Hard seltzer in AustraliaBusiness

What’s next for seltzer in Australia

Alcoholic seltzer celebrates its second anniversary in the local market next month with huge growth and a dizzying array of new releases. Sales of seltzer in Australia have more than doubled in the past 12 months and experts are predicting it’s to be a huge summer for the category.

“Many anticipated last year to be the summer of seltzer in Australia, but we believe this summer will be the real summer of seltzers and are already starting to see the upward trends since moving into spring,” said Endeavour Group’s RTD Category Manager Lance Friedman. 

“Many customers have tried different brands and flavours of seltzers and fallen in love with them. In the coming months, we expect seltzers to be cemented as the official drink of the Australian summer.”

Lion was the first major drinks company to launch an alcoholic seltzer into the Australian market, releasing Quincy on November 1, 2019. However, Quincy battled a lack of awareness in the market about what exactly is an alcoholic seltzer was. While “seltzer” is a well-known term in the US, it was new to Aussie consumers.

But we’ve caught on fast … and Quincy has been quietly retired by Lion following the brewer scoring the local distribution deal for White Claw last year. Twelve months, five flavours and 7.8 million cans later, White Claw is Australia’s No.1 selling hard seltzer. It snared a 30.9% volume share of the hard seltzer market during the last quarter.

The pandemic has accelerated the growth of hard seltzer globally over the past 18 months, not to mention the brands on shelf. All the major drinks companies want a piece of the action – in recent weeks Somersby and Coca-Cola have both entered the market for the first time.

“Maybe you don’t make yourself a Manhattan at home, but it’s your favourite drink at the bar,” Chris Lombardo, senior analyst at IBISWorld, told Yahoo Finance. “At home, maybe you want a low calorie, easy beverage, and you go with a hard seltzer.”

Danelle Kosmal, vice president of the alcoholic beverage practice for NielsenIQ, added that new growth in the category will come from seltzer infiltrating the on-premise.

“What’s unique about hard seltzer is typically in alcohol you see a trend start in bars and restaurants and then it transfers to off premise,” she said. “Seltzer is one of the few times we see the opposite trend, started off premise and now it’s transitioning to on premise.”

The keys to catching attention in a crowded market

Denomination CEO Rowena Curlewis points to the need for more education about seltzer, plus further innovation in packaging, as the category has mainly been taking its design cues from market leader White Claw.

Curlewis notes at FMCG CEO: “Outside of America, there is a general lack of understanding of the term ‘seltzer’, for example. Not having an immediate understanding of the sparkling nature of product by way of the ‘seltzer’ term, well understood by US consumers, means the sparkling messaging needs to be upweighted if the entrant is wanting to tap into the refreshment codes of the category.

“There’s also confusion as to what the product category actually is. Is it a brewed beverage, or alcoholic sparkling water? Vodka-infused, wine-based or a rice brew? If it’s a vodka, isn’t it then another RTD, albeit in a lower sugar/carb form? And does the consumer even care? Each brand will need to work out the answer to this last question to fit their brand’s persona and positioning.

“There’s plenty of opportunity for hard seltzer brands to tap into the desires of broader consumer segments. The challenge now is that new entrants are going to have to work out how to disrupt the exploding hard seltzer category with something unique, differentiated, and yet that plays to the same trends that have made those initial big brands so massive.”

The founders of Aussie brand FELLR agree. Seasoned drinks marketers Andy Skora and Will Morgan (above) launched FELLR out of their garages on the beaches of Sydney in July 2020 and the brand is predicting growth of 500% in FY2022.

“From the outset we knew it would be an extremely cluttered market, with many suppliers looking to the US and their successful products for inspiration,” they told Drinks Digest. “So, we decided to steer well clear of this, and it’s worked in our favour. It really is a sea of the same out there, everyone’s got a sleek can, claiming low calories and very low sugar, so there’s really no unique point of difference between them. For us from the outset we wanted to create a unique lifestyle brand that was born from, and inspired by, the sunburnt country we live in, Australia. Making sure we prioritised flavour too was hugely important. We didn’t spare any expense on getting the best flavours and creating a smooth a crisp base that was fresh and delicious.” 

Improving customer experience

Shopper Intelligence ANZ has interviewed Australian shoppers to see how they feel about the category and what they’d like to see improved. According to Client Services Director David Shukri there are three key factors holding seltzer back.

1. Availability – it scores bottom for seltzer shoppers out of 17 measures and also scores the worst versus the rest of the RTD department. “However vibrant and exciting the lifestyle brand is, if it isn’t on shelf …well, you know the rest,” Shukri said.

2. Highlight value – seltzer shoppers say they find it hard to work out what’s good value and what isn’t. Price scores well, but perceptions of fixed low price are poor, indicating retailers and suppliers should do more to convey a consistent message on price and value while familiarity with the category is still relatively low.

3. More range – seltzer shoppers are less satisfied than other RTD shoppers with the range that’s available and their number one desired improvement is more new products. “Sorry Mr Retailer, I know you have a lot of meeting requests from budding seltzer brands already, but I speak only the truth from your shoppers,” Shukri concluded.

As for what’s next in seltzer innovation, the category is experimenting with new hybrid seltzer concoctions along the lines of “hard lemonade seltzer, hard tea seltzer, agave-based seltzers and tequila-inspired [drinks],” said Kosmal of NielsenIQ.

“We’ll continue to see those. The blurring of the lines continues to increase to the point where most consumers don’t know or care what the alcohol base is — they’re going after what tastes the best.”

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