Sales of hard seltzer declined 5.5% in the last year, according to data from NielsenIQ, a market research firm. Most popular in the summer, hard seltzer boomed during the pandemic, as people gathered informally outside, rather than at bars. Sales of beer, flavored malt beverages, and cider, also considered part of the ready-to-drink category—meaning bottled or canned drinks you can buy at the store for immediate consumption—dropped 2% in the same time period, according to the company.
More broadly, the drop in hard seltzer sales comes as people return to bars and restaurants as pandemic precautions fade, affecting products and services, like food delivery and indoor workouts, that benefited from covid.
The rapid growth of the hard seltzer market
The US hard seltzer market grew rapidly during the pandemic: In 2021, sales rose nearly 12% year-over-year, totaling $48 billion in sales, according to NielsenIQ.
“With seltzer, the headwind it’s facing, it’s true of any kind of new category that grew very rapidly,” said Bart Watson, chief economist at Brewers Association. For the past few years, the growth came from people trying the blend of carbonated water, alcohol, and fruit flavoring in packaged cans for the first time, said Watson. After consumers trial it, some stick with it and some don’t, he said.
Led by the success of White Claw, owned by Mark Anthony Brands, which also owns Mike’s Hard Lemonade, beer companies like AB InBev and Boston Beer rushed into the seltzer market creating brands like Truly, Michelob Ultra hard seltzer, and Bud Light hard seltzer. Beer has been losing share in the beverage industry for years, said Watson, and seltzer, which is priced higher than beer, helped reverse some of those share losses.
But now the market may be crowded out. “[H]ard seltzer has lost this novelty as consumers have been distracted by many new Beyond Beer products entering a hyper-crowded marketplace,” said David Burwick, president of the Boston Beer Company, on a recent conference call with investors and analysts.
In addition to the pandemic fading, inflation has pushed consumers to look for cheaper alternatives. “[W]e’re seeing a volume shift from hard seltzers back to premium light beers with their lower pricing, particularly among 35- to 44-year-olds,” said Burwick.
Despite a year-over-year decline in sales, hard seltzer still makes up the majority of the ready-to-drink alcohol market, according to NielsenIQ. In order to keep pace with other ready-to-drink competitors like spirits-based cocktails, Jon Berg, an analyst of the alcohol industry at NielsenIQ, said companies will look to reinvent the seltzer category by focusing on the perception of “good for you” ingredients.