The Coca-Cola Company (KO - Free Report) has emerged as a beverage powerhouse over the decades and has continued to broaden its appeal by adding brands to its portfolio. After gaining prominence with its soft drinks, energy drinks, juices and SmartWater brands, the company is now set to explore the fast-growing hard seltzer market, which became a key attraction for beverage companies in 2019. The popularity of hard seltzers escalated in 2020, given its rich flavors and the COVID-19 outbreak-led at-home consumption.
To scoop a share of the hard seltzer market, Coca-Cola is ready to launch Topo Chico Hard Seltzer in the Latin America countries, including Mexico and Brazil, in late September. Moreover, the company plans to roll out the brand in the United States in the following months. The Topo Chico Hard Seltzer will be launched in three gluten-free flavors, including Tangy Lemon Lime, Strawberry Guava and Pineapple Twist, in sleek aluminum cans.
Coca-Cola’s Topo Chico brand has been popular among bartenders as a craft cocktail mixer, making it the right brand for exploring the low-alcohol beverage category. The company earlier announced plans to launch the Topo Chico Hard Seltzer in the summer of 2020. Topo Chico Hard Seltzer was developed quickly in six months during the pandemic. The product launch is likely to help the company overcome the losses suffered during the pandemic due to the decline in soda sales as restaurants and cinemas were closed.
However, this is not Coca-Cola’s first venture in the alcoholic-beverage space. The company earlier had a wine business in the 1980s. It also sells Lemon-Do, an authentically crafted, sour lemon drink in the chu-hi category in Japan.
Hard Seltzer Market Poised to Grow
Beverage companies have been scrambling for opportunities to grab a share of the lucrative hard-seltzer market, which has taken the alcohol-drinking American population by storm. Product innovation and increased brand launches played a crucial role in the growing penetration of hard seltzer. Further, hard seltzers are expected to continue gaining popularity due to its low alcohol content, which is preferred by millennials in developed economies like the United States, Canada and Australia.
According to Grand View Research Inc., the global hard seltzer market size was $4.36 billion in 2019 and is expected to reach $4.51 billion in 2020. Moreover, the hard seltzer market is projected to reach $14.5 billion by 2027, expanding witnessing a CAGR of 16.2%.
The hard seltzer beverage industry is dominated by privately held White Claw and Boston Beer’s (SAM - Free Report) Truly brand. According to Bank of America, Truly and White Claw together held nearly 80% of the hard seltzer market at the end of 2019.
Boston Beer Dominates the Market: Boston Beer has been making fortune in recent times through growth in the hard seltzer, cider, tea and kombucha categories, while it significantly lost share for its Samuel Adams lager beer in recent years.
Boston Beer has been witnessing robust trends for the Truly and Twisted Tea brands, which aided depletions in second-quarter 2020. Growth at Truly was led by the Truly Hard Lemonade, which is witnessing solid trends with the momentum likely to continue. It expects to continue investing heavily in the Truly brand to enhance the brand’s position in the hard seltzer category as competition continues to increase. It is optimistic about the new Truly advertising campaign that showcases colors, variety and joy to hard seltzer drinkers through four different ads. Management foresees increased brand investments in the second half of 2020 as compared to the first half, and expects accelerated distribution and volume growth for the Truly, Twisted Tea and Dogfish Head brands.
Key Gainers in the Market: Another company upping the hard seltzer game is Molson Coors Beverage Company (TAP - Free Report) with its Vizzy Hard Seltzer launched earlier this year. Vizzy contains anti-oxidant vitamin C, which differentiates it from other sparkling seltzers. Moreover, the company is scheduled to launch HUZZAH, in the seltzer category, in Southern California in September. HUZZAH is a pumped-up, full-flavored seltzer that will also include probiotics to support a healthy gut. Additionally, it will contain 3g or less of sugar per 12oz can and 15 calories or less. These will give it an edge over other seltzer brands in the market.
The company plans to launch HUZZAH on the online platform, DrinkHuzzah.com, along with select retailers in South California. The brand will be launched in three flavors — Strawberry & Hibiscus, Juicy Pear, and Raspberry & Lemon.
Constellation Brands (STZ - Free Report) is another brewer gaining from the momentum in hard seltzer in the past year. The company’s Corona Hard Seltzer, launched in first-quarter fiscal 2021, racked up 6% market share in the U.S. seltzer market. The company is witnessing high Hispanic penetration rates for the brand versus other hard seltzers. Notably, the refreshment characteristics of seltzers combined with the Corona beer brand’s popularity is aiding the performance of Corona Hard seltzer. It is available in four flavors namely tropical lime, mango, cherry and blackberry lime.
Other Notable Hard Seltzer Brands: Bud Light Seltzer from Anheuser-Busch InBev (BUD - Free Report) , which was launched earlier this year, is another prime stakeholder garnering market share in the hard seltzer category. Additionally, the company has other spiked seltzer brands like Bon & Viv in its kitty, which recorded robust sales in 2019.
Furthermore, Diageo’s (DEO - Free Report) Smirnoff Seltzers, a mix of Smirnoff Premium Vodka, sparkling water and natural fruit flavors, launched in June 2020 has been popular in the U.K. Notably, Smirnoff Seltzers are available in two flavors, including Smirnoff Seltzer Orange and Grapefruit, and Smirnoff Seltzer Raspberry and Rhubarb.
The hard seltzer market has been a lucrative investment avenue for companies brewing beer and other spirits in the past few years. Apart from the aforementioned names, the industry houses several other small-sized companies that are looking up to gain from the momentum in the hard seltzer category. The entry of Coca-Cola in this fast-growing market is expected to further intensify competition, making way for more non-alcohol beverage companies to explore the industry in the future. Moreover, given Coca-Cola’s reach and size, we believe that the company is poised for growth in this promising market.
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