency,” Azer said.
Wachusett Brewing Company, maker of early hard seltzer entrant Nauti Hard Seltzer, launched Country Hard Seltzer, this month. The new product is seltzer lemonade, born from the Nauti line’s blueberry lemonade offering that rolled out in 2017.
“We’ve been making lemonade seltzer longer than anyone,” Wachusett Brewing president Christian McMahan told Brewbound.
The company launched Nauti in 2016, the same year that White Claw and Truly launched, and has retrenched its footprint to include the Northeast from Maine to Maryland, with Wisconsin as an outlier. Sales of Nauti’s variety 12-pack offering are up 30% over this time last year, McMahan said.
“Nauti was fortunate enough to go out before a lot of the national went out and now shelf space, especially in chain states, is a lot harder to get,” McMahan said. “We’re focused on our Wachusett footprint [for Country], which is New England currently, because we’re making as much as we can to just be able to take care of that and then we’ll see after, so right now, New England only.”
Country is 5% ABV and 100 calories, while Nauti is 4.5% and 100 calories.
McMahan explained that Wachusett drinkers’ familiarity with the brand’s fruit beer offerings made the jump to hard seltzer lemonade a natural one. Country’s packaging echoes the Wachusett brand’s, with the beer brand’s logo and barn.
“There’s such trust and belief in our fruit beer portfolio with them,” he said. “When they see it, I think there’ll be kind of more instant recognition, which, you know is, especially during these times, great because you don’t have the sampling opportunities or the classic brand building opportunities when launching a new brand.”
Other new hard seltzer products are on the way from well-known brands, including a Labatt branded hard seltzer from FIFCO USA that is being test marketed in Upstate New York, a BrewDog hard seltzer called Clean & Press in the United Kingdom, and Yosef Raspberry Hard Seltzer from Craft Brew Alliance-owned Appalachian Mountain Brewery in honor of the Class of 2020 at Appalachian State University.