Hard seltzers are taking the drinks industry by storm, eroding the market share that once belonged to wine.
Hard, or spiked, seltzers are a combination of sparkling water, alcohol, and sometimes fruit juice, and fall under the ready-to-drink category of the beverage market. Hard seltzers have relatively lower levels of alcohol, lower calories, and environmentally friendly packaging, all of which taps into key consumer trends and increases its resonance with consumers, according to a Wine Intelligence report released this week.
According to beverage analytics firm IWSR, the US market volume share of hard seltzer tripled from 0.8% in 2018 to 2.5% in 2019, carrying an approximate retail value of US$3.4 billion. In comparison, IWSR reported a decline in US wine sales of 0.9% in 2019, the first decline in 25 years.
“Hard seltzers are far from a fad; they’re growing at a spectacular rate and increasingly, seltzer producers are pulling consumers from other beverage alcohol categories,” said Brandy Rand, COO of the Americas at IWSR, in a December statement.
Rob McMillan, author of the Silicon Valley Bank’s State of the Wine Industry report, thinks the strain wine is feeling, and the rise of the hard seltzer, is caused by new consumer values. “The reality is wine sold to boomers was sold on the pretext of boomer values,” he told Meininger’s. “The industry has struggled with this transition to the new consumer, who doesn’t carry the same values.” He says spirits and other beverages are able to tap into notions of wellness and wellbeing, in a way that wine hasn’t. “We’ve got to this point where spiked seltzers are seen as a more healthful choice because of the clarity and transparency of the ingredients.”
The retail value of the US wine market is estimated at $70bn, meaning that hard seltzer is sitting at just under 5% of the size of the US wine market.
And while that may seem small in comparison, it is quickly growing. White Claw, the hard seltzer leader with a 50% market share, had a sales growth of 275% in 2018.
Lulie Halstead, CEO of Wine Intelligence, commenting on the challenges faced by wine said, “The American love affair with wine is far from over, but…wine should not be taking anything for granted.”
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