If hard seltzer wasn’t already inescapable pre-pandemic, a year of boozing almost solely on park blankets sealed its fate. (There’s nothing like a case of black cherry White Claw to spice up a socially distanced hang.) A few million picnics later, the hard seltzer industry hit $4.1 billion in sales last year, up from just $400,000 in 2018. Goldman Sachs has predicted that number will top $30 billion by 2025.
White Claw and Truly are the Coke and Pepsi of the industry, capturing 75% of sales between them. But the market is growing more and more crowded. The number of hard seltzer brands has jumped from 10 at the start of 2018 to more than 100 today. Liquor, wine, and beer giants have hopped on the trend— Natty Light, Bud Light, Pabst Blue Ribbon, Smirnoff, Jose Cuervo, and Barefoot Wine have all released hard seltzer-inspired beverages. Even sparkling water brands like Polar and Spindrift are joining with their own alcoholic products.
Last week, rapper and aspiring mogul Travis Scott announced Cacti, an agave-flavored hard seltzer released in partnership with Anheuser-Busch. Cacti marks the conglomerate’s third hard seltzer product, and Scott has already proven that his name moves inventory. Last year, McDonald’s “Travis Scott Meal” was so popular that the chain began running out of ingredients. Likewise, Cacti sold out on the official website within two days of its launch, with physical retailers selling out of the beverage in a single day. Anheuser-Busch is now boosting production to meet surging demand.
Stars used to slap their names on bottles of Pinot Grigio or whiskey to tap fans’ wallets. Kendall Jenner, whose new 818 Tequila brand was recently the subject of a cultural appropriation controversy, found out the hard way that times have changed. Hard seltzer is the money-maker now.
Five women walk into a bar: The history of hard seltzer
In 2012, Nick Shields was sitting in a Westport, Connecticut bar when he saw a group of women order a round of vodka sodas. The owner of a small beer brand and a fifth generation brewer, Shields thought he could make something better. After all, nobody really orders a vodka soda for the taste.
He started experimenting with fizzy concoctions in his garage. “The goal… was to bridge the gap between beer, wine, and cocktails with a new kind of alcoholic beverage,” Shields told WhaleBone Mag. Spiked seltzer doesn’t contain any separately distilled spirit. It’s brewed a bit like beer, made using sugar, water, and yeast. The yeast ferments the sugar, dissolved in carbonated water, turning it into alcohol. Add in some fruit flavoring or extracts and you’ve got yourself a best-selling beverage.
Shields' efforts turned into a brand called SpikedSeltzer, which launched in late 2013. By 2015, SpikedSeltzer was selling 250,000 cases a year. In 2016, the company was acquired by Anheuser-Busch, which rebranded the drink as Bon & Viv in 2019.
Truly and White Claw both launched in 2016, around the same time as SpikedSeltzer's big acquisition. Three years later, 2019 was declared “White Claw summer,” when hard seltzer became the top growing segment in the beer category (and a must-have accessory featured in thousands of Instagram posts). Hard seltzer sales have risen right alongside “virgin seltzer” by 42% since 2014.
Gender stereotypes hurt sales, until Claws came around
From Mike’s Hard Lemonade to Smirnoff Ice to Budweiser’s Lime-a-rita, low-proof malt brewed beer alternatives have existed for decades. But these drinks were often marketed toward women, which limited sales growth. In 1993, Coors Brewing Company put out an alcoholic seltzer-like drink called Zima. It was initially popular, selling 1.3 million barrels in 1994, but sales fell to just around 400,000 barrels within a few years. Coors pulled the plug in 2008. “Zima was done in by its medicinal taste and girly-man rep,” Slate wrote of the drink’s demise.
Shields said in 2017 that SpikedSeltzer’s customers skewed female by about 70%. However, in recent years, hard seltzer has taken off with male drinkers. It's now understood as a gender-neutral beverage, if not a bit bro-y. An Insider story investigating “Why American bros suddenly can’t get enough of White Claw” quoted one self-identified bro who said, “If I'm at a party now and someone offers me an IPA or a White Claw, I definitely take a White Claw.”
In part, this is a result of a deliberate, self-aware marketing campaign aimed at millennial men. A sponsored White Claw advertisement by YouTuber Trevor Wallace spawned catchphrases like “Claw me, bro” and “No laws when you’re drinkin’ White Claws.” Marketing experts praised the company for turning its product into a meme, giving generally embarrassed male drinkers a winking loophole, similar to the “Smirnoff Ice'' challenge.
Winning strategies in the spiked seltzer space
White Claw remains on top, controlling 50% of the seltzer market, but competition is bubbling. Boston Beer Co. Inc.'s Truly Hard Seltzer is the runner-up, holding 24.9% market share.
The dominance of the Claw is partially due to its right-place-right-time market entrance. White Claw was early on the scene and the first hard seltzer brand to become a household name by integrating itself into consumers' lives. The company relied on organic social media brand engagement and responded to people’s evolving tastes and habits. Wallace's viral video spoke to the company's existing consumer culture and took it to the next level. The meme led to unsponsored “Claw me, bro” Instagram captions and "ain't no laws" lifestyle aspirations.
White Claw also engages with its consumers' literal tastes, as in tastebuds. Last year, the company tapped its online followers and introduced three new flavors based on 70,000 survey responses. Another benefit the company had was in predicting an increasingly health-conscious audience. According to a 2019 Kerry study, 65% of consumers seek functional benefits from their food and beverages.
Hard seltzer has risen to glory on the back of wellness culture, along with the dwindling influence of beer. The low-calorie, low-carb, low-alcohol drink is gluten-free and Keto-compatible with just 100 calories and 2 grams of sugar. Beyond its recipe, hard seltzer boasts a crisp lightness, the perfect “guilt-free” drink that you can throw back without getting too drunk or consuming a muffin's worth of calories in a can. It’s no wonder that wellness It Drink kombucha is the latest to get “spiked.”
"Unlike other innovations, seltzer was built off-premise and not only aligns with today’s health and wellness desires, but its consumption spans across demographics, income, and regions," Credit Suisse analyst Kaumil Gajrawala wrote last January. "Seltzer is also less seasonal than initially thought, legitimizing it as a proper strategy."
Big beer goes after the anti-beer
All this suggests Millennial and Gen Z consumers aren’t as interested in beer as previous generations. U.S. beer volumes were down 1.6% for 2019 according to a report released by the Brewers Association. A recent report predicted another 8% drop due to COVID.
In 2019, hard seltzer sales grew 226.4%, while total beer sales grew less than 1%, according to Nielsen data. This year, seltzer sales accounted for 8.3% of all beer sales for the week ending on January 10.
Beer brands know they’re lagging behind consumer desires, and they've determined they can't beat the hard seltzer craze— so they're joining in on the fun.
Coors announced last December it was increasing production capacity for hard seltzers by more than 400%. It launched Vizzy Hard Seltzer in the U.S. last year, adding to the company’s existing seltzer roster which includes Coors Seltzer and Blue Moon LightSky. The company is also the exclusive U.S. manufacturer, marketer, and distributor of Coca-Cola's new Topo Chico Hard Seltzer, which will hit shelves next week.
Big Beer’s seltzer moment seems to be paying off so far, for some brands more than others. Last February, Corona launched Corona Hard Seltzer with just one SKU and a $40 million marketing push from parent company Constellation Brands. It finished the year as the #4 hard seltzer brand in the U.S.
Last year, Anheuser-Busch said it will invest $100 million into new seltzer innovations in 2021. The beer giant introduced Michelob Ultra Organic Seltzer, the first USDA certified organic hard seltzer, just a few months ago. Bud Light’s hard seltzer hit shelves in 2020, following the 2019 debut of fellow Anheuser-Busch brand Natural Light Hard Seltzer.
Bud Light Seltzer helped drive AB InBev’s 2020 market share growth to 14% from 9% in 2019. The beverage also helped increase the parent company’s overall U.S. market share over the summer for the first time since the end of 2012. Bud Light Seltzer holds 9.7% of hard seltzer market share as of January, putting it right behind the top two players— White Claw and Truly.
Bud Light Seltzer is speeding ahead, but the market's not slowing down
Anheuser-Busch InBev was a little late to the hard seltzer game, but the company believes it can scale quickly by focusing on innovation, variety, marketing, and optimizing Bud Light Seltzer— taking a few pages from the market leader’s book.
White Claw’s array of flavors and variety packs are crucial to its success with customers. According to VP of Nielsen’s Beverage Alcohol Practice Area Danelle Kosmal, variety packs play an important role for hard seltzers across the board. They're the top-selling flavor packs for almost every brand and account for 63% of total hard seltzer sales. Bud Light Seltzer is diversifying accordingly.
After introducing Bud Light Seltzer at the start of 2020, the company launched classic cocktail style Social Club, a higher alcohol “Platinum” seltzer, and a seasonal “Ugly Sweater” Bud Light Seltzer line. At the beginning of 2021, Bud Light continued to expand its seltzer offerings with hard seltzer lemonades. (The lemonade-seltzer crossover is ripe for replication. Truly, a leader in the hard seltzer space, released its Hard Seltzer Lemonade in January 2020. Meanwhile, Mike's Hard Lemonade Seltzer launched earlier this month.)
Bud Light Seltzer also revamped its digital marketing with creator sponsorships and vouchers for people to try drinks for free, mimicking White Claw’s organic social media advertising strategy and letting consumers drive brand awareness.
As people across the U.S. start to emerge from COVID cocoons and winter hibernation, the brands are ready to meet us — in the backyard, at the park, the beach, the bar, on Instagram — with a hard seltzer in hand. Whether White Claw will own the post-vaccine summer — or get dethroned by Bud Light Seltzer — will depend on its ability to rise above the competition as the weather heats up and Americans crave cold ones.