Can hard seltzers dominate outside the US?

The meteoric rise of hard seltzers, or hard sparkling water, in the US has been enabled by a confluence of trends – including consumer demand for convenience, refreshing flavours and ‘better for you’ products.

Usually made from a base of malt alcohol that is blended with carbonated water and fruit flavours then bottled at 4-5% ABV, hard seltzers appeal to beer, wine and spirits drinkers. Brands can be perceived as ‘healthier’ alcoholic beverage alternatives, offering transparency with regards to ABV, calories, sugar and carbs. White Claw and Truly dominate the US market, while a number of players from other categories have entered the fray, including Bud Light and Barefoot.

Crucially, the category continues to benefit from its broad consumer appeal that spans all demographics. Success has also expanded beyond the off-trade and into bars, with bartenders seeing increased requests for hard seltzers and a willingness from customers to try new flavours.

According to Adam Rogers, IWSR’s research director for North America, unlike other sub-categories of the RTD segment, hard seltzers have the potential for longevity. “This is primarily due to the category being seen as a healthier alternative to the incumbent beverage alcohol brands in the market,” he says. “Innovation is also keeping consumers engaged through the release of new formulations, new flavours and higher-quality offerings.”

The category has a strong opportunity to premiumise and products have already started to come to market, says Rogers. “In addition, trade-up alternatives could come through hard seltzers with additional benefits such as organic alcohol, added electrolytes and real fruit juice, as well as other value-added attributes which benefit wellbeing.”

The positive momentum has led the IWSR to predict that while the sharp growth spike in hard seltzer volume sales will level out, there will still be sustained growth in the category over the coming years. Furthermore, since the trends that are boosting the popularity of hard seltzers are not unique to the US, international expansion is on the cards.

There are signs that there could be growth opportunities in markets such as Mexico, Australia and New Zealand, which have been fertile ground for the Ready-To-Drink category in the past. In addition, the taxation structure in Australia means there could be equal opportunity for hard seltzers alongside other spirits.

“The perception of health benefits may work well for US consumers, but other markets could be more interested in exciting flavour profiles or the convenience factor that hard seltzers offer, for example.”

Even with these possibilities for global expansion, however, there are considerations that brands need to be aware of.

Hard seltzers’ alignment with the ‘better for you’ movement could be called into question. There is evidence that some consumers may add extra alcohol to the beverage, meaning it is not always being treated as an intrinsically ‘healthy’ product by the consumer. There is also a question on whether the health perception will be unravelled once ingredient lists start to be published – in the EU, alcohol drinks producers have pledged to publish all ingredient and nutritional information relating to their brands by 2022. The industry needs to be careful that the bad press Alcopops received in the 90s does not repeat itself.

When it comes to regulating alcoholic drinks, other nations have much stricter marketing codes than the US. In the UK for example, the Advertising Standards Authority stipulates that an alcoholic beverage can give “information about product contents”, but cannot “make any health, fitness or weight-control claims”. Therefore, a number of high-profile hard seltzer adverts in the US that reference sports and fitness may be problematic in the UK. Much of course can happen once the UK is no longer governed by EU legislation.

Brands will also need to tailor marketing messaging for target markets. “Using the correct value propositions to appeal to relevant consumer groups will be important,” advises Rogers. “The perception of health benefits may work well for US consumers, but other markets could be more interested in exciting flavour profiles or the convenience factor that hard seltzers offer, for example.”

While it’s clear that there could be opportunities for diversification and international expansion, the hard seltzer category may need to evolve if it is to replicate its US success in new markets.

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IWSR hard seltzers video: The rise of hard seltzers

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