During the 4-week period ended 11 July, US sales slowed to 4% growth with fewer new customers entering the fray. Shares of Boston Beer Company, which owns the market’s second most popular hard seltzer brand Truly, lost a quarter of their value last Friday after chief executive Dave Burwick said in a statement that the company “overestimated the growth of the hard seltzer category in the second quarter and the demand for Truly, which negatively impacted our volume and earnings for the quarter and our estimates for the remainder of the year.”
The company blamed the flood of new brands for causing “consumer confusion”.
The market slowing is made more notable given the wild popularity brands have enjoyed. In 2019 the category posted year-on-year growth of 320%. According to US NielsenIQ figures for off-trade sales, hard seltzer sales totalled US$4.41 billion in the 52-week period ending on 20 March 2021.
For the time being, however, category leader White Claw seems unaffected. Sales powered by memes and social media increased at a triple-digit annual rate from its 2016 launch to 2020. And the brand is now available in 15 countries.
By positioning itself as a healthier alternative to beer, the brand was able to engage with a new, elusive customer base that has been so difficult for alcohol brands to reach.
“Consumers are seeking ‘better for you’ options to suit their active lifestyles,” says Davin Nugent, chief executive officer at White Claw.
“They have become less interested in beer and sugary drinks, with their associated high calorie and carb content. Taste expectations have also changed with consumers increasingly gravitating towards more refined flavours, rather than sweet, intense tasting products.
“As a result, consumers are expecting more from their drinks and are actively seeking new taste experiences without having to compromise. The brand also comes with no baggage, it is a modern brand that appeals to men and women in equal measure. “
Without baggage, the brand has found a home on social media and amongst the notoriously difficult-to-please gen Z drinkers, with impressive interest.
“The numbers are staggering,” says Nugent. “Last year alone White Claw fans generated over 4 billion impressions, 46 times more social media mentions than competing brands in the US.”
And youth engagement seems to be a strategy that the brand is continuing with a UK launch that includes an exclusivity partnership with the hyper-local 10-minute-groceries app Gorillas.
“UK and Irish consumers have less knowledge about the category, which is why we take our category education role seriously,” says Nugent.
“However, the initial signs are very positive. We lead the category across all the markets we have entered so far, including the UK and Ireland. We believe that universal, global trends and needs drove the US growth and that similar dynamics are at play in the UK and Ireland.”
%%PAGE_BR%%
Beyond the US, UK and Ireland, White Claw is available in 15 markets, including Australia, Canada, Germany, Sweden, and Finland, with market share up for grabs in each.
“With beer as a major source of our volume, the category has great long-term growth potential,” says Nugent. “We believe that hard seltzers will continue to expand into more drinking occasions. One of the immediate growth frontiers will be the on-trade, particularly as venues are opening up after the pandemic.”
This has been the model in the States. Hard seltzer gaining market share from beer. Now in what must be of direct influence from this, the category is becoming increasingly filled with brands launched by brewing giants. Molson Coors has launched Three Fold, Heineken has launched Pure Piraña, Constellation Brands launched Corona Hard Seltzer, and Anheuser-Busch has launched a whole stable of hard seltzer brands. Nugent isn’t fazed.
“We welcome competition, as it signals a healthy, growing category,” he says. “Brand proliferation will die down and that the category will likely coalesce around a few major players. It’s in our interest to ensure that consumers adopt hard seltzers as part of their repertoire and key drinking occasions. Category buzz certainly aids that behaviour shift.”
The category has had its fair share of critics. When Boston Beer Company’s share price dived last Friday, articles appeared online immediately crying that the bubble had burst. But Nugent doesn’t think the detractors should be so hasty.
“This is not a fad,” he says. “Hard seltzer is a new category that better reflects the needs of today’s consumers, this is not going away. We believe the hard seltzer category has the potential to take the equivalent of 20% share of the beer category.”
