- Hard seltzer is here to stay, experts say, but the craze that swept the nation is officially over.
- Hard seltzers like White Claw became hugely popular in 2019, leading major brands to follow suit.
- But now, the category has become oversaturated and only a handful of brands rule the market.
After roughly three years of hard-seltzer domination, Americans' love of the canned beverage may be fizzling out.
Molson Coors has nixed Coors Seltzer. Truly's parent company is dumping "millions of cases" of the hard seltzer. And beverage industry experts are warning that the seltzer craze is on the way out as sales wane across the sector.
It's a cool-down for a category that took over the alcohol industry as recently as 2018, spurring major investment from beer companies and inspiring almost too many upstart seltzer brands to count. And while hard seltzer sales may have boomed in 2020 as the pandemic kept people either at home or outdoors, that momentum is waning in 2021.
Here's where the seltzer craze began – and why it's appears to be over.
Seltzer goes from struggling upstart to nationwide craze
Hard seltzers have been around for years – Bon & Viv launched in 2013 and even White Claw and Truly have been on the market since 2016.
But it wasn't until 2018 that the seltzer craze took off, due in large part to people posting about White Claw on social media. The hashtag "#ClawLife" was born, and then, in 2019, YouTuber Trevor Wallace made a parody video dubbing 2019 "White Claw summer" and cementing the catch-phrase "ain't no laws when you're drinking Claws."
-Trevor Wallace (@TrevWall) June 26, 2019
Sales of seltzer skyrocketed, and White Claw sales alone quadrupled, from $154.8 million in 2018 to $627.2 million in 2019, according to Bloomberg.
By the end of summer 2019, White Claw was in short supply, leading its parent company, Mark Anthony Brands, to invest $250 million ramping up production.
The seltzer craze had officially swept the nation, luring everyone from fraternity bros to the gluten-free. Analysts were predicting that sales of Truly would grow threefold by 2021 and the brand's parent company, Boston Beer Company, inked a deal with the National Hockey League. By October 2019, Truly announced it was overhauling its flavors in an attempt to snatch some market share from White Claw.
At the same time, Natural Light and PBR announced plans to roll out affordable hard seltzers of their own, and Four Loko promised a hard seltzer with a staggering 14% ABV.
UBS estimated at the time that hard seltzer could grow to be a $2.5 billion beverage category by 2021.
2020 brings about new seltzer brands - and heavier drinking
By the first quarter of 2020, the seltzer market was officially saturated. Constellation Brands - the owner of Corona, Kim Crawford wines, and Svedka vodka - launched Corona Seltzer, spending $40 million on marketing alone, CNBC reported.
Anheuser-Busch InBev debuted Bud Light Seltzer, which immediately took off, becoming the third-most-popular seltzer in the US weeks after launching, CNN reported, citing Nielsen data. And in September 2020, Molson Coors launched Coors Seltzer in four flavors: black cherry, grapefruit, lemon lime, and mango.
And then there were a slew of smaller players that launched between 2018 and 2020: Malibu Splash, High Noon, Arctic Summer, Wild Basin, and a dozen more.
By the time the pandemic hit, the hard seltzer market was ready. Trapped at home as the virus surged, Americans started drinking - a lot. One study published in September 2020 found that drinking in the US was up 14% from the onset of the pandemic, with hard seltzer helping to fuel the trend.
Hard seltzer has a promising start to 2021
The hard seltzer category saw $4.5 billion in sales from May 2020 to May 2021 with White Claw and Truly combined making up 75% of the market share, according to NielsenIQ data shared with Insider's Mary Meisenzahl.
Bud Light Seltzer remained in third, and in February, AB InBev said its "beyond beer" category, which includes seltzer, had topped $1 billion, The Wall Street Journal reported.
In March, rapper Travis Scott partnered with AB InBev to launch Cacti, which sold out its inventory in only 12 hours after an ad aired during this year's Grammys. And Vizzy and Topo Chico Hard Seltzer, both owned by Molson Coors, started to make gains, particularly after the company said it would increase it seltzer production capacity by 400%.
Ahead of the summer, analysts and business-owners predicted it was going to be "a big summer for hard seltzer," and White Claw launched Surge, a new seltzer with 8% alcohol instead of the standard 5%.
Signs of a slow-down emerged halfway through 2021
But by July, it seemed that seltzer's popularity was beginning to fade. Boston Beer founder Jim Koch warned in the company's second-quarter earnings that the "hard seltzer category and overall beer industry were softer than we had anticipated."
Bloomberg Intelligence data showed that hard seltzer sales had slowed to a crawl during the summer, and data from Jefferies and Nielsen found the same: Sales growth slowed to about 30% by July 2021, down from 165% in 2020, Insider's Alex Bitter reported.
Phil Lempert, a food analyst and founder of SupermarketGuru.com, told Insider at the time that a return to restaurants and bars was the likely culprit, with drinks like cocktails seeming like a more interesting option than a hard seltzer.
Even White Claw sales began slumping: White Claw sales dipped 12.8% during the first two weeks of September, Wine Business reported, citing data from Evercore ISI.
Molson Coors discontinued Coors Seltzer in the US after less than a year on the market
Coors Seltzer met its demise in July after only a few short months on shelves. Molson Coors said at the time that it didn't think seltzer brands that were an offshoot of an existing beer brand performed well, according to Beverage Daily, and would opt instead to focus on two other seltzer brands in its portfolio: Vizzy and Topo Chico Hard Seltzer.
"We launched a number of hard seltzers in the US market and got two clear winners in Vizzy and Topo Chico Hard Seltzer," Molson Coors CEO Gavin Hattersley told CNBC at the time. "In order to prioritize focus, and put all our investments and efforts behind our two clear winners, that led us to the decision."
Since then, Vizzy has become one of the top-four seltzer brands in the US and Topo Chico Hard Seltzer will rollout across the US next year, according to Forbes.
Truly's parent company dumps "millions of cases" of the hard seltzer
Boston Beer's Koch told CNBC this month that the company overestimated the popularity of hard seltzers, getting overly "aggressive" about buying raw materials like flavors and cans and adding extra capacity to produce Truly, Koch said during an interview on "Closing Bell."
"Frankly, we overbought," he said. "And when the growth stopped, we had more of all those things than we were going to be able to use, because there is a shelf life."
Now, Boston Beer plans to throw away the excess cases rather than sell them at a discount. Koch told CNBC that the company would rather eat the product than run the risk of selling customers stale Trulys.
But Boston Beer isn't the only company taking a hit when it comes to seltzers: Constellation Brands said in its most recent earnings that it has excess inventory of hard seltzers "resulting from a slowdown in the overall category in the US."
The craze has fizzled out, but seltzers are here to stay
It would be oversimplifying it to say that the hard seltzer category as a whole is on the decline, or that the world has moved on from hard seltzer.
But it's safe to say that the craze is over, due in large part to how big the category gotten - Brandy Rand, an analyst with research firm IWSR, told Bloomberg earlier this year that "the larger the category, the harder it is to achieve double and triple-digit growth."
Plus, the bigger players with large distribution networks are likely to edge out the seltzer upstarts still trying to gain a foothold in the market. "The winners are going to be the ones that have the best distribution," Lempert of SupermarketGuru.com told Insider in July. "That's No. 1."
At this point, the brands that will succeed will need to have "a clear point of difference," Molson Coors' CEO Hattersley said during the company's most recent earnings call.
"We have been saying for more than a year now that (hard seltzers) couldn't continue to grow at the pace they were at," he said. "But they are now a part of the alcohol space, and they are here to stay."