Are hard seltzer sales going flat?

There are concerns that hard seltzer sales are losing momentum after being hailed as the new growth driver in alcohol.

Boston Beer, which produces the second biggest selling seltzer in the US – Truly Hard Seltzer – has revealed its sales growth has fallen. The company said it increased production to meet anticipated summer demand, which failed to meet expectations.

Following the release of the brewer’s second-quarter earnings last week, Boston Beers attributed the drop in sales to the lifting of COVID restrictions and the reopening of the on-trade, which had led to less at-home alcohol consumption.

Boston Beer founder Jim Koch also said there were so many new brands on shelf that the category was becoming too confusing for consumers.

“The problem is everything becomes the same ….  And I think a lot of those brands will be gone,” he said.

According to Nielsen data, Truly and market leader White Claw account for about 75% of the hard-seltzer market, with the Truly brand taking share from White Claw over the past 12 months.

Nielsen said hard seltzer sales were up more than 51% for the 52 weeks ending July 10, 2021, but in the final 12 weeks of that period sales were only up 7.8%. 

Molson Coors, which has launched three hard seltzer brands since March 2020, also recently announced it will discontinue its Coors-branded seltzer.

“I think we’ve learned over the last year that beer-branded seltzers don’t tend to perform as well,” Molson Chief Communications Officer Adam Collins told Bloomberg.

However, the company still sees hard seltzer sales as fast-growing, and plans to focus on its Vizzy and Topo Chico brands – the later of which it produces for Coca-Cola Company in the US.

Coca-Cola sounds note of caution

The Coca-Cola Company released its Q2 2021 results last week, with CEO James Quincey discussing the business’ late entry to the hard seltzer category with Top Chico, which is now available in 17 markets worldwide and on track to be in 28 markets by the end of the year.

While Coca-Cola Amatil – now Coca-Cola Europacific Partners – has been successfully involved in the alcohol category for many years, it’s a relatively new market for Coca-Cola globally.

“Launching a global brand in markets where the categories are at different stages of development comes with many learning and our local knowledge allows us to adapt with speed-to-win or in some cases develop this new category,” Quincey said.

“From strong performance in Europe where available, to top two position in Mexico, to the US where velocity is robust and the products has enjoyed positive consumer reaction, we are encouraged by recent trends and are gaining valuable insights along the way.

However, he sounded a note of caution regarding further exploration in alcohol.

“We are still very much in the learning phase,” he said. “It’s not a category we are familiar with, particularly with the alcohol. It’s got a number of important characteristics and regulatory characteristics and business characteristics that we need to learn about.

“So we have not got to a stage of concluding anything more strategic or coming to the point of view that there is a bigger vision for us out there in the flavoured alcoholic beverage space. We want to learn and understand more before we decide anything one direction or the other.

“Retail customers, we understand they are very bullish, lots of display activity and activity. So we are looking to see that continue to expand. Of course, we are conscious that the overall hard seltzer category has come down in terms of its overall growth rates in the US. That’s not ultimately that big of a surprise to us, because it is a category that has been predominantly an at-home channel category, much less bars and restaurants category.

“And so as people have gone back out, clearly, some of those occasions have moved from at-home to away-from-home. So it’s not too surprising that some of the strong tailwinds the category got in the lockdowns have lessened.

But we still think it’s very interesting. It’s got some long-term potential in the US It’s very on-trend for a lot of consumers. And so we are continuing to look at that and push on that and invest to see where we can go.”

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