Hard seltzers - still the next big thing?

The hype around hard seltzers in the UK is still palpable, but as the category hits bumps in the US, Lucy Britner asks if growth can remain strong this side of the pond.

"The unexpected rapid slowdown of hard seltzer category growth this summer significantly impacted our business.” These were the words of Truly hard seltzer owner Boston Beer Co’s president & chief executive Dave Burwick last October. While it’s important to note that the category is still growing, the rate of growth has declined.

Does that mean the same thing is about to happen in the UK? The short answer seems to be “not yet”.

Oli Clements, co-founder of the Drty hard seltzer brand, says expectations for the category in the UK remain high, though he suggests we practise a little patience.

“In the US, the first brands were launched in 2015, White Claw launched in 2016, so hard seltzer had three to four years of development before it really exploded in the summer of 2020,” he explains.

“In the UK, we are maybe in year two of what might be a three or four-year trajectory. I’d be cautious to say 2022 is the year it will ‘explode’ in terms of reaching its full potential, but we will undoubtedly see more of the fast category growth we’ve seen in 2021 vs 2020.”

Recent IWSR data gives us an idea of hard seltzer’s growth potential in the UK and the research specialist outlined an annualised average growth rate of 90% from 2020 to 2025. The IWSR says growth is being driven by “consumer demand for flavourful drinks with ‘better-for-you’ attributes” and predicts that hard seltzers will account for half of all global RTD volumes by 2025 (up from 30% share in 2020).

“Hard seltzer volumes outside the US are small, but awareness is also low,” says Brandy Rand, chief operating officer, Americas, at IWSR Drinks Market Analysis. “As that awareness grows, we’re seeing that people are increasingly willing to consider trying these products.

“It’s important to remember that it took a few years for hard seltzers to catch on in America, and we’re still in the early days in this category outside the US.” Accolade Wines marketing director Tom Smith also picks up on the wider better-for-you trend.

“As a result of the increased focus on moderation, we expect the importance of low/no-alcohol products to increase following the Christmas period, with sales projected to rise 31% by 2024,” he says. “Our dedicated seltzer line, Nine Yards, engages with younger drinkers and adapts to the changing alcohol landscape.”

At White Claw, Michael Dean, head of marketing UK/Ireland, agrees that younger consumers are driving the category, adding that wider trends, such as health, fitness and moderation, will encourage more drinkers to pick up a hard seltzer.

“As well as this we have seen a switch to more consumption outside the on-trade with consumers now making cocktails and beverages at home, which Covid has really driven,” Dean says. “People are creating their own moments, whether that be in a park, at a festival or at home. The emergence of things staying open later and the return of events such as festivals has switched consumers to cans, which really helps the category. Canned cocktails are cool again, and beverages like White Claw offer the perfect environment for these new tastes and trends.”

Drty’s Clements also highlights the importance of festivals when it comes to really putting hard seltzers in as many hands as possible.

“With the major festival we went to with Drty, sales exceeded that of the total wine category and the growth in awareness was really apparent,” he says. “With more of this happening in 2022, I fully expect to see similarly explosive growth in 2022 versus 2021.

“I think the category could easily reach £100 million by the end of 2022, which would be two years ahead of schedule based on our Drty Hard Seltzer Handbook prediction last year.”

CAN CLONES

Part of that growth will come from new players – and retailers will no doubt be looking for ones that stand out. The problem, though, is that many hard seltzer brands look the same. If you’ve ever scanned a supermarket hard seltzers display, you’ll notice the “better for you” cues in spades. The slim cans, the white or pale livery, the calorie count on the front label.

Clements believes that going forward, differentiation is going to be key.

“There has been an influx of brands into the category, which is positive to a point, as it builds awareness. However, it’s important that brands do different things for different consumers,” he says. “Ultimately, the best way of building a big category will be to have a collection of brands which all appeal to slightly different consumer groups, thereby growing overall category penetration. It’s not helpful to anyone to have brands that simply cannibalise each other when on promotion.”

He says Drty has worked hard to deliver a differentiated proposition on both taste and brand positioning.

“We want Drty to have much fuller flavours than other brands on the market, which is something we regularly test versus the competition. Our brand design, tone of voice and how we act is also deliberately set away from wellness/health-based cues that some of our competitors adopt.”

Accolade also made a deliberate decision to make Nine Yards different.

“With vibrant packaging, strong sustainability credentials and clear brand positioning, we’re confident that our new 90 calorie and vegan-friendly Nine Yards line up will stand out from the competition,” says Smith. “Nine Yards offers a chance for people to explore a new category with exciting flavours in a convenient format.”

In terms of ways retailers can avoid same-y shelf displays, White Claw’s Dean suggests keeping a simple range of brands to avoid confusion in a new category.

“Currently the vast majority of switch and spend is coming from the beer and cider categories,” he says. “Research from Kantar shows that 52% of those switching is from the beer/cider/stout/ale categories. So, there is an appetite from consumers which retailers need to keep front of mind.”

Meanwhile, some producers are looking to break away from the summertime image of these light, fizzy RTDs. Berczy, for example, recently rolled out a Winter Cola edition. “Hard seltzer is often seen as a summer focused drink, but we are looking to change that perception with the British public,” says co-founder Nick Graham of the new flavour.

Despite his cautionary words, Boston Beer’s Burwick also said that he expects hard seltzer to remain a “very important segment of the beer market in the future”.

And if that’s true of the US, then you can bet a summer of festivals will set sales on fire in the UK this year.

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