THE GIST
We’ve been here before: Industry watchers are confident in declaring hard seltzer down for the count, while U.S. drinkers continue to buy millions of cases of the stuff. What feels different this time is that hard seltzer growth has, in fact, stalled: For the first year ever, 2022 will end with hard seltzer volumes falling compared to the year prior. This isn’t a death knell, rather a stabilization point as hard seltzer reaches its maintenance phase.
In 2022, malt-based hard seltzers make up 7.4% of total beer volume, and about 9.5% of dollar sales in chain retail stores tracked by market research company IRI. Hitting 10% of dollars was once seen as a dream scenario.
For comparison, craft beer currently makes up 9% of beer volume and almost 13% of dollars in chain retail thanks to a wide range of price points.
By total volume, seltzer will decline about -17% against last year while craft will be down about -11.5%
Despite these changes, seltzer has still added +4.3% share of the beer category over 2019, the zenith of hard seltzer’s “ain’t no laws” ascendancy. (Craft beer’s share of beer is down -0.5% since 2019.) Take that in: Hard seltzer made up a bigger slice of the beer market in 2022 than it did during that pre-pandemic, White Claw-crazed year when the stuff seemed to be everywhere in pop culture. At the end of 2022, hard seltzer is basically the number-five beer subcategory by volume in chain retail, coming in behind a near-tie between craft beer and premium plus, a subcategory dominated by Michelob Ultra.
Still, there’s no denying hard seltzer sales lately are “soft, soft, soft,” as Chris Hagle, vice president of sales for Olympic Eagle Distributing in Puyallup, Washington, puts it. Olympic Eagle’s portfolio of hard seltzer—which includes Anheuser-Busch InBev (ABI)-owned seltzers such as Bud Light Seltzer, Michelob Ultra Organic Seltzer, and Corona Seltzer—is down -35% by volume in 2022. Those three ABI brands are among the top-10 largest hard seltzer families, but they’ve also struggled to even maintain market share after their debut years. Still, Hagle envisions hard seltzer being a single-digit contributor to overall beer sales in five years.
“There are still people that drink it,” Hagle says. “It won’t be like the hard root beer demise. I think it’ll stabilize into a much smaller base.”
Even if hard seltzer does shrink slightly from its current volumes, it would still be on par or slightly ahead of the rest of the entire flavored malt beverage category it’s nested within, bringing in billions of dollars every year.
WHY IT MATTERS
Conclusions about hard seltzer’s “stunning collapse” tend to mistake one tree for the forest: That withering tree is Truly Hard Seltzer. Parent company Boston Beer Co. has had to dramatically walk back projections for Truly’s growth on a near-quarterly basis and Truly’s headline-making declines have obscured the fortunes for other hard seltzer brands, many of which are maintaining or even growing sales. The Truly brand family will wrap 2022 down about -22% in volume compared to 2021. As the second-largest hard seltzer brand behind White Claw, its fortunes do have broad implications for the category’s top-line number, but there are still signs of success:
In the four weeks ending Nov. 22, for example, investment banking advisory firm Evercore ISI notes that hard seltzer category sales were down -11%, with Truly down -24% and White Claw actually up +3.8%.
Boulevard Brewing’s Quirk hard seltzer line almost doubled its volume sales in chain retail in 2022 versus the year prior thanks to a focus on local sales.
Ranch water hard seltzers, too, continue to be a bright spot, with Lone River Ranch Water more than doubling its volume sales in chain retail last year versus 2021. Karbach’s ranch water-dominant hard seltzer portfolio was also up +36% in 2022. This sub-category of hard seltzer grew 2.5 times last year.
Kevin Bartholomew, president of Ben E. Keith Beverages, a distributor in Fort Worth, Texas, says declines in the company’s portfolio of hard seltzers have been led by Truly and ABI brands, which include Bud Light Seltzer, Bud Light Platinum Seltzer, and Michelob Ultra Organic Seltzer. Bartholomew says newer hard seltzer brands, including Sonic Hard Seltzers and San Juan Seltzers, continue to gain traction in his market, though it’s uncertain how long they can maintain that momentum. (Topo Chico Hard Seltzer, which debuted in March 2021, ended 2022 as the fourth-largest hard seltzer brand in the U.S., up about +130% in volume.)
This coming spring will be an indication of how confident retailers are in the future of hard seltzer. With a finite amount of physical space for alcohol, stores will decide which brands have earned a spot in coolers and on shelves in an annual process known as “spring resets.” In one survey compiled by alcohol delivery company Drizly, 49.4% of retailers said they still plan to carry more hard seltzer in 2023 than 2022, with 28% saying less. Almost 19% were still evaluating whether they should stock more, less, or the same.
As decision-makers weigh how much space to allocate for hard seltzer, they’ll be considering it against an ever-growing collection of similar alternatives that include light beer, flavored malt beverages, wine-based flavored drinks, and spirits-based canned cocktails. Hagle anticipates a reduction in the number of hard seltzer brands and packages that stores, especially large chains, carry this coming spring and summer. After such a rapid explosion in space for hard seltzers, he says there’s likely to be a course correction.
“They went from zero seltzer on the shelf to a ton,” he says. “Well see in this next round of spring sets how that plays out. The chains will dictate the future of some of these brands.”
While cutting some hard seltzer brands from retailers’ shelves could reduce hard seltzer sales volume in the short-term, Hagle believes it’s ultimately beneficial to the category overall. He says some producers have been unwilling to pull the plug on underperforming hard seltzer brands even though sales trajectories suggest they should, although he declined to name those brands. Like a gardener prunes unhealthy branches, retailers are likely to drop some of the slower-selling hard seltzer brands as part of spring resets, encouraging producers to focus resources on the hard seltzer lines that bring robust sales.
Along with the shifting interest of consumers, some companies have simply decided to minimize their involvement in hard seltzer or leave the category altogether, prompting category declines in the millions of cases.
Cacti Agave Spiked Seltzer, once a top-5 hard seltzer brand from ABI, was discontinued in December 2021 and it fell to roughly 1% of the category.
Another ABI hard seltzer brand, Social Club, was also a mere blip and was discontinued after about a year.
Smirnoff, at one time the #3 hard seltzer family in the country, reduced production and now also focuses on a vodka-based canned cocktail.
MolsonCoors Beverage Co.’s Coors Seltzer also got the ax in 2021 as the company turned its attention toward Vizzy and Topo Chico seltzers.
Hagle describes a hard seltzer future that looks remarkably like the overall beer market: A few major brands (in this case, White Claw, Truly, and Bud Light Seltzer) dominate, while smaller brands do well on a local or regional basis, like Astra Hard Seltzer in Ohio (+11% in 2022) or Two Robbers in the Northeast (+0.3%). Far from signaling the end of seltzer, the next few years likely see the category settle into a mature one with a long-term, right-sized future.
Words by Kate Bernot