Mike’s Hard Lemonade Seltzer Hits Retail; RBC Believes Hard Seltzer Could be 17-20% of Beer by 2025

The lemonade seltzer competition is picking up, as White Claw maker Mark Anthony Brands announced today that its Mike’s Hard Lemonade Seltzer brand extension is now hitting retail shelves nationwide.

The launch of a Mike’s branded lemonade seltzer comes a year after Boston Beer Company’s successful launch Truly Hard Seltzer lemonade brand, which was the top selling SKU for the brand in 2020, posting $269 million in off-premise sales in multi-outlet and convenience stores tracked by market research firm IRI.

The lemonade seltzer play also comes as the largest beer manufacturers either have or will launch their own lemonade line extensions, including Anheuser-Busch Bud Light Seltzer Lemonade, Molson Coors’ Vizzy Lemonade and Constellation Brands’ Corona Limonada. The hard seltzer field is growing even more crowded as craft brewers such as New Belgium (Fruit Smash) and non-alc brands Topo Chico (with Molson Coors), AriZona (with Heineken USA), Monster and Bang prepare their own entries into the segment.

Mike’s Hard Lemonade Seltzer will roll out in variety 12-packs of four flavors: lemon, strawberry, mango, and pineapple. The product attributes largely mirror White Claw at 5% ABV, 100 calories, 1 gram of sugar and gluten free. According to a press release, Mike’s Hard Lemonade Seltzer is made with “a proprietary blend of three specialty lemon varietals” and uses a cold-pressed method to extract more lemon flavor.

“We are obsessed with crafting the best-tasting hard lemonades, which we have perfected over the last 21 years,” John Shea, Mark Anthony Brands CMO, said in the release. “Other companies do other things, Mike’s makes lemonade. Mike’s has been the No. 1 hard lemonade for over two decades for delivering the superior taste, and now we are thrilled to introduce Mike’s Hard Lemonade Seltzer, the best tasting hard lemonade seltzer.”

In 2020, Mark Anthony Brands grew to be the fourth best selling beer category vendor, with portfolio-wide off-premise sales up 81.1%, to nearly $2.8 billion, according to IRI.

The White Claw hard seltzer brand family was the No. 7 best-selling beer brand family, increasing off-premise sales 130.6%, to $1.97 billion, while the Mike’s family of FMBs was the 24th best selling, increasing sales 16.2%, to nearly $316 million, IRI reported.

Mark Anthony’s portfolio-wide off-premise dollar sales increased 34% year-to-date through February 6, with sales of Mike’s offerings up 19.2% and White Claw sales up 38.3% year-to-date, according to NielsenIQ. Mike’s and White Claw sales were up 17.5% and 34.9%, respectively, over the last four weeks, the firm added.

Meanwhile, Truly, the second best-selling hard seltzer brand, has continued its triple-digit ascent, increasing off-premise dollar sales 132.4% year-to-date (and 131.4% over the last four weeks), according to NielsenIQ. Boston Beer’s other big FMB play, Twisted Tea, is up 50.4% year-to-date (49.4% over the last four weeks), NielsenIQ shared.

Overall, year-to-date hard seltzer sales are up 78.6% in off-premise retailers tracked by NielsenIQ. Sales have slowed slightly over the last four weeks, up 73.4%.

Several analysts have noted the deceleration of hard seltzer sales since last summer. In a recent study, Nik Modi, analyst for financial firm RBC Capital, found that the segment “is far from its peak and could grow another 150% by 2025, reaching the same size as beer imports today.”

RBC attributed the recent slowdown to several factors:

Fewer drinking occasions due to the pandemic, with regions with the strictest restrictions lining up with bigger hard seltzer markets.

Increased seasonality, as so-called “light buyers,” those who aren’t heavy hard seltzer drinkers, saying they buy more hard seltzer during the summer. Those drinkers are also much more likely to switch to wine or spirits during the holiday season.

“We also note that hard seltzer lemonades (which have grown to be an important part of the overall category) tends to be more seasonal than base hard seltzer offerings,”

Out of stocks and the aluminum shortage limiting growth last year. RBC expects these headwinds to improve as more capacity goes online, although it won’t happen quickly.

“While we expect ‘slower’ trends to persist during the winter months, we expect a strong re-acceleration as we move into spring and summer,” Modi wrote. “We expect the overall hard seltzer category to grow at least 70% in 2021 — with potential upside if vaccinations happen by the winter of 2021.”

Additionally, Modi reported that retailers are devoting at least 50% more shelf space to hard seltzers this year. “We would expect further shelf gains heading into 2022,” he added.

As for hard seltzer’s ceiling, Modi wrote that the segment could be as big as imports by 2025, which indicates 150% growth from expected 2020 levels. Modi’s reasons for optimism include household penetration being a fraction of other alcoholic beverages and the segment being “underpenetrated in terms of actual shelf facings (not ACV).”

“In 2021, if hard seltzer were to grow points of distribution 50% and velocity 25%, the category can grow nearly 90%,” Modi wrote. “We believe the category could eventually be 17% to 20% of beer by 2025 assuming the category grows in the range of 70% to 100% this year.”