One of the most notable trends in the US drinks market in recent years has been the sharp growth in hard seltzers, or spiked sparkling water with various flavours. The hard seltzer industry in the US was valued at $550m in mid-2019 but continued growth is anticipated and projections are for it to reach a value of $2.5bn by 2021 (Canvas8).
From sober foundations…
Flavoured sparkling waters have been a strong growth category in the US for the past 5 years with brands such as Lacroix offering a wide range (close to 30) of sparkling waters with natural fruit essences as a healthier alternative to traditional sugary soft-drinks. This is a great example of a brand that was able to capitalise on the growing demand for Health & Wellness which Bord Bia explores in depth in our Consumer Lifestyle Trends, and particularly plays to the sub-trend of ‘rediscovering natural’. Although on the market for over 20 years, Lacroix’s renewed focus on the brand to capitalise on a growing demand for cleaner, healthier refreshment and their successful targeting of millennials through social media channels such as Instagram delivered results and vastly grew the category. Lacroix parent company Natural Beverage Corp’s value soared from $2bn in early 2016 to $4.1bn in April 2017 (Bloomberg, 2019). Strong consumer buy-in to the category obviously sparked competition. Alongside many smaller competitors, Pepsico launched Bubly in 2018 and CocaCola bought established Mexican water brand Topochico to get in on the action, with both distribution and marketing budget far surpassing those of Lacroix, ensuring strong ongoing competition in the US market.
…To twisting the sobriety
Hard seltzers (sparkling waters spiked with alcohol and available in various flavours) are a more recent phenomenon, but their success is clearly reliant on the same strong consumer appetite for healthier, natural and refreshing beverages. Similar to the growth of the sparkling water category, initial category growth was paved by one brand, with other big drinks players then scrambling to get in on the action.
The trailblazer for hard seltzers in the US is White Claw (owned by Mark Anthony Group) which showed phenomenal growth in spring/summer 2019. The brand cleverly built on the surge in popularity of non-alcoholic seltzers and sparkling waters, positioning itself as a ‘healthy’ alcoholic beverage with its ‘made pure’ (natural flavours and 100 calories, 4.5% ABV, no artificial sweeteners) proposition appealing to health conscious drinkers. The brand successfully married its product attributes with its positioning as a fun, on-trend, easy to drink and affordable, not to mention insta-friendly, summer beverage . By the end of June 2019 White Claw had sold $212.1m in the US, up from $196.7m for the full year in 2018 and accounted for half of all hard seltzer sales in the market (Canvas8, 2019). But competition was brewing…
With hard seltzers negatively impacting on light-beer sales, (Total US beer volume sales decreased 4.3% from 2014 to 2019 –Mintel), large beer manufacturers sought to get in on the action. Most of the big brewing companies, and many smaller ones, now have a range of products in this space. Examples include Anheuser-Busch InBev (Bon Viv! brand and Bud Light Hard Seltzer), Boston Beer Co (Truly), Molson Coors (Henrys’s Sparkling Water, Vizzy seltzer range with acerola making antioxidant and Vit C health claims; a Coors Hard Seltzer range is due to launch in autumn 2020 also), Diageo (Smirnoff Spiked) and many more. Clearly these major players are banking on continued category growth in the US market and their international footprint make it possible for them to expand rapidly in other markets too. Over the past month or so, unsurprisingly then, hard seltzers have begun popping up on Irish shelves.
Will it be a harder sell for seltzers in Ireland?
The RTD (ready to drink) category in Ireland hadn’t shown a particularly strong performance in recent years. Overall volume sales declined by 1% in 2018 to reach 6 million litres (Euromonitor, 2019). Initially associated with sickly sweet colourful ‘alcopop’ offerings back in the 1990s, the negative connotations led to a decline in the overall RTD category with colourful fruity drink brands, such as Woody’s and Hooch disappearing and only brands linked to more established spirits brands such as Bacardi Breezer and Smirnoff Ice showing better longevity. Spirit-based mixed drinks and wine spritzers had proven most popular in the category lately with brands such as WKD bucking the trend somewhat. But with White Claw in the Irish Market from June 2020, could the RTD market be given a refreshing boost this summer?
Like their US counterparts, younger generations of Irish are more health conscious than ever before so clearly White Claw are banking on this to develop a strong foothold in Ireland, but in new markets they have less of a head-start than they enjoyed in the US. Big players such as Kopparberg (330ml cans) and Smirnoff (250ml cans) have launched hard seltzer ranges here recently, both looking to get in on the action early on.
Ahead of the game, Irish brand Lo:Ki appeared on the market as far back as 2017 offering low alcohol hard seltzers (and alcohol-free gin and tonic range under their No:ki brand) in 330ml and 275ml bottles (rather than cans which has become the category norm). More recent Irish-made entrants include Pearse Lyons Brewing & Distilling’ Flying Flamingo tropical hard seltzers (250ml cans) launched in late June 2020.
It remains to be seen whether the significantly less hot and sunny Irish summer will put a dampener on potential growth here or whether we’ll get swept up in the ‘wave of pure refreshment’ promised by White Claw and others, but if the hard seltzer trend takes hold here as it has in the US, then this will certainly be an interesting category to watch.
White Spirits - US - Market Perspective -Hard seltzers upend the alcohol market. Mintel. December 2019
Passport, RTDs in Ireland, Euromonitor International, July 2019
White Claw: The Seltzer that took over the summer. Canvas8 Case Study, 5th September 2019
Mintel Gnpd search, 2020