Will hard seltzers resonate with the UK market?

For the third consecutive year, ready-to-drink (RTD) products were the fastest growing beverage alcohol category in 2019 globally, up almost 20% in volume consumption from 2018. Even though RTDs only represent a small slice of beverage alcohol market share, they contributed more than double the value growth to the industry than wine in 2019. RTDs are expected to continue to remain the fastest growing category over the next five years as well.

Much of this interest and growth in the category is fuelled by the innovation and convenience of hard seltzers, or hard sparkling water, in the US. Outside the US, product innovation, affordability, refreshment, convenience and youth appeal have contributed to continued interest in the category as well.

“Hard seltzers enjoyed phenomenal success in the US in 2019, and by the end of the year, were already larger in terms of volume consumption than the entire vodka category in the US,” remarks Brandy Rand, COO Americas for IWSR. “Given its wide appeal, hard seltzers are taking share from all other categories in the US, and are forecast to have a volume CAGR of 20.9% (2019 to 2024). This growth rate follows the 200% increase in volume consumption between 2018 and 2019 alone,” adds Rand.

In the US, hard seltzers resonate with consumers looking for alternatives that are refreshing and flavourful, but also low-calorie and low-sugar. These products also meet consumer demand for convenience, and appeal to people who enjoy popular cocktails like vodka soda and wine spritzers.

Most importantly, in the US, hard seltzers appeal to all genders and ages, stealing share from not only beer, but wine and spirits as well. All major brewers are investing in hard seltzer brand extensions or new brands, and are using vast distribution networks to make these products widely available. Wine and spirits companies are launching seltzer-like products to compete in this growing segment too. Hard seltzers are proving to be a year-round category, demanding retailer shelf space and, prior to Covid-19, were rapidly moving into the on-premise.

Through the Covid-19 pandemic, the IWSR has noted strong demand for the RTD category via the off-premise and through ecommerce sites in markets such as the US. Rand comments, “we are likely to see RTDs, and hard seltzers, continue to fare well through the pandemic. As markets start to lift restrictions, the category’s on-the-go format will likely only fuel the growing demand we saw before physical distancing became the norm for most, especially as we head into summer.”

The US hard seltzer category is dominated by brands White Claw and Truly. And on 1^st June 2020, White Claw entered the UK – the first country outside North America to sell the product.

How will hard seltzers need to adapt to the UK market?

Hard seltzers arrived in the UK in 2019, with launches from AB InBev (Mike’s Hard Sparkling Water), Kopparberg (Balans), local player Bodega Bay, and others.

“We expect hard seltzers to resonate with the UK consumer, tapping into the cues that have contributed to their success in the US, such as the perception of the category as being healthier than alternatives, and transparency with regards to its ABV, calorie, sugar and carb content,” remarks Humphrey Serjeantson, IWSR’s Research Director for Western Europe.

Although hard seltzers tap into key consumer preferences, IWSR does not expect the success of hard seltzers to be replicated exactly as it has in the US.

Brands will likely need to tailor marketing messaging for the UK audience. Hard seltzers’ alignment with the “better for you” movement could be called into question, where the Advertising Standards Authority stipulates that an alcoholic beverage 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. And, of course, the industry needs to be careful that the bad press Alcopops received in the 90s does not repeat itself.

While the perception of health benefits may work well for US consumers, UK consumers, at least initially, may be more attracted to the category by the promise of experiencing something new and trendy that’s made a dent in the US market. So far, consumer awareness of the hard seltzer concept comes primarily from awareness of the category’s success in the US, especially via social media channels. As hard seltzers enter the UK, brand owners may have to do additional work in educating the wider UK public on what hard seltzers actually are. The category itself does not have widespread resonance yet.

Driving momentum for the wider RTD category

In the US, hard seltzers have reignited interest in the overall RTD category, paving the way for a category awakening with canned cocktails, hard kombuchas, and cross-over beverages such as hard teas and coffee.

In the UK, the larger RTD category has already changed dramatically in the past 10-15 years, increasingly becoming more sophisticated, both through product branding as well as through more nuanced and interesting flavour profiles.

As hard seltzers enter the UK market, they are likely to reignite interest in the RTD category too – offering a new experience and helping to premiumise the category further. While long drinks already offer consumers a way to trade up within the RTD category, the sessionability and positioning of hard seltzers may cater to slightly different drinking occasions as well.

Over the next five years, hard seltzers are likely to see the highest growth rate within the UK’s RTD category, with a forecast volume CAGR of 71.7%, 2019 to 2024. And while this is from a small base in absolute volume terms, hard seltzers offer consumers a new way to explore the RTD category.

The IWSR is currently conducting further in-depth research into the global RTD category, focusing on growth drivers for leading and emerging markets, category innovation, consumer attitudes, markets to watch, and the impact of soft drinks on the category. If you are interested in our upcoming report, The Future of the Global Ready-to-Drink Alcohol Market, please fill in the form below. 

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