Are hard seltzers paving the way for ‘soft seltzers’?
From White Claw to Mike’s, Drty to Bodega Bay, hard seltzers are big business. But, could the success of alcoholic sparkling water provide a fillip to the sparkling water category itself? Soft drinks commentator Lucy Britner investigates.
Flavoured alcoholic sparkling water has taken the beverage industry by storm. Just about every major drinks brand owner – from Anheuser-Busch InBev to Diageo to The Coca-Cola Co – has either created or bought a hard seltzer, as they continue their quest to satisfy the 100-calories-per-drink market.
But, while ricochets from hard seltzer have been felt in beer, the category may also be influencing the soft drinks market.
Flavoured water is the largest and fastest-growing part of the water business.
In late February, Coca-Cola updated the Aha sparkling water portfolio, swapping in two new flavours for a pair of retirees. The brand first rolled out to the US in 2020 after Celina Li, Coca-Cola North America’s VP for water, described mainstream flavoured water as “the largest and fastest-growing part of the water business” and “a segment we know we must double-down on”.
“Aha is our big-bet brand in this big-bet category,” she said.
Aha posted strong results in its first year, according to Coca-Cola, exceeding expectations despite launching in the early stages of the pandemic. The brand finished 2020 with an 8.3% share of the unsweetened flavoured sparkling water category, Coca-Cola North America said. Overall, flavoured sparkling water sales were up 24% from January 2020 to January 2021, with innovation accounting for 52% of total category growth (Nielsen).
Danone has also got in on the action, with the aunch of the first flavoured and sparkling line from its Evian bottled water brand in the US. The four-strong range, called Evian+, is free from sugar, sweeteners and calories. They’re even packaged in slim cans.
Of the launch, VP of marketing Shweta Harit said: “The introduction of a sparkling, flavoured functional water reflects the importance of adapting to consumer habits.”
Over in the UK last month, Feel Good Drinks added multi-packs to its flavoured sparkling water brand. “We are very much aware of the growing demand for soft drinks with low- or no-added-sugar or sweeteners,” said GM Ed Woolner, “but also drinks that are created using natural ingredients and offer added health benefits. We want to ensure that Feel Good Drinks is the go-to choice in this category.”
And, let’s not forget PepsiCo’s Bubly, which launched in 2018 with help from social data company Black Swan, which uses its AI-powered ‘Trendscope’ to make predictions on the next big trends.
These sparkling water launches tap into the same consumer trends as hard seltzers. Many brands in both categories talk about natural flavours and no sugar/sweeteners and, while the hard seltzer sweet-spot is around 100 calories, sparkling water seems to champion zero calories.
There could also be a threat from a different kind of drug, as CBD gets the soft seltzer treatment with Canopy Growth’s roll-out last month of Quatreau, a CBD-infused sparkling water.
There’s evidence that consumers are swapping a beer for a lower-cal/no-carb hard seltzer, which begs the question: Could ‘soft seltzer’ become the no-abv alternative? And, if this happens, does this mean flavoured sparkling water will become a competitor to alcohol-free beer?
The global sparkling water market is expected to grow at a CAGR of 11.8% from 2020 to 2027.
Indeed, like the ‘clean’ branding of many hard seltzer brands, the likes of Quatreau and Evian+ wouldn’t look out of place on the hard seltzer shelf.
A recent report from Grandview Research says the global sparkling water market was valued at US$24.5bn in 2019 and is expected to grow at a CAGR of 11.8% from 2020 to 2027. “Increasing consumer preference for healthy alternatives to carbonated and other types of sugary soft drinks is the key factor for the market growth,” the report says.
The predicted big winner for the future? Grandview anticipates that flavoured sparkling water will be the fastest-growing segment of sparkling water, with a CAGR of 12% over the same eight-year period. “Consumers are gradually adopting a healthy lifestyle,” the company says. “The global market is full of new flavoured sparkling or carbonated water launches as a healthy alternative to soft drinks.”
What’s more - and like so many things - COVID has accelerated the trend towards healthier options. In the world of alcohol, that’s a boon for hard seltzers. In soft drinks, meanwhile, flavoured sparkling waters are poised to enjoy their moment in the sun.