Hard Seltzer ‘Can Sustain Significant Growth for Beer for Years to Come:’ Rabobank

A new report from Rabobank notes hard seltzers are driving many new consumers to the beer segment.  “It’s not just the current size of the category, which is attention-getting enough, but the fact it can sustain significant growth for many years to come,” says Stephen Rannekliev, lead beverage analyst at Rabobank, in a note to clients.  But he warns “virtually every player in he U.S. beer space has major plans  for new products in 2021.  The category boundaries are rapidly blurring and the marketplace is getting very crowded.”  And it’s not just the U.S. where hard seltzers are having an impact:  They’re having an  impact in the UK, Europe, and Australia.

What drove hard seltzer to nearly  10% share in just five years?  Rabobank identifies XX factors.  First, hard seltzers are ‘entry level alcohol and part of the “very long shift to super light American lagers.”  Because they are low cal and low carb, they are perceived as healthy.  Established light entry-level beers are in long-term decline and are weighed down by declining brand equity and a history of sexist, juvenile marketing, Rabobank says.

Hard seltzers are also part of generational change.  “Each generation tends to embrace something new. Hard seltzer is quite new but clearly builds off previous light lagers/Flavored Malt Beverages (FMB). Hard seltzer consumers skew younger than overall beer (and alcohol) consumers.”

Hard seltzers also give companies that have embraced a “no stick to beer mentality” what they need: a fuller brand portfolio.  The “days of zero-based budgeting as a first priority are over,” Rabobank says, “corporate focus is on finding growth through innovation.”  A-B says 75% of Bud Light seltzer sales are incremental to the top line, which Constellation puts it at 90%.

Not only that, but hard seltzer is cheaper to make than beer and pricing is at a premium to beer.  What’s not to like?

Rabobank says it expects to see significant growth in the hard seltzer category and adds it could reach 20% of total beer sales.

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