The hard seltzer was first invented in 2013. The original seltzer “Spiked Seltzer” was invented in Westport, Connecticut by fifth generation brewer Nick Shields. The product is now known as Bon! Viv! Beginning in 2018 hard seltzers started to experience rapid growth in sales. The rise in seltzer sales over the past 7 years looks very similar to the growth in light beer sales in the 1970s and 1980s. As a retailer you are probably well aware of the growth in demand and sales for these products. Indeed the rate of growth coupled with the inventory and supply chain disruptions this year have caused inventory shortages for many major suppliers.
Why are seltzers suddenly so popular with consumers? Seltzers by their product design offer consumers several key benefits. First, they are generally lower in sugars and carbohydrates and calories than other competing beverage alcohol choices. This fits into mega consumer trends of wanting healthier choices and supporting an active lifestyle. Consumers for seltzers are pretty much across all ages, genders and demographics with various brands looking for niches and specific offerings against flavors, ABV, calories, and other product attributes designed to appeal to different consumers. They appear to younger consumers because they are something different and trendy. Advertising is increasing which builds awareness.
The growth in hard seltzer sales suggests implications for considerations in space, assortment and arrangement. Some facts are helpful to make informed decisions in each of these areas.
The first question is how much space to allocate? Space is usually allocated by sales and profit generated. The rapid growth of these products as resulted in many retailers not allocating enough space or inventory to keep pace. Seltzer sales rapid growth puts the market now roughly equal with total craft beer sales which a much higher growth rate. There are important differences between seltzers and craft beer. But when decided space should represent at least 10% of available beer space or an allocation equal to that given for craft beer.
In assortment there are many new items being introduced with many more national brands and new players jumping into the rising market as they seek to participate in the sales and profits. This is not a bad thing! The market can’t effectively grow when it’s a one or two brand market. Flavor combinations matter. Tastes change. Currently four brands dominate the majority of sales with the market leader going from a 60 down to a 40 share with new competition entering. One important fact is that 70% of all sales come from multi flavor assortment packages. This implies that when making assortment choices, it is better to put heavy emphasis on multi flavor packs versus multiple packages of individual flavors unless a particular flavor is very popular with your customers.
So we have an idea how much space to allocate and some thoughts on the types of packages we want to add. How do we arrange this? Consumer insights show that many seltzer sales come from infrequent or casual shoppers when compared to other beverage alcohol products. So to make the products easy to find is important. In the shoppers mind the products represent something different from beer, wine or spirits. The best grouping is with flavored malt beverages like hard lemonades or fruit forward drinks. This is where the shopper expects them to be. They should be arranged all together in a grouping rather than scattered across the space.
I hope these brief insights are helpful in navigating the best approach for helping to capture the sales and profits available in the rapidly growing seltzer category. For more information on seltzers or any other beverage alcohol topics please feel free to reach out to your sales representative or contact us to help.