The undisputed leader in this market is White Claw, a brand owned by private Canadian company Mark Anthony Brands, which had an unexpected boost at the start of the summer when a mocking YouTube video by comedian Trevor Wallace went viral.
Mr Wallace’s rant about the drink, which turns him into an obnoxious Hawaiian shirt-wearing frat boy as soon as he cracks open the can, spawned a meme that became so popular — “Ain’t no laws when you’re drinking Claws” — that police in several states jumped in to clarify that no such legal free pass existed.
Industry executives say spiked or “hard” seltzer taps into 20 and 30-somethings’ desires for healthier drinking options with fewer calories and carbohydrates, and little in the way of artificial ingredients and colourings. It is also further evidence of the shrinking appeal to this age group of mass-market beer, which has been losing share in the US for years.
Analysts at UBS expect spiked seltzer as a category to grow rapidly from $550m this year to reach $2.1bn in three years. The say White Claw currently has 53 per cent of market share by value, followed by Boston Beer’s Truly with 31 per cent.
Constellation Brands said it would roll out a Corona-branded alcoholic seltzer in four flavours next year, including tropical lime and mango, while MillerCoors is already selling Henry’s Hard Sparkling Water. Dozens of craft breweries have also launched hard seltzers this year.
Anheuser-Busch InBev and Constellation Brands admitted that summer beer sales were hurt by the seltzer craze. AB InBev said it lost 0.85 percentage points of market share in the third quarter in the US, its biggest market, largely for this reason.
Nevertheless, AB InBev chief executive Carlos Brito said the emergence of spiked seltzer was good for the brewer of Budweiser and Bud Light in the long run, and allowed it to appeal to different types of customers.
The company’s three-year-old Bon & Viv brand is marketed to women in their 30s, while the more recently launched Natural Light Seltzer uses a well-known light beer brand to appeal to more price-conscious young men. A seltzer version of Bud Light is planned for early next year.
“Spiked seltzer is very positive for us and the industry because it’s a growing, very profitable category that is bringing in new customers,” said Mr Brito. He shrugged off the idea that AB InBev was playing catch-up to White Claw and Truly: “It’s like craft beer was ten years ago, we came from behind in that market too and caught up. We have similarly big ambitions for seltzer.”
Spiked seltzer is so far a largely US phenomenon, although a few small brands have popped up in the UK, such as Balans and Bodega Bay. But analysts expect that the big beer companies will eventually bring the product to international markets and that it would appeal to consumers in other mature beer markets such as the UK and Australia.
Sanjiv Gajiwala, a marketing executive at White Claw, declined to say whether the company was looking to launch abroad. “Our number one objective is to supply the US market where we’ve had shortages for the past year or so,” he said. But the company has been registering the brand in various countries, including the UK.
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One hurdle in Europe is that people do not use the word seltzer for fizzy water, so there might be initial confusion over the product, said Caroline Levy, an analyst at Macquarie investment bank. But the increasing popularity of ready-to-drink cocktails in cans means that the concept is likely to travel well, especially once big beer companies with international distribution put their marketing muscle behind it.
James Watson, an analyst at Rabobank, said it was obvious that the big beer companies would want a slice of the growth. “It’s a totally new category that is not weighed down by past associations with beer, so you have a new ability to brand it to both men and women,” he explained. “For beer giants, that’s a win.”
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