Aug 11, 2020 - Economy

The hard seltzer wars are heating up

An illustration of a hard seltzer bottle

Illustration: Aïda Amer/Axios

Competition in the hard seltzer market is heating up in the closing weeks of summer, as big companies like Constellation Brands, AB InBev and Molson Coors have entered the market and Coca-Cola is poised to join the fray in 2021.

Why it matters: The coronavirus pandemic has increased alcohol sales overall and hard seltzers are exploding in popularity and look to have staying power, boasting record high sales in recent weeks.

What's happening: At the beginning of 2018, 10 hard seltzer brands were on the market, analysts at market research firm Nielsen write.

  • "That number rose to 26 brands by the beginning of 2019, and more than 65 brands are now fighting for consumers’ attention and purchase."

The state of play: Coors' Vizzy, Constellation's Corona Seltzer and AB inBev's Bud Light Seltzer have begun taking increasing share from market leaders White Claw (845 basis points of volume share year over year) and Truly (280 basis points).

  • However, investors are betting that even as Big Bev moves in, the hard seltzer market is primed to be a fast-growing pie.
  • Coca-Cola announced it is releasing Topo Chico Hard Seltzer in Latin America later this year before unrolling it in the United States.

By the numbers: During the four weeks ending July 11, the hard seltzer category recorded all-time high retail sales of $413 million, Bank of America Global Research notes.

  • At its summer peak last year, hard seltzer accounted for 5.4% of beer category dollars, according to Nielsen.
  • In the four weeks ending July 11, hard seltzers captured 10.1% of total beer/flavored malt beverage/cider retail sales.
  • Previously thought of as a summer-only alcoholic beverage, Nielsen reports that in colder months, hard seltzer still held 5% of the beer retail sales category.
  • Hard seltzer dollar sales were already up nearly 500% from 2018 to 2019.

The intrigue: Hard seltzer has "proven to be the most resilient segment within the entire alcoholic beverage industry, which has felt the sting of sudden bar, restaurant and on-premise tasting room closings amid the COVID-19 pandemic," per Nielsen.

  • Since the week ending March 21, each week’s off-premise U.S. dollar sales of hard seltzer has exceeded the week of July 4, 2019, which was previously the highest individual week of sales.
  • The week ending June 13, 2020, represented the fourth consecutive week during which hard seltzer drove more than $100 million in retail off-premise dollar sales, and the 10th consecutive week during which annual retail hard seltzer dollar sales increased by at least $50 million.
Data: Nielsen; Chart: Axios Visuals
Data: Nielsen; Chart: Axios Visuals

Between the lines: Social media is helping hard seltzers' prospects, with this year's July 4 holiday driving new sales records.

  • BofA notes that the number of Instagram posts mentioning hard seltzer increased 16% in July from the prior month and were 39% higher in comparison to July 2019, indicating additional share gains this summer.
  • "There is a solid relationship between the volume of Instagram posts mentioning hard seltzer and total retail sales of the category as consumers' Instagram posts are usually linked to direct consumption."
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