Leveraging the seltzer opportunity
There is no denying that hard seltzers are making a lot of noise in the liquor industry, writes Delphine Lambert, Liquor Senior Associate Consultant, IRI.
Whether we refer to it as ‘hard seltzer’, ‘hard seltzers’, ‘seltzer’, ‘aqua spritz’ or ‘spiked seltzer’, this RTD-like alcoholic and flavoured sparkling water is making a lot of noise in the liquor industry at the moment. After becoming the leading growth segment in the US, hard seltzers are now arriving (en masse) to the UK and Australia.
Seltzers now encompass a broad range of production methods. Some are sparkling water blended with vodka; others are brewed (the alcohol comes from fermented grains like rice), while others still are produced from fermented cane sugar.
The common attribute is the ubiquity of ‘better-for-you’ claims: low or no sugar and artificial sweeteners or preservatives, gluten free, low or zero calories and carbohydrates, as well as being infused with natural flavours. Like canned wine, gin and tonic and vodka soda RTDs, seltzers deliver versatile convenience. They have a clean label, refreshing flavours and are mostly available in cans.
In the US, hard seltzers exist within in the beer category, sitting in the flavoured malt beverages (FMB) segment. In 2019, nine of the top 15 new beer brands in America derived from the FMB segment. Most were seltzers.
The largest and fastest growing hard seltzers brand in the US, White Claw, saw its variety pack become the 12th largest beer sub-brand in 2019 (MAT to 05/01/2020). The variety pack recorded 302.3 per cent growth during this time period and now ranks alongside beer behemoths Bud Light, Michelob Ultra Light, Modelo Especial and Corona Extra to name a few. Truly is another seltzer success story in America, with its NPD sub-brand Tropical Mix Pack ranking number one in 2019 (MAT to 05/01/2020) and selling over US$69 million. The variety/mixed pack format has been the top growth driver for both brands.
From an Australian perspective, the seltzers market is still very much in a nascent phase. Lion was the first mover with Quincy in October last year, generating approximately $1.6m in MAT to 03/05/20. Coles Liquor has launched its private label range Somma and some other brands like Actual, Hint and Good Tides have entered the market as well. However, the biggest local launch will almost certainly be White Claw. Under a deal with Mark Anthony Brands International, Lion will import, market and exclusively distribute White Claw in Australia from October this year. White Claw was also recently launched in the UK, with the Natural Lime, Raspberry and Black Cherry flavours selling for £2.50 per 330ml can in some of the major retailers.
Hard seltzers are not a fad in the US with longitudinal sales data clearly highlighting the enduring appeal of the format compared to other fads like root beer. But will the Australian liquor industry capitalise on this huge trend and give its own definition to this booming category?
This article first appeared in the July issue of National Liquor News, which can be read online here.
IRI Market Advantage, Total US Multi Outlet + Convenience, 52 Weeks Ending 01-05-20
IRI Market Edge data, AU Liquor Weighted, data until w.e. 03/05/20