“There’s snow on the ground and people are still coming in for their White Claws,” remarked Lenette Stoudt, owner of Tramway Market in Stateline, Nevada, in early spring. “White Claw is going crazy. Some months it’s our top-selling alcoholic beverage.”
Similarly, Jon Manuyag, director of marketing at Oregon’s Plaid Pantry chain, reported, “Hard seltzers have become a prominent segment for us,” accounting for 13% of beer dollar sales, compared to nothing just a few years ago. “And they’re still growing at a double-digit rate,” the retailer said.
At Texas Born (TXB) stores in Texas, Benjamin Hoffmeyer, vice president, marketing and merchandising, noted that the company has allocated more shelf space and promotional displays in its beer caves to spiked seltzers, including an entire cooler door in some locations “to take advantage of the sales and great margin trends.” In addition, the stores have added a number of seltzer single packages “to garner customer trial, which leads to larger take-home pack purchases,” Hoffmeyer said.
Seltzers fit well into health and wellness trends we see within the category, where consumers are looking for low-calorie and low-carb beverage options.
Indeed, spiked seltzer sales in convenience stores are surging. According to the NACS State of the Industry Report of 2020 Data, hard seltzers helped grow average store sales of the flavored malt beverage (FMB) segment an incredible 70% last year, with premium and above pricing that lifted the profitability mix for the beer category. FMBs have quickly become the No. 2 beer subcategory with a 15% share, after premiums at 32%.
Spiked seltzer marketers see even more opportunity ahead for the products in c-stores. “The segment’s success comes from its ability to deliver on consumers’ desire for flavored and sessionable beverages,” said Joy Young, senior director, category development, at Anheuser-Busch, which markets a number of hard seltzers. “On top of that, seltzers fit well into health and wellness trends we see within the category, where consumers are looking for low-calorie and low-carb beverage options.”
Lauren Quaglia, national channel manager-convenience stores, at Boston Beer Co., marketer of the Truly brand, added, “There’s a massive opportunity for hard seltzer in c-stores. Household penetration is only at 3.5%, compared to 16% in grocery.”
Mark Anthony Brewing’s White Claw and Boston Beer’s Truly dominate the spiked seltzer category, but their quick success has sparked the entry of numerous brands by large and small marketers alike. At Plaid Pantry, the two leading brands account for at least 90% of hard seltzer sales, Manuyag said. As a result of the segment’s strong performance, “share of space is gaining with every update we do,” he noted.
The proliferation of flavors and brands is giving customers a lot more choice.
At TXB, in addition to White Claw and Truly, Anheuser-Busch’s Bud Light and Michelob Ultra’s hard seltzers, as well as Molson Coors’ Vizzy, are performing well, Hoffmeyer reported. “The proliferation of flavors and brands is giving customers a lot more choices,” he noted. Variety 12-packs have emerged as popular options within the hard seltzer space, and at Thorntons, they’re “far and away the best performing package,” remarked Doug Parker, director of category management. “Singles are also performing well and serve as a good entrance into the category for consumers,” he added. Overall sales of hard seltzers are growing at a double- or triple-digit rate at the chain, Parker said, bringing in new consumers to the segment, as well as pulling from the wine category.
Beyond leading beer marketers, craft and non-beer vendors are now involved in the spiked seltzer space. This year has seen the entry of brands under the Sparkling Ice, AriZona, Stewart’s and Topo Chico banners. “The AriZona consumer is already shopping in c-stores, and we believe that AriZona Sunrise hard seltzer will resonate with this consumer in a way that no other hard seltzer can,” said Karla Flores, director of innovation at Heineken USA, which distributes the brand. She sees particular opportunity for the seltzer’s 19.2-ounce single-serve cans in c-stores.
Stewart’s Enterprises also sees potential to leverage the iconic soda brand with Stewart’s spiked seltzers, now available in Eastern markets. Citing the Stewart’s brand’s strength in c-stores and independent retail accounts, Peter Strahm, CEO, said, “We felt there was no better way to marry such an iconic lifestyle brand than with that of an emerging, fun beverage category.” Among the flavors in the brand’s product line are root beer and orange cream.
Also trending recently within the spiked seltzer space are lemonade and iced tea variants. “We have seen tremendous success with both Truly Lemonade and Truly Iced Tea,” remarked Quaglia. The former launched in 2020 and the latter earlier this year, while Truly Extra hard seltzer, with an 8% alcohol by volume, was unveiled in March. Bud Light Seltzer Lemonade, meanwhile, was introduced in January, and according to Ramona Giderof, vice president, small format, at A-B, the line extension is contributing to the overall strong performance of the company’s hard seltzer portfolio. Plaid Pantry’s Manuyag applauded the new entries. “Innovation keeps the category moving,” he said.
Balance Is Key
With hard seltzers performing so well, retailers said the most important tactic to driving sales is having enough supply to satisfy consumer demand. In general, there hasn’t been a need to price promote or offer discounts on the products, they noted. Prior to the pandemic, TXB stores did feature promotions on seltzers, but “when COVID hit, we pulled back because we were running out of stock,” Hoffmeyer reported. More recently, the stores have run features to garner trial of new brands like Truly Lemonade and Iced Tea. TXB also offers twofer deals on singles to encourage trial of different flavors, usually at two for $6 or two for $6.50.
New Category Definitions Released!
NACS Category Definitions & Number Guide Version 8.0 was released in early 2021. Developed by the NACS Research & Technology Committee, this new version reflects significant updates to the last broad iteration (version 7.0 released in 2010). To view the latest updates, visit www.convenience.org/categorydefinitions.
Alcoholic seltzer is one of 11 new subcategories that have been identified, as well as ready-to-drink coffee, bakery, E15 fuel and many others.
As with other beverages, convenience retailers need to ensure that they’re offering their customers the right spiked seltzer brands and packages for their needs. “It’s critical to maintain a balanced approach to space allocation across the full category,” remarked A-B’s Joy. “A balanced approach will enable retailers to capture new shoppers and maximize the growth of seltzers.”
Flores suggested retailers consider the use of “secondary activation zones” via suction cups, ice bins and warm displays to test and evaluate brands and packaging. “These activation areas can be used to determine if there’s a customer base for these packages to earn their space in the cooler,” she said. Key holiday selling periods, such as during the summer and winter, should also warrant increased promotional frequency, Flores added.
The meteoric rise of spiked seltzers could make some retailers cautious about the segment’s longevity. But that’s hardly the case. The expansion into lemonade and iced tea varieties will “fuel seltzer sales,” Hoffmeyer said. “I also see the next round of seltzer innovation going beyond just flavors and expanding into functional products like hydration, energy, CBD and ciders.” Parker agreed that the segment has just begun to scratch the surface. “Seltzers have proven that they’re here to stay,” he said.