Hard Seltzer Volume Projected to Triple By 2023, IWSR Shares at Beer Industry Summit

Hard seltzer is not a fad; it’s a category, Brandy Rand, the COO of market research firm IWSR, declared today during Beer Business Daily’s Beer Industry Summit in Palm Beach, Florida.

Rand argued that hard seltzers are meeting consumers’ desire for refreshing, flavorful beverages that are low in calories with little to no sugar. And seltzers are cutting across all demographics and age groups, she said.

In 2019, Rand said, hard seltzer’s share of total beverage alcohol in the U.S. grew to 2.6%, up from a little less than 1% in 2018.

Compare that to beer, which still holds three quarters of the volume share in the U.S., or wine which makes up nearly 11% or spirits at 6.83%.

According to IWSR, hard seltzer volume in the U.S. hit around 82.5 million cases in 2019, and volumes are expected to more than triple, to 281 million cases, by 2023. Rand shared that more than half of U.S. alcohol consumers drink hard seltzer at least once a week, with an average of 2.83 cans per occasion.

Rand sees plenty of growth prospects for hard seltzer due to 90% of hard seltzer sales occurring at off-premise retailers, and less than 1% of those transactions are being made through ecommerce.

According to Sanjiv Gajiwala, senior VP of marketing for Mark Anthony Brands, which produces White Claw and Mike’s Hard Lemonade, consumers are gravitating toward flavor, which he called “critical” to the growth of the beer category. He added that the major CPG suppliers who have embraced flavors are finding success.

Beer is making progress, making up four of the top five beverage alcohol sales growth segments. Hard seltzers are leading the way with 238% growth in dollar sales, followed by Mexican imports (+8.8%), FMBs (+10.3%) and craft IPAs (+14.2%). The only outlier in the top five, whiskey, is growing dollar sales 10% year-over-year.

“Flavored beverages are really driving a lot of growth,” he said.

So where are hard seltzer drinkers coming from? Hard seltzers are sourcing 40% from wine and spirits. Gajiwala added that about 10% are coming from vodka alone. And spirits consumers are open to adding hard seltzers to their shopping baskets, which Gajiwala called an “amazing opportunity.”

Meanwhile, the consumers who are giving up beer for hard seltzers are “trading up” to higher dollar offerings in the $33 per case range, he added.

Gajiwala noted that hard seltzer consumers are distinct from buyers of FMBs. He pointed out that 90% of households that buy FMBs have not purchased hard seltzer. Again, more opportunity for growth.

Seltzer is also no longer a seasonal beverage, fitting occasions throughout the calendar, Gajiwala said.

In 2020, Mark Anthony Brands is expecting White Claw sales to double, possibly triple, its sales, Gajiwala said. Asked if the company is capable of meeting demand, he said the company is confident in its ability to supply the market. The company is investing $385 million to build production facilities in New Jersey and Glendale, Arizona.

And consumers are increasingly gravitating to convenient shopping options. Gajiwala pointed to 52-week data from marketing firm Numerator that showed that four in five households are now shopping in convenient channels. Since 2016, household online purchases have increased nearly 61%, while liquor (+49%), convenience (+18%) and drug store (+2.3%) trips have increased while grocery (-2.7%) and mass market retailer (-0.7%) trips have both declined.

Gajiwala added that 75% of shoppers in convenience channels are seeking healthy options, and two-thirds of convenience shoppers are seeking healthy snacks to eat on the go.

Further reinforcing how big the White Claw brand has become, Whole Foods global senior category merchant for beer and spirits Mary Guiver said White Claw is “our top SKU,” during a separate panel discussion of off-premise retailers.

During Day One of the Beer Industry Summit, Boston Beer Company CEO Dave Burwick said the hard seltzer category could double again in 2020, with several new brands launching, including Bud Light and Corona spinoffs.

Burwick added that Boston Beer’s goal for Truly in 2020 is to close the gap between White Claw and leave a lot of “breathing room” between itself, and the third-best selling brand, which is currently A-B’s Bon and Viv.

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