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What does the slowdown of 2021 mean for hard seltzer at home and abroad?

By Andy Morton

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Just Drinks examines how hard seltzer is set to change in its home market of the US and abroad in the coming years.

Last year, the hard seltzer wunderkind had its confidence rocked by two of its leaders in the US. No sooner had The Boston Beer Co, owner of the Truly brand, withdrawn its full-year guidance on “continuing uncertainty” in the category, than Constellation Brands took a sizable stock writedown.

“The hard seltzer landscape has shifted considerably in recent months,” said CEO Bill Newlands in October. 

Alcoholic sparkling water, then, may not have welcomed 2022 as enthusiastically as the rest of us.

In its 'Topical Insights: Hard Seltzers' report, released last month, GlobalData highlights that while hard seltzer is not shrinking, the category is certainly slowing. For flavoured alcoholic beverages, the category in which hard seltzers sits, the compound annual growth rate (CAGR) of 9.6% for worldwide volumes between 2017 and 2021 is expected to falter significantly in the coming years. In fact, despite a gangbusters one-year jump of 20% between 2021 and 2022, GlobalData predicts that the category will expand at less than half its 2017-2021 rate in the next five years, clocking a 4.5% CAGR between 2022 and 2026. 

Hard seltzer is synonymous with the US. Last year, according to GlobalData figures, the country accounted for 98.1% of global volumes - marginally less than the 99.5% share it held in 2020. 

Are there any other countries emerging as players in the category? 

GlobalData predicts that, after starting at near parity with the UK in 2017, Canada will kick on to 285.8m litres in 2026, representing a ten-year CAGR of 7% and cementing its position as hard seltzer's second-largest market. 

Meanwhile, the UK, which last year saw category launches from major players such as Anheuser-Busch InBev and Molson Coors Beverage Co, sits just behind. The country was also the launchpad for hard seltzer format innovation in 2021, with Molson Coors and Long Shot Drinks rolling out draught formats. 

Last March, Rabobank analysts said Europe was poised for hard seltzer growth. However, GlobalData expects the continent's two next largest markets, France and Germany, to remain almost flat until 2026. 

One factor to consider for brand owners eyeing a European move will be advertising laws that are tough on calorie and 'health benefits' content. Indeed, this seems to be a point worth noting globally. 

With a sparkling water base and often fruit flavourings, hard seltzer is an attractive proposition for the growing demographic of health-conscious consumers. However, a large portion of alcoholic sparkling waters tend to sit at an abv of 5% or higher, a range that comes in way above 1.2% abv - the UK Alcohol Standards Agency's classification of a 'low-alcohol beverage'. 

Bridging the gap between 'booze with benefits' and actual 'good for you' will be a fascinating development to track for hard seltzers. Some companies have already successfully implemented the former, like UK-based Berczy's Turmeric-infused seltzer and Sentz seltzers with added minerals. 

GlobalData research found that US consumers, meanwhile, appear to be looking for hard seltzer's softer side in the shape of hard smoothies and hard teas, like Boozy Buchas

From a raw materials and inflationary standpoint, hard seltzer will likely feel the bite along with the rest of the beverage industry in the coming months. That said, with the category still in its relative infancy, it may be more agile than more old-school categories to pivot to alternative packaging. 

Although hard seltzer may be cooling down, grounds for optimism and excitement among brand owners remain. After its trip 'to the moon', the category is on solid ground and can start to build through innovation, not only at home in the US but also abroad. 

Image credit: TonelsonProductions / Shutterstock