Beverage Wars: How To Find Success In The Hard Seltzer Category

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Grant McDougall is the CEO and Co-Founder of BlueOcean, an AI brand strategy platform that helps companies outmaneuver the competition.

Competition in the beverage industry has always been hard-fought. These battles’ modern era is notably marked by the neverending “Beer Wars” that have played out on TV, in sports stadiums and during nearly every other live and broadcasted event in the past 50 years. If there’s one thing to take away from this war, it’s that branding and marketing make or break a beverage’s success. Now, a new category in the alcoholic beverage industry is threatening to challenge both beer and spirits brands with explosive growth only dreamed of in established industries.

That challenger? Hard seltzers. 

How popular is this growing category? According to a recent report, in the month of August 2020, hard seltzer brands White Claw, Truly and Bon & Viv outsold the top six beer brands combined. In fact, the recent growth of the hard seltzer market is projected to continue, with the industry growing from a value of $4.5 billion today to $14.5 billion by 2027.

How Did We Get Here?

While distribution, product assortment and pricing are factors as the brands vie for consumer preference, other attributes will likely be the real drivers in this emerging lifestyle category. As health-conscious consumers turn to hard seltzer over beer for its lower carbs, hard seltzers are also winning and distinguishing themselves as “occasion” beverages. Simply put, right now, they align better with people’s perceptions about themselves, who they want to be and how they want to spend their time.

Upstart brands such as Truly and White Claw have been able to lean in hard on the lifestyle aspects, quickly gaining market share. The challenge these early entrants face will come from multiple fronts as beer companies, including Corona and AB InBev, look to gain back some of the losses their traditional beer products are suffering at this category’s hands. AB InBev is taking a multipronged approach, on the one hand leaning on the strength of the Bud Light brand, but also looking to appeal to the nonbeer audience with its Bon & Viv brand. 

While beer companies have the infrastructure to shift gears to hard seltzer quickly, it is more complicated, though not impossible, for distillers to play in this space as well. Smirnoff, which has done well with flavored vodkas, looks to replicate that success in the hard seltzer category with nearly a dozen flavor variants.

Keys To Winning The Seltzer Wars

So, what are the keys to winning the heart and minds (and mouths) of consumers either already in the hard seltzer market or those looking to try something new? Brands in the category may actually have a leg up during the pandemic, as consumers shy away from mixed drinks that require communal bottles. Nielsen data shows that during the 15-week “pandemic period” ending June 13, sales of hard seltzer quadrupled compared to the previous year. Several key factors are likely to hold sway:

• Segmentation: Brands need to target the consumer with pinpoint accuracy. Hard seltzer has carved out a space on store shelves, and in the consumer’s mind, by connecting with a particular type of lifestyle: healthier, outgoing, social. Truly and White Claw clearly and effectively explaining what their brands are all about while Smirnoff has struggled to make the same connection. Messaging, packaging, flavors and all other aspects must speak to this lifestyle.

• Development and Distribution: If traditional brand extensions and product roll-outs happen on an annual basis, it feels like change happens closer to quarterly in the hard seltzer category. New competitors and innovative flavor and alcoholic combinations all combine to make this a rapidly evolving category. Brands need to match this pace as customers can quickly get bored and will be on the lookout for something new. Millennials, in particular, fit this fickle mindset, with 60% indicating they “like trying new drinks” in a recent poll. The successful brands will be those that can consistently get their products on the shelves, building the type of familiarity and affinity that leads to long-term customers.

• Engagement: The hard seltzer consumers expect not only to find their brand of choice on the digital platforms they frequent, but also for brands to be receptive. It was reported earlier this year that Bank of America’s Hard Seltzer Sentiment Tracker found “the volume of conversations on Instagram about hard seltzer in January was six times greater than last January.” Consumers can be a valuable source of innovation, suggesting new flavors or providing insights to promotion and sponsorship opportunities. Savvy brands should not only absorb this information but also acknowledge the consumers who will drive the passion for the brand.

Undoubtedly, I believe the hard seltzer category will continue to grow in the short-term, and the competition for market share will remain intense. Winning the “Seltzer Wars” has the potential to propel a challenger brand into an established position or help legacy brands make up shortfalls from other parts of their portfolio. It will be fascinating to see who comes out victorious.

Does hard seltzer have the staying power to become a long-lasting category, or is it just a trend that will come and go? We’ll see what the future holds.


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