Nielsen: Off-Premise Beer Sales Flatten in 2018 as Hard Seltzer Sales Near $500 Million

Sales of beer, cider and flavored malt beverages topped $38.2 billion in 2018, according to market research firm Nielsen, which tracks category-wide sales at major off-premise retailers.

For the 52-week period ending December 28, 2018, category-wide dollar sales grew just 0.7 percent, according to the retail data provider. Sales slowed in the back half of the year, however, as sales dipped 0.1 percent during the final four-week period of 2018.

According to Nielsen, off-premise dollar sales of beer were flat (-0.2 percent), eclipsing $34.6 billion.

Meanwhile, craft beer dollar sales were also relatively flat (-0.7 percent), to more than $4.9 billion, while volume sales declined 1.4 percent. Craft dollar sales declined over the last 26 weeks (-1.8 percent), 13 weeks (-2.2 percent) and four weeks (-4 percent) of the year.

Caitlyn Battaglia, a manager within Nielsen’s Beverage Alcohol Practice Area, told Brewbound that the growth of craft over the last five years makes for difficult comps. She added that craft brewers are also dealing with increased competition, as the number of breweries has swelled to more than 7,000, and changing consumer tastes as offerings such as hard seltzers and kombucha have emerged and captured market share.

Although 2018 beer sales were flat, Battaglia said there were “pockets of growth” in domestic super premiums (+14.3 percent), FMBs (+10.2 percent), cider (+8.4 percent) and imports (+5.8 percent).

Within FMBs, hard seltzer drove much of the growth and now makes up 1.3 percent of total beer category dollar share, Nielsen reported.

Hard seltzer dollar sales grew about 169 percent, to nearly $487.8 million, while volumes increased 181 percent, Nielsen reported.

Hard seltzer dollar sales grew triple-digits throughout 2018 — 26 weeks (+175.5 percent), 13 weeks (+201.4 percent) and four weeks (+217.9 percent). However, Battaglia said the bulk of sales still occurred between Memorial Day and Labor Day.

“It’s very summer skewed,” she said, adding that the July 4 holiday marked the peak of sales, similar to other beer category segments.

Despite its seasonality, the hard seltzer segment is continuing to develop as new entrants launch products, Battaglia said. Earlier this month, Oskar Blues began shipping its Wild Basin Boozy Sparkling Water brand in Colorado and North Carolina with plans for a nationwide launch in early 2019. Oskar Blues joined a field that includes craft breweries such as Wachusett (Nauti Seltzer), Two Beers (Sound Hard Seltzer), M.I.A Beer Company (HRD WTR), NoDa Brewing (Brizo), Platform Beer Co., Braxton Brewing (Vive) as well as products from large alcohol companies such as Mark Anthony Brands (White Claw), Boston Beer Company (Truly Spiked & Sparkling), Anheuser-Busch (Bon & Viv Spiked Seltzer), MillerCoors (Henry’s Hard Sparkling Water), Constellation Brands (Svedka Spiked Premium Seltzer) and Diageo (Smirnoff Hard Sparkling), among others.

Meanwhile, hard seltzers are on the verge of receiving its largest captive audience, as A-B will use one of its Super Bowl ad spots to promote the Bon & Viv brand.

Hard seltzers were also a popular topic during Beer Business Daily’s annual Beer Summit, held in San Diego.

During a discussion Sunday afternoon, Boston Beer Company founder Jim Koch said his company would double production of the Truly Spiked & Sparkling brand in 2019. He added that the company has already begun filling distributor warehouses with product in advance of the summer selling season.

Additionally, Koch said more hard seltzer could have been sold had there not been a shortage of slim cans that he blamed on Diet Coke transitioning to the format.

Still, Koch said there’s an opportunity to grow the hard seltzer segment at bars and restaurants. Those comments were echoed by Sanjiv Gajiwala, senior vice president of marketing for Mark Anthony Brands’ Mike’s Hard Lemonade and White Claw offerings.

Gajiwala said hard seltzer’s opportunities include increasing shelf space as well as days of supply with retailers and gaining shelf placements in convenience stores.

For 2019, both Truly and White Claw will introduce similar innovations — called Truly Pure and White Claw Pure, respectively — aimed at attracting on-premise “vodka soda” drinkers.

Koch said Boston Beer ran consumer taste tests of Truly Pure against Grey Goose and soda until the hard seltzer was the preferred choice.

However, in a separate presentation, Ben Weiss, who built Bai Antioxidant Beverages and sold it to the Dr. Pepper Snapple Group for $1.7 billion in 2016 and has launched the Crook & Marker “spiked and sparkling” alcoholic beverage, said consumers aren’t choosing seltzer as much as they are steering away from sugar.

“They are running from sugar, and seltzer is a safe haven,” he said. “It’s a convenient stop on their journey back to flavor.”

Weiss said Crook & Marker, which is not being marketed as a “hard seltzer,” is a more flavorful offering compared to seltzer brands currently on the market.

“Allow us to lead this consumer back to beer,” he said. “Allow us to disrupt this industry. There are 472 million cases at risk. We want those cases back near beer.”

However, Wachusett Brewing president Christian McMahan told Brewbound he believes hard seltzer has “as much runway in front of it as there is behind it” due to the category being “underdeveloped nationally” with consumers and retailers beginning to allocate more shelf space to the products. He added that seltzer lines up nicely with many of the macro trends within the beverage industry, such as the shift to lower ABV, “better-for-your” functional beverages.

“This is not like hard soda where sugary, non-sessionable and once you found out the calories, people would try it but wouldn’t adopt it,” he said.

For 2019, Nauti will transition to slim cans, shift from 6-packs to 12-packs, use a gluten-free recipe, and add new flavors, McMahan said. A re-launch is slated for March.

Nauti is also launching “Extra Nauti,” an 8 percent ABV hard seltzer in a 19.2 oz. single-serve can, targeted for convenience stores with an early April launch date.

“We’re going to test it out and see how it performs thinking that there are still fringes of the category that there are a lot of growth and opportunity for us,” he said.

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