Hard Seltzer Market Analysis

Part
01
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Part
01

Category Insights

Some insights surrounding the hard seltzer category include healthier alcoholic options, convenient packaging, high demand during summers, gender-neutral alcoholic beverages, and alcoholic beverages that resonate with the needs of younger generations.

#1. Healthier Alcoholic Options

  • According to a survey report by Arctic Summer, 38% of the respondents to the survey claimed that they perceived hard seltzers as healthier alcoholic options. This insight is important in enabling brands to innovate and produce options that provide better benefits to consumers.
  • The increasing popularity of hard seltzer has been largely impacted by the recent trends of consumers, particularly Millenials, who have shifted their focus toward better and "more health-conscious drinking habits".
  • The popularity has also been fueled by Millenials preference for beverages that have low-alcohol volume.
  • Generally, hard seltzer beverages are characterized by low calories of between 90-100 calories per serving. They are also low in sugar ranging from zero sugars to about 4 grams per can and contain about 4-6% alcohol by volume.
  • Kelly Pritchett, an Associate Professor of Nutrition at Central Washington University, noted that hard seltzers have become more popular among health-conscious consumers because of their health benefits that resonate with the preferences of consumers as opposed to other alcoholic beverages such as beer, wine or rum.
  • In addition, hard seltzer brands have been luring consumers with the fact that these products contain natural flavors such as ruby grapefruit and pomegranate, as well as the idea that these beverages are ideal for consumers living active and healthy lifestyles.
  • For instance, Truly, claims that its 12-ounce can contains 100 calories, 1 gram of sugar, and 2 grams of carbs.

#2. Convenient Packaging

  • According to a report by Good Beer Hunting, hard seltzers have relied on the intersection of several current consumer trends including convenient packaging and sessionability.
  • Most hard seltzer brands have been capitalizing on convenient packaging in cans that appeal to consumers.
  • The report noted that hard seltzer brands have adopted convenient packaging from several attributes that are currently popular with consumer packaged goods.
  • Besides, emerging brands in the hard seltzer market have been emphasizing the health benefits of their products by clearly labeling the nutritional facts that include low carbs, low sugars, lack of gluten, and low calories on the packaging.
  • Convenient packaging has played a fundamental role in marketing these beverages because they have a direct connection with packaging attributes that are already popular with consumers.
  • White Claw is an example of a brand that has appealed to many consumers due to its convenient packaging.

#3. Summer Sales Spike

  • According to 2019 adult beverage market data published by Nielsen, the sales of hard seltzer experienced a growth rate of 164% in July. Besides, during the same time frame in 2018, sales increased by almost 200%.
  • Hard seltzers increased demand in summer is attributed to the fact that these beverage drinks are marketed as favorable for outdoor parties. Summer being a period when most Americans venture outdoors contributes to the sharp rise in sales of hard seltzers.
  • In the of 2019, the sale of hard seltzers skyrocketed in the summer of 2019, and some brands such as White Claw ran out of stock due to the high demand.
  • White Claw, which has the largest market share in the hard seltzer market, experienced growth in sales by over 265% in the summer of 2019, compared to the same period last year.

#4. Appeal Across All Genders

  • Traditionally, beer drinking was associated with men while women were associated with drinking wine.
  • Targeting a gender-specific market meant that brands were alienating a large portion of their customer bases.
  • However, hard seltzer brands were able to overcome this setback by producing alcoholic beverages that were considered ideal for both genders.
  • According to a 2019 survey study by Bank of America that analyzed the drinking preferences of Millennials, it was found that there was a "clean 50-50 split in younger consumers of hard seltzer".
  • Sanjiv Gajiwala, the Marketing Vice President of White Claw, claims that the idea behind the brand was to produce an alcoholic beverage that addressed a new set of gender norms. This meant that the brand would be gender-neutral and appeal to both men and women.

#5. Popular Among Younger Generations

  • The rapid adoption and popularity of hard seltzers have also been linked to its target customer base that includes Millenials and Gen Zers.
  • According to the survey by Bank of America, hard seltzers accounted for about 21% of the overall Millennial alcoholic beverage consumption in 2018.
  • The younger generations have played a fundamental role in the craze of hard seltzers by popularizing different seltzers brands on social media.
  • According to a report by CNBC, during the summer of 2019, the younger generations published millions of memes and posts that were trending on social media and greatly helped to hype the popularity of hard seltzers.
  • For instance, a YouTube video published by comedian Trevor Wallace during summer was able to garner over 3 million views and over 62k likes.
  • White Claw is one of the hard seltzer brands whose popularity skyrocketed as a result of a strong social media presence that included creative memes and also a parody video of the brand.
Part
02
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Part
02

Consumer Insights

A fun-loving, wellness-oriented, 25-34-year-old is very likely to have tried a hard seltzer. They are also likely to be more loyal to a brand than the average American, but as long as the brand prioritizes product quality, customer care, product superiority, ethical practices, and rewards/loyalty programs. Below is an overview of the findings.

Hard Seltzer Adoption

  • According to Forbes, hard seltzer is disrupting the traditional alcoholic beverage industry and the trend is being driven by the focus of millennials on healthy and moderate drinking. The "new generation of health-focused drinkers" are attracted by hard seltzer's claim of lower calorie and carb levels as well as the attractive and portable packaging.
  • The Washington Post corroborates the report by Forbes by stating that wellness/health-oriented millennials are the largest consumers of hard seltzer.
  • Both reports by The Washington Post and Forbes dismiss the theory that stereotypes have caused a female skew to consumers of hard seltzer.
  • The The Washington Post quotes a Bank of America study that reported that there is an equal gender split in younger consumers of hard seltzer. The report also quotes a Nielsen study which found that White Claw, which accounts for over 50% of the hard seltzer market, is loved by women and all kinds of men, even frat boys.
  • Based on these insights, a fun-loving, wellness-oriented, 25-34-year-old is very likely to have tried a hard seltzer.

Brand Loyalty Levels

  • According to a Morning Consult research, only about 19% of U.S. millennials are loyal to specific brands. Despite having brand preferences, 48% of millennials in the United States tend to consider alternatives. About 28% do not pay attention to brands.
  • Overall, only about 9% of U.S. consumers describe themselves as loyal with 55% and 36% admitting that they try new brands sometimes and often, respectively.
  • Based on these insights, a fun-loving, wellness-oriented, 25-34-year-old is likely to be more loyal to a brand than the average American.

Brand Loyalty Drivers

  • Factors that would drive brand loyalty, especially for beverages such as hard seltzer, include quality at a given price point (54%), customer-centric experience (50%), product superiority (43%), the company's moral and ethical standards (42%), and loyalty/rewards programs (30%).
  • Notably, the product's price is not as important as value to U.S. millennials. Only 23% would be loyal to a brand primarily because it is the cheapest available but 54% would be willing to pay a higher price if quality is proportional to the cost.
  • Based on these insights, a fun-loving, wellness-oriented, 25-34-year-old is more likely to be loyal to a hard seltzer brand that prioritizes quality, customer care, product superiority, ethical practices, and rewards/loyalty programs.

Buying Habits

  • Millennials in the United States make over 54% of their purchases online with about 67% saying that they prefer the online shopping experience to that of in-store shopping.
  • About 81.3% of U.S. millennials shop online at least once monthly and about 80% of U.S. millennials must read a review before making a purchase.
  • Additionally, 45% admit that the ease in product and price comparison is what attracts them to online shopping. Similarly, 53% would rather research online than inquire from store staff and 61% say that it is easier to communicate digitally with a retail staff than to visit a physical location.

Brand Philosophies

  • As mentioned above, U.S. millennials are extremely social conscious and are influenced by how a company treats its employees. The loyalty levels of 70% would decrease if they discovered that the company's employees are underpaid, and 69% would not purchase as much if they found out that the brand condones unethical labor practices.
  • About 72% of U.S. millennials would "like a company either much more (51%) or somewhat more (21%)" if the company compensates its employees fairly.
  • According to Forbes, U.S. millennials are drawn to a brand's social corporate responsibility and environmental-friendliness. They also value bonuses as well as personal connections through high-quality customer service.

RESEARCH STRATEGY

To provide insights surrounding the hard seltzer consumer, the research team assumed the target consumer to be a fun-loving, wellness-oriented, 25-34-year-old. Apart from providing the psychographic characteristics and/or insights, the research team aimed to determine whether this demographic has ever tried a hard seltzer and their brand loyalty traits. From our initial research to better understand this particular demographic, we established that the demographic defines a typical millennial. We also found that most studies did not segment this generation by age but instead conduct analyses on the whole generation. This was not discouraging as millennials are aged between 22 years and 36 years, which puts the demographic of interest within the millennial cohort. We have, therefore, provided the required information based on this demographic.
Part
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Part
03

Acerola Superfruit Awareness

While the US consumer has a high awareness and positive perception of superfruits with antioxidant properties in food and beverage products, acerola appears to be a less well-known but increasingly visible superfruit within the American marketplace.

High Awareness of Superfruits with Antioxidant Properties

  • Recent surveys suggest that the US consumer has a high level of awareness related to superfruits and their antioxidant properties in food and beverages.
  • Notably, 71% of Baby Boomers, 73% of Generation Xers and 66% of Millennials in America are looking for antioxidants such as superfruits in consumable products, while approximately 60% of US consumers are looking for beverages that provide superfruits and other good sources of antioxidants.
  • Among the most "easily recognizable" superfruits with antioxidant properties in America are domestic staples such as blueberries as well as newly prominent exotic fruits such as pomegranates.
  • In particular, blueberries are sometimes considered the "original superfruit" in the US, and are equated with "antioxidant power" by consumers.
  • Meanwhile, this superfruit awareness is driven by a variety of factors, including longstanding associations with "goodness" and "wholesomeness" for domestic staples such as blueberries, as well as marketing and branding by consumer goods companies for newer dominant superfruits such as the pomegranate.
  • Additionally, the movements toward more transparent product labeling in the US as well as products with clinically-proven benefits continue to bolster the awareness of superfruits with antioxidant properties in the country.

Positive Perception of Superfruits with Antioxidant Properties

  • In parallel, superfruits with antioxidant properties are also viewed as highly desirable within food and beverages by US consumers.
  • First and foremost, the fact that many more domestic superfruits such as blueberries are easily recognized and accessible has helped to increase the acceptance and attractiveness of these antioxidant-rich products in consumables such as food and beverages, according to industry specialist Tom Payne.
  • In particular, the underlying associations with these superfruits with "happy memories" and a "warm halo effect" has extended to positive feelings about their "antioxidant power."
  • Additionally, the acceptance of these superfruits and their antioxidant cache has had a self-reinforcing effect, whereby the prevalence of superfruits with antioxidant properties in food and beverages has generated increased demand and positive attention for these products.
  • Ultimately, the result of this cycle is that more than half of Americans actively want antioxidants such as superfruits within their food and beverages.

Brand Marketing Increasing Awareness

  • In addition to this self-reinforcing effect, another significant and ongoing driver of US consumer awareness of superfruits and their antioxidant properties is marketing by major companies and brands.
  • Specifically, as part of promoting new products, food and beverage companies are effectively educating US consumers about superfruits and their antioxidant properties through packaging, digital advertising, social media and other media channels.
  • For example, the most popular antioxidant beverage in the market, Bai Brands, has a web page that focuses on antioxidants and highlights their benefits.
  • Additionally, POM Wonderful 100% Pomegranate Juice has launched numerous campaigns across national print and digital media to highlight the company's product while also educating consumers about the antioxidant benefits of pomegranates.
  • Although such marketing efforts may have started as a means to differentiate products, brands are more often highlighting these functional ingredients in their marketing efforts in response to increasing US consumers appreciation and preference for superfruits and their antioxidant properties.

Moderate Awareness of Acerola Superfruit

  • Although awareness of acerola and its antioxidant properties is high in certain US populations, more general knowledge of the superfruit is just beginning to take off in the country.
  • Generally speaking, awareness of acerola appears to be high within America's scientific community, where this segment of consumers is exposed to numerous articles touting the benefits of the superfruit from publications including the Journal of Food Science and Technology as well as the Journal of Medicinal Food.
  • Similarly, US consumers who are highly engaged in eco-friendly and natural lifestyles have access to the numerous publications highlighting acerola as a superfruit with antioxidant properties, including Natural Origins, Naturex and Raintree.
  • More significantly, however, awareness of acerola as a superfruit is currently expanding across the country through the introduction of mass-market products that feature acerola, such as the June of 2019 introduction of acerola-based products by smoothie company Juice It Up! and a forthcoming acerola and antioxidant-branded Vizzy hard seltzer.
  • These prominent product introductions are creating significant consumer awareness for acerola as part of product advertising via traditional media as well as digital channels such as social media.
  • As a result, it appears that the US marketplace is seeing building customer conversation and knowledge of both acerola and its superfruit properties.

Positive Perception of Acerola Superfruit

  • Meanwhile, the developing perception of acerola appears to be highly positive in the US, building on general consumer attitudes towards antioxidants.
  • Beyond more anecdotal opinions and evidence, an analysis of consumer sentiment on Twitter over the last 90 days by 30DB revealed that 92% of acerola mentions were of a positive sentiment, while a more extended sentiment analysis by North Carolina State University also indicated that the majority of acerola mentions on Twitter were highly positive.
  • Similarly, recent discussion of acerola within major US-based media outlets such as QSR Magazine and Fast Casual has been highly positive.
  • Notably, a good deal of this positive perception appears to be driven by existing sentiment about superfruits with antioxidant properties, with outlets such as Fast Casual calling acerola the "new acai."
  • More generally speaking, it appears that a large majority of acerola mentions also include references to "health" and "wellness," further bolstering the image of this superfruit among US consumers.
Part
04
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Part
04

Forecasted Drivers or Challenges

Two drivers that are predicted to continue to impact the hard seltzer category include health consciousness and additional market entries. Three challenges that are predicted to impact the hard seltzer category into 2020 and beyond include lack of differentiation, the die-out of fads, and competition from sparkling-wine products.

Drivers

Health Consciousness

  • A major driver of the growth in the hard seltzer category is expected to continue to be a trend toward "more health-conscious drinking habits and a preference for low-alcohol beverages, particularly among millennials."
  • Hard seltzer brands have positioned themselves at the intersection of convenience and health, which allows consumers to drink alcohol without worrying about the added calories and carbohydrates.
  • Health-conscious men and women of all ages equally enjoy hard seltzers, which also sets it apart from other alcohol segments.
  • In 2020, especially during the first part of the year, when New Year's resolutions are popular, the category is expected to continue its growth as more people become familiar with its lack of calories, carbohydrates, gluten, and sweetness, which has been a problem with flavored malt beverages that the seltzers are essentially replacing.

Additional Market Entries

  • White Claw was the first hard seltzer to really make a splash on the market when it was launched by Mark Anthony Brands in 2016, but new competitors are entering the market to grab a piece of the growing hard seltzer pie.
  • New brands like Truly from the Boston Beer Company, Bon & Viv from Anheuser-Busch, Bud Light Seltzer from Budweiser, and Catalina Lime Mixer from Natural Light have entered the hard seltzer market in just the last few months.
  • According to CNBC, "the growing influx of beer brands into the seltzer space might suggest that adult beverage makers might be worried about hard seltzer eclipsing the popularity of beer."
  • This is expected to continue to affect the hard seltzer category in 2020 and beyond as more companies develop their own hard seltzers to compete with the products already on the market and as consumers have more options, the category is likely going to continue to grow at a significant pace.

Challenges

Lack of Differentiation

  • One challenge facing the hard seltzer category is that brands will have trouble differentiating themselves from other companies.
  • This is because hard seltzer is at the core flavored or flavorless water with alcohol. There does not appear to be much innovation that can impact this category of alcohol.
  • As stated in Craft Beer Austin, the challenge will be how companies separate themselves from other brands because "the websites for all the current major players pretty much say the same thing, which is more or less that spiked seltzer is a refreshing alternative to other beverages, low calories, gluten free, and convenient and easy to drink."
  • This is expected to affect the category because growth cannot be sustained without innovation and differentiation.

Fads Die Out

  • It is quite possible that hard seltzer is simply a fad and like other fads, especially fad diets, the category may die out when people tire of the novelty.
  • Craft Beer Austin calls hard seltzer "essentially a marketing phenomenon" that touts a low-calorie, gluten free way to consume alcohol.
  • Additionally, some experts believe that "hard seltzer seems to have many similarities of many diets on the market that people follow only temporarily."
  • This is expected to affect the category because fads tend to spike quickly and die out quickly, which is a detriment to the segment's growth.

Sparkling-Wine Competition

  • There are signs that the hard seltzer category is going to face stiff competition from the sparkling-wine spritz category.
  • Sparkling-wine has been hit the hardest by the hard seltzer trend and many consumers who engaged with sparkling-wine are crossing over to hard seltzer.
  • Several wine companies, including Archer Roose are "moving aggressively into the low-ABV space" by developing canned sparkling-wine, which will compete better with hard seltzer due to its increased portability.
  • Whereas hard seltzer sells well in the summer as a refreshing alternative to beer, sparkling-wine is positioning itself as a year-round beverage.
  • This could impact the hard seltzer category because sparkling-wine spritz beverages could eat into hard seltzer's market share, especially if they lure back original sparkling-wine drinkers who have recently crossed over to hard seltzer.
Part
05
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Part
05

Campaign Review - White Claw

White Claw launched three different marketing campaigns in the last three years, focusing heavily on ideas of "wellness" and "health and fitness". Details about each campaign have been compiled in the attached presentation.​
  • In the summer of 2017, White Claw ran its "Purest Hard Seltzer in the World campaign. They brought on Erin Andrews to promote White Claw as a "better-for-you choice", and put huge ads on the streets of Philadelphia, including "a giant, high-impact display, five bulletins and 14 metro lights targeting 5.6MM consumer impressions including the famous Ben Franklin Bridge". They ran tastings in liquor stores and Whole Foods.
  • From May 2nd 2018 through June 3rd, White Claw ran the "My Best Life Contest", having customers send in pictures of themselves "living their best life" via Instagram tagged #mybestlifecontest (or on www.whiteclawbestlife.com, a URL which currently resolves to a placeholder page). The winners were given $60,000 each to travel America and document their travels on social media.
  • In 2018, White Claw worked with Wavemaker to promote themselves in gyms across the nation as a "health and fitness" brand. They placed 10'x7' wallscape ads in locker rooms, gyms and showers; launched billboards and painted walls; and placed themselves for weekly sampling at fitness events. As well, they launched a digital plan towards workout apps, with Spotify playlists, geofilters for famous gyms, and paid social units. They also put print ads in "health and wellness" magazines like Men's Health and ESPN.
  • Notably, White Claw doesn't seem to have had any large, coherent marketing campaigns in 2019. Instead, running off the energy of the Trevor Wallace-created meme video, they cut media spending 30% and still experienced a demand that outstripped the supply.
Part
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of nine
Part
06

Campaign Review - Truly

Truly launched four different marketing campaigns in the last three years, including a national TV ad starring actor Keegan-Michael Key. Details about each campaign have been compiled in the attached presentation.

Campaign review: Truly

  • Truly Hard Seltzer took swipes at beer, wine and spirits in its latest national advertising campaign, launched in August 2019. The campaign stars actor Keegan-Michael Key.
  • In 2018, Truly launched a campaign which was primarily digital-based and featured Ryan Riback's remix of Starley's "Call On Me" as the soundtrack for a group of friends that are seen enjoying a beach day with cases of Truly Spiked & Sparkling in tow.
  • #LiveTruly is a social media campaign Truly launched in 2017 that is still taking place. The hashtag is used on Facebook, Twitter and Instagram by the company, and is also the hashtag consumers see when opening the brand’s landing page on its website.
Part
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Part
07

Campaign Review - Bon & Viv

Bon & Viv rolled out five different campaigns in the last three years, including NFL sponsorship and a Superbowl ad in 2019. Details regarding each campaign have been added in the attached presentation.

Campaign review: Bon & Viv

  • Bon&Viv's latest campaign is the ultimate Seltzer Showdown, where consumers were faced with a polygraph challenge and a chance to win $1,000, if they really prefer Bon&Viv's Classic seltzer over other seltzers (more specifically White Claw Pure).
  • Bon&Viv’s summer 2019 campaign was based on a collaboration with a social media channel Betches, which featured a video called “When you realize you are basic”.
  • The company's Superbowl ad featured two mermaids pitch their drink to a bunch of sharks. The mermaids represented the fake founders Bonnie and Vivian trying to sell their drinks underwater.
Part
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Part
08

Campaign Review - Henry's

Henry's rolled out three different marketing campaigns in the last three years. Each of the campaigns debuted in spring and had a summer-inspired creative campaign, and was pushed until the end of the year. Details for each campaign have been compiled in the attached presentation.

Campaign review: Henry's



Part
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Part
09

Campaign Review - Smirnoff

Smirnoff launched four different campaigns for its spiked sparkling seltzer in the last three years, mainly focusing on TV ads. Details regarding each campaign have been compiled in the attached presentation.

Campaign review: Smirnoff

  • Smirnoff Seltzer’s 0 Sugar campaign features two different TV spots that showcase two different groups of four friends each who are getting together on a sunny day and enjoying Smirnoff Seltzer 0 Sugar in the four different available varieties — Pinacolada, Raspberry Rosé, Berry Lemonade, and Cranberry Lime.
  • In December 2018, holiday travelers with a middle seat ticket on a U.S. direct, non-stop flight taking place were asked by the brand to share their story and flight info on SmirnoffSeltzerUpgrade.com in order to apply to win an upgrade.
  • Smirnoff’s 2018 summer campaign featured its new flavor called "90 calories Raspberry Rose".
Sources
Sources

From Part 05
Quotes
  • "This summer, Erin Andrews, co-host of "Dancing with the Stars" and NFL/FOX Sports sideline reporter, is partnering with White Claw Hard Seltzer, the number one selling hard seltzer1, to provide active consumers with pure refreshment and enjoyment. "
Quotes
  • "White Claw Hard Seltzer will encourage pure enjoyment across the streets of Philadelphia with, “The Purest Hard Seltzer in the World” campaign� Philadelphia will be home to a giant, high-impact display, five bulletins and 14 metro lights targeting 5�6MM consumer impressions including the famous Ben Franklin Bridge� White Claw’s campaign will also extend to print and digital media� Look out for White Claw ads in Men’s Health, ESPN magazine and Women’s Health this May�"
Quotes
  • "White Claw Hard Seltzer is the purest hard seltzer in the world. Stop by for samplings of the White Claw variety pack and giveaways!"
Quotes
  • "Our friends from White Claw will be at the store sampling "The Purest Hard Seltzer in the World!" from 1-4 pm. Come out and try it!"
Quotes
  • "Beginning May 2nd through June 3rd, fans can enter the contest for the chance to embrace new experiences, travel to new places and discover new passions. In the end, two lucky winners ages 25 or older will become the official White Claw® Hard Seltzer ambassadors for six months, armed with $60,000 each to travel the United States while documenting their experiences with White Claw® fans nationwide."
Quotes
  • "Two winners will be required to travel anywhere in America (on separate journeys) with a minimum of two places per month over a six-month period, using the cash prize."
Quotes
  • "Mark Anthony Brands (MABI) launched White Claw hard seltzer into a crowded market with a limited budget. We recognized that success hinged on the health-conscious social trend of using fitness activities and regimes to offset social indulgences. Following our campaign, White Claw became the #1 category leader at 40% share, and sales grew 355%."
Quotes
  • "Sales of those White Claw variety packs are up a staggering 271 percent year to date according to IRI, a Chicago-based market research firm."
From Part 06
From Part 07