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27 May 2021

Hard seltzers in Europe: will they fly?

Belgium | They have been a long time in coming and the covid pandemic certainly delayed rollout plans, but finally hard seltzers, which are an alcoholic drink containing sparkling water and fruit flavour, are hitting Europe’s shelves.

From what we hear, retailers have cleared shelf space for a deluge of new offerings. Among them are Heineken’s Pure Pirana, Coca-Cola’s Topo Chico, Mark Anthony Brands’ White Claw, AB-InBev’s Mike’s, and Molson Coors’ Three Fold. Hard on their heels are a host of local hard seltzer brands.

AB-InBev’s hard seltzer brand, Mike’s Hard Seltzer, will launch in Belgium, Germany, France and the Netherlands. Media say there will be a slight local difference regarding the flavours: in Belgium, the Netherlands and France, the flavours will be lemon, raspberry and black cherry, but in Germany, the latter will be replaced by passion fruit.

Hard seltzers have little to do with beer, except for the alcohol content, which is between 4 percent and 5 percent ABV, close to that of traditional lagers. Apart from that, the drink consists of sparkling water and fruit flavours.

High hopes and some cunning

The plan is to target younger consumers, who are still experimenting with alcohol and are not as set in their consumption habits as older folk. The hope is that they will be lured to the novel category because of the drinks’ lower calorie load. Mike’s Hard Seltzer, for example, only contains 100 calories per 330 ml can.

In the US, hard seltzers have been on fire since 2016, when both Truly (Boston Beer) and White Claw were first introduced. In May 2021, the Beverage Marketing Corporation, a consultancy, counted 200 brands and over 1000 SKUs, which had garnered a volume share of 8.5 percent of the beer market. The category is worth billions of USD.

In the UK, where they arrived in 2019, hard seltzers have already grown to a value of GBP 600 million (around USD 850 million), reports say.

There is a lot of strategic thinking behind hard seltzers: Both for brewers and Coke, they can potentially compensate declining sales in their core products. Hence brewers say they need to move “beyond beer”. Coke, for its parts, wants to “own the day”, another marketing slogan, which means it seeks to offer a diverse beverage portfolio, which caters to all drinking occasions, including the evening, when people tend to drink alcohol.

Most likely, Coke has also set its eyes on establishing the first global hard seltzer brand with its Topo Chico, thus besting the brewers.

The race is on

Moreover, all fear that the hard seltzer category will evolve akin to energy drinks, where today two brands – Monster and Red Bull – rule the roost. In the US, the hard seltzer category is dominated by the early entrants, White Claw and Truly, which control over 70 percent of the volume combined. Or as Jim Koch of Boston Beer put it: “two Snow Whites and a lot of dwarves”. This may explain the mad rush into Europe.

The question remains, though: Will hard seltzers grow into a sizeable category in Europe as they have in the United States? During Molson Coors’ first quarter results presentation on 29 April, CEO Gavin Hattersley issued some caution: “I think the early data in the European market suggests that seltzer is going to be good. I’m not sure yet that I’m ready to tell you that it’s going to be as good as it is in the United States.”

Molson Coors appears somewhat hamstrung: Its partnership with Coke for Topo Chico (Coke owns the Topo Chico mineral water brand) is exclusive to the United States. In Europe, Molson Coors has decided to launch several other brands: Three Fold in the UK and Wai Moment in central eastern Europe.