Hard seltzers enjoyed considerable success in 2019 with a global market size valued at $4.4 billion and expected to grow at a CAGR, compound annual growth rate, of 16.2% between 2020 and 2027. In the past year, total annual sales of hard seltzer in the US were 82.5m nine-liter cases, which surpass the growth and market share of vodka, and is expected to reach more than 281m cases by 2023.
Factors Driving Popularity
So what is driving this meteoric growth of hard seltzer? The answer lies in the composition of hard seltzers, carbonated water, fruit flavoring, and alcohol. A 12-ounce can contain about 2 grams of carbohydrates and 100 calories compared to 15-30 grams of carbohydrates and 150 calories in a similar beer can. This makes it popular with consumers who want to enjoy a nice buzz while restricting their calorie intake. The use of fermented sugars also makes hard seltzers a drink of choice for those who want a gluten-free alcoholic beverage.
This has allowed hard seltzer brands to market their products as a healthier option due to their low caloric quantity and gluten-free claim. Their naturality gives hard seltzer a guilt-free identity and a functional appeal of convenience and refreshment, especially during the summer, reinforcing its position as a new category of alcoholic beverage. Hard seltzer’s low alcohol makes it the perfect drink for those who want to avoid a hangover. However, some mix the hard seltzers with drinks that have a higher ABV.
Most brands use creative designs on their cans to make them hipper to increase desirability. The Instagram-able and sleek packaging give consumers a reason to post their hard seltzer drinks on social media.
Role of Social Conversation in Hard Seltzer Popularity
Over the past five quarters, there's been significant growth in seltzer drinker related reviews consisting of consumers comparing hard seltzer brands while also discussing their interest in sparkling water and seltzer products. On the other hand, there's been a decrease in alcohol drinker related reviews suggesting that while hard seltzer was initially popular with beer drinkers, it's now drawing in normal seltzer and sparkling water fans. This means that hard seltzer is quickly creating its own category.
Flavor variety preference was one of the biggest conversation drivers amongst consumers. Flavor variety theme climbed from 7.5% in Q2 2019 to 15.4% in Q2 2020, which shows that flavor variety continues to be a crucial differentiating point for consumers.
When consumers sample an original, fruity, and innovative flavor, they excitedly share their discovery online, resulting in more exposure for brands with excellent flavor diversity. Whether or not they agree about the different hard seltzer flavors, the debate on the taste drives more conversation and exposure about the products.
Fruity flavors seem to work well with consumers since they value varied and original flavors, but they want a more natural but wider flavor palate for canned cocktails. They seek a higher quality for cocktails and wine hard seltzers, but most are pleasantly surprised by the taste.
Looking at 6 overlapping flavors between White Claw and Truly, it's evident that White Claw dominates the market. In terms of average sentiment on taste and flavor, Truly has a lower average with many complaints highlighting 'weird aftertaste' and 'artificial flavors.'
While lower ABV beverages have historically been feminized, hard seltzers have been embraced by people of different genders and ages. Brands have positioned hard seltzer as gender diverse drink that anyone can enjoy and are becoming playful pop culture subjects with phrases like "No laws when you're drinking Claws."
While this has boosted White Claw's popularity, we found that White Claw was the most associated with terms like 'stereotypical' and 'basic' out of all brands. This means that White Claw's perceived popularity among trend-conscious millennial women has negatively impacted its appeal to other demographics.
Competitive Analysis
Our data shows that most brands perform well and have 4-star ratings and positive sentiment, with PRESS leading the pack while Cape Line and Bud Light are straggling behind.
Although top brands from mainstream beer manufactures have more name recognition and command a 20% of the market share as of June 2020, brand names not affiliated with beer such as Truly and White Claw command the lion's share of the hard seltzer space. The explosive growth of hard seltzer has grabbed many companies' attention, eager to take a piece of the rapidly expanding pie.
There were only 26 brands at the beginning of 2019, but that number has risen to more than 70 brands. All these brands are fighting for consumers' attention, so to stand out, most brands are now launching new products with new hard offerings and blends focusing on specific attributes such as natural flavors, calories, carbohydrate content, and other 'better-for-you' cues.
Data shows that among all alcohol bases, malt-based hard seltzers were more popular. In the US, malt-based hard seltzer experienced explosive growth in 2019 Q4 with the top 3 brands, White Claw, Truly, and Bon & Viv taking 97.7% of the total review volume.
Out of the three non-malt-based hard seltzer brands, Barefoot (wine based), Cape Line (rum-based), and High Noon (vodka-based), our data shows that Cape Line has the most reviews but also the lowest sentiment. At the start of Q1 2019, Cape Line's online presence began to grow, but in Q4 the same year, its review volume experienced a sharp decrease. During the same period, Truly and White Claw experienced a surge in review volume, which could have negatively impacted Cape Line.
Most of the negative sentiments regarding Cape Line has to do with flavor expectations. Customers expect Cape Line's products to taste the same as the actual cocktail mentioned on the label. So when the product fails to meet their expectations, they give a negative review. This comparison between the product's actual flavor and the standard cocktail is unique to non-malt-based hard seltzer, which is why malt-based seltzers have higher popularity.
Conclusion
The rise of hard seltzers shows a gap in the beverage alcohol market, and a segment of the consumers looking for low-sugar and low-calorie options that are both flavorful and refreshing. Hard seltzers meet this need and the growing consumer demand for convenience.
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