Hard seltzer is about to have its its biggest summer yet as it completely changes the alcohol industry
Bethany Biron/Business Insider
- Hard seltzer sales are at an all-time high and set to peak over the fourth of July.
- Seltzer's success has led to a growing canned cocktail industry.
- Alcohol sales are moving towards more novelty and ready-to-drink items, analysts say.
- See more stories on Insider's business page.
Hard seltzer brands are gearing up for a big summer, and their success has already changed the alcohol industry.
Alcohol sales were up in 2020 as Americans stayed home during the pandemic, and hard seltzers led the growth. Overall alcohol sales rose about 2% in 2020, while ready-to-drink sales including seltzers and canned cocktails rose 43%, IWSR Drinks Market Analysis found.
Alcoholic seltzers are now a multi-billion dollar industry, with over $4.5 billion in sales over the 52 week period ending on May 22, according to NielsenIQ data shared with Insider. Sales are up 80% over the same period in the previous year, which was itself a major increase from an industry that did only about $39 million in sales in 2017. Year-to-date sales are already at $3 billion, doubling over 2019.
The widespread popularity of seltzers has spurred on ready-to-drink cocktails as a major category of its own, though canned cocktails still make up a tiny 3% of alcohol sales. The category did over $434 million in sales over the year ending on May 22, an increase of more than 160% over the previous year, according to NielsenIQ.
Seltzers paved the way
The same trends that first made hard seltzers popular are continuing to drive their growth, Nielsen analyst Danelle Kosmal told Insider. First, hard seltzer consumers typically want "an experience through flavor or trying something new," she said.
Convenience is a key factor driving the growth of hard seltzers, and the tall, slim cans that have become synonymous with the drinks are portable and easy to find room for, Kosmal said. Finally, health and wellness trends make customers more likely to select seltzers over other alcoholic drinks. Some of the most successful brands have communicated nutritional information like carbs and calories to consumers and made the drinks seem like less of an indulgence than other options, Kosmal told Insider.
Hard seltzer drinkers are likely to be between age 21 and 43 and to live in suburbs or small urban areas, according to Instacart. They're also what Kosmal calls "promiscuous drinkers," meaning they are drinking across different alcohol categories. Hard seltzer drinkers are 214% more likely to purchase a ready to drink cocktail, driving the growth of the new category.
Forecasting ahead
Seltzers exploded especially due to COVID-19 keeping people home and closing bars and restaurants, but there's still room to grow. Seltzers might be nearing their peak off-premise sales, where they were bought by customers at grocery stores or liquor stores, but there's reason to expect plenty of growth in bars and restaurants, Kosmal said. As people start to return to these venues, opening a can of White Claw or Truly has the "perception of health as safety" for customers.
Long term, Kosmal sees huge potential growth as music and sports venues reopen. A canned seltzer has the convenience for an event like a music festival, she says.
Consumers can also expect more innovation beyond just canned drinks. There are a variety of products hitting the market outside of traditional drinks, including frozen novelties, Jello shots, and popsicles, and likely more to come, Kosmal says.
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