Boston Beer (SAM) is Key Contender in the Hard Seltzer Market
The Boston Beer Company Inc. SAM has been catching up with the latest trend of shifting to non- or low-alcoholic beer category owing to a change in consumer preference. Consumers are increasingly switching to drinks with low or no alcohol content due to increased health awareness. Consequently, beverage companies are looking to expand in the near-beer categories with healthy ingredients and different flavors to attract consumers.
Benefiting from this trend, there has been a marked boom in the hard seltzer category since 2019, which further gained momentum on increased at-home consumption occasions during the pandemic. According to Grand View Research Inc., the global hard seltzer market size was $4.36 billion in 2019 and is expected to reach $4.51 billion in 2020. Moreover, the hard seltzer market is projected to reach $14.5 billion by 2027, witnessing a CAGR of 16.2%.
The hard seltzer beverage industry is dominated by the privately-held White Claw and Boston Beer’s Truly brand. Truly and White Claw together held nearly 80% of the hard seltzer market at the end of 2019, per sources.
Boston Beer has been particularly making a fortune in recent times through growth in the hard seltzer, cider, tea and kombucha categories while it significantly lost share of its Samuel Adams lager beer in recent years.
The company has been witnessing robust trends for the Truly and Twisted Tea brands, which aided depletions in second-quarter 2020. Growth at Truly was led by the Truly Hard Lemonade, which is witnessing solid trends with the upside likely to stay. The company expects to continue investing heavily in the Truly brand to enhance the brand’s position in the hard seltzer category as competition stiffens. It is optimistic about the new Truly advertising campaign that showcases colors, variety and joy to hard seltzer drinkers through four different commercials.
Management foresees increased brand investments in the second half of 2020 compared to the first half and expects accelerated distribution and volume growth for the Truly, Twisted Tea and Dogfish Head brands.
Product innovation and more frequent brand launches played a crucial role in the growing penetration of hard seltzer. Further, hard seltzers are expected to continue gaining popularity from low-alcohol content, which is preferred by millennials in developed economies like the United States, Canada and Australia.
Among the beverage behemoths, The Coca-Cola Company KO is the latest to join the race to gain a firm footing in the fast-growing hard seltzer market with the recent launch of Topo Chico Hard Seltzer in the Latin America countries including Mexico and Brazil during late September. The Topo Chico Hard Seltzer is launched in three gluten-free flavors including Tangy Lemon Lime, Strawberry Guava and Pineapple Twist in sleek aluminum cans. Moreover, the company plans to roll out the brand in the United States in the first half of 2021.
Another company upping the hard seltzer game is Molson Coors Beverage Company TAP with the launch of Vizzy and Coors Seltzer brands, earlier this year. Vizzy contains the anti-oxidant vitamin C from acerola superfruit, which differentiates its quality from other sparkling seltzers. The Vizzy brand launched in April 2020 has been reckoned by Nielsen as one of the top-10 growth brands since Aug 8. Moreover, the company rolled out the Coors Seltzer brand at the end of August, which has been exceeding expectations ever since. It predicts the same to become a popular beer brand in the segment.
Moreover, the company launched HUZZAH, a pumped-up, full-flavored seltzer with probiotics and low calories in Southern California during September. It also recently signed an exclusive partnership with Coca-Cola to manufacture, market and distribute its Topo Chico hard seltzer in the United States.
Bud Light Seltzer from Anheuser-Busch InBev BUD, unveiled earlier this year, is another prime stakeholder garnering a decent market share in the hard seltzer category. Additionally, the company has other spiked seltzer brands like Bon & Viv in its kitty, which recorded robust sales in 2019.
Overall, the hard seltzer market has been a lucrative investment avenue for companies brewing beer and other spirits in the past few years. Apart from the aforementioned names, the industry houses several small-sized companies that are looking up to gain traction from the momentum in the hard seltzer category.
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