Hard seltzers bolster RTD growth in 2019

8th June, 2020 by Nicola Carruthers

The ready-to-drink (RTD) category was the fastest-growing alcohol category in 2019 due to the rise of hard seltzers, according to IWSR Drinks Market Analysis.

White Claw is the biggest-selling hard seltzer brand in the world

The RTD category was up by nearly 20% by volume in 2019, the IWSR noted, and contributed more than double the value growth to the industry than wine last year.

RTDs are forecast to remain the fastest-growing category over the next five years, IWSR said.

The RTD category has been boosted by the “innovation and convenience” of hard seltzers – alcoholic sparkling water – in the US.

Last year, a report by the IWSR said the hard seltzer category will more than triple in size in the US by 2023 to reach 281 million nine-litre cases

“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,” said Brandy Rand, chief operating officer, 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 [compound annual growth rate] of 20.9% (2019 to 2024). This growth rate follows the 200% increase in volume consumption between 2018 and 2019 alone.”

In the US, hard seltzers have benefitted from being low-calorie and low-sugar, as well as attracting consumers who are “looking for alternatives that are refreshing and flavourful”. In addition, IWSR noted the importance of the category’s ability to appeal to all genders and ages, stealing share from beer, wine and spirits.

While brewers are “investing hard” in making hard seltzers, the category has also attracted the attention of wine and spirits firms which are also producing seltzer-like products, IWSR said.

IWSR also noted “strong demand” for RTDs during the Covid-19 pandemic through the off-trade and the US e-commerce channel.

Rand said: “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.”

Tackling the UK

Hard seltzers also arrived in the UK last year with new lines from brewer AB InBev (Mike’s Hard Sparkling Water) and cider producer Kopparberg (Balans). Category giant White Claw Hard Seltzer entered the UK market last week (1 June).

“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,” said Humphrey Serjeantson, IWSR’s research director for Western Europe.

However, IWSR does not expect the success of hard seltzers in the US to be replicated in the UK.

The IWSR also said brands should tailor its marketing to the UK as they could face problems from the Advertising Standards Authority (ASA) due to the organisation’s rule that states alcoholic products must not make claims about health, fitness or weight control.

As a result, “a number of high-profile hard seltzer adverts in the US that reference sports and fitness may be problematic in the UK”, IWSR said. “The industry needs to be careful that the bad press alcopops received in the 90s does not repeat itself.”

The IWSR also said brand owners may need to do “additional work in educating the wider UK public on what hard seltzers actually are” as the category’s awareness comes mainly from its success in the US, via social media.

The RTD category has “changed dramatically” in the UK over the past 10-15 years, IWSR noted, as more sophisticated options come to market.

Over the next five years, IWSR predicts that hard seltzers will likely witness the highest growth rate within the UK’s RTD category, with a forecast volume CAGR of 71.7% from 2019 to 2024. “While this is from a small base in absolute volume terms, hard seltzers offer consumers a new way to explore the RTD category”, IWSR said.

White Claw Hard Seltzer will launch in Australia this October through a partnership with Australasian food and beverage marketing company Lion.

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