Beer companies gaining traction in the seltzer category
- Constellation and AB InBev challenging legacy hard seltzer brands
- Hard seltzer consumption jumped 130% last year
- Truly and White Claw market share shrinking as competition rises
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Hard seltzer newcomers Anheuser-Busch InBev (EBR: ABI) and Constellation Brands (NYSE: STZ) are taking on legacy beer brands Truly and White Claw as they seek to edge them out. According to CNBC, the two brewers introduced their hard seltzer at the beginning of last year in time for the boom in drinking as people stayed at home because of the pandemic.
New hard seltzer brands challenging legacy White Claw and Truly
AB InBev and Constellation splashed their hard seltzer cans with popular Bud Light and Corona names that appeal to customers who have created a relationship with their products over the years.
Notably, Bud Light has been changing the flavors roster via seasonal variety packs with the introduction of an adventurous assortment besides cherry, grapefruit, and lime. Its summer variety pack contributed 3.5% of the market share, leading to its confirmation that it will make it a permanent staple.
The entry of Corona and Bud Light into the hard seltzer market comes after years of beer consumption decline in the US. Interestingly, brewers have adapted to the change in consumer preferences and are shifting to a new segment and focusing on beer categories seeing growth such as no-alcohol beer.
Hard seltzer consumption was up 130% last year
Bud Light’s VP Marketing Andy Goeler told CNBC:
“As we sit here in year two, I’m more bullish than ever on the seltzer category and Bud Light’s position in it.”
International Wine and Spirits Research (IWSR) indicated that hard seltzer consumption was up 130% last year. The majority of hard seltzer drinkers are young people overlapping with consumers who don’t drink beer. According to Euromonitor International numbers, Boston Beer’s (NYSE: SAM) Truly and Mark Anthony Brands’ White Claw accounted for almost 75% of the hard seltzer share market in 2020. However, with competitors launching, the brands have seen their market share shrink.
For instance, White Claw which held a market share of 56.5% in 2019, saw its share decline to 49.5% in 2020. On the other hand, Truly’s market share had declined since 2018, when it accounted for almost 33% of all hard seltzer sales. Moreover, Boston Beer’s shares recently dropped over 25% after the company attributed disappointing earnings and revenue to softer than anticipated demand for its Truly.
Boston Beer CEO Dave Burwick was also quoted by CNBC as saying:
“Now, there’s 220 brands and 1,000 SKUs according to IRI in the category right now. That’s about 50% larger than last year. And we’re seeing our retail customers are still trying to support all of them.”