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SELTZERS: BUBBLING TO THE TOP
Bubbling to the top
As the weather gets warmer, it’s time to look to the emerging hard seltzer category.
-By Caoimhe Hanrahan-Lawrence.
HARD SELTZERS have seen a meteoric rise in popularity in the past few years. It has proven to be a category to watch as we approach a second summer of seltzer.
The global seltzer market was valued at US$18.97 billion in 2023, with a CAGR of 19.8 per cent. CGA by Neilson IQ’s OPUS 2022 evidenced the rising popularity of hard seltzers, with a 67 per cent increase in engagement compared to 2021. The category sees no signs of slowing down, with the March 2023 OPUS Australia reporting that 36 per cent consumers intend to drink hard seltzers more frequently this year.
Hard seltzers are more popular among the 18 to 35 age demographic and see a boost over spring and summer. As a category, hard seltzers sit adjacent to RTDs, and can be considered part of the “contemporary” RTD sub-category, which is a key driver of RTD growth. However, many Australian hard seltzers are being produced by craft breweries, blurring the line between RTD drinkers and beer drinkers. This is especially true of brewed seltzers, which are made in a similar way to beer and have a different flavour profile to spirit-based seltzers.
Marli Evans, Moon Dog brand manager, spoke to the category’s popularity.
“Sessionability and flavour variety are definitely a key factor in the appeal of seltzer. We’ve seen that the demographic of seltzer drinkers is just so wide spanning and that really comes down to there being a flavour for everyone and the light, refreshing finish of seltzer,” she explained.
Despite the growing awareness of hard seltzers, the category is still in its infancy, with nine per cent of Australian drinkers reporting drinking hard seltzers out of home. This is comparable to the market for alcoholic ginger beer, another growing category. Even so, only 5.3 per cent of Australian consumers were drinking hard seltzers in the on-premise in 2021, indicating a significant growth potential in coming years.
FLAVOUR IS KING
As with RTDs and cocktails, flavour experimentation is influencing the growth of the hard seltzer market. This is particularly prevalent in the on-premise, with CGA’s February Consumer Pulse Report showing that 73 per cent of customers were likely to experiment with new drinks in the on-premise.
“Seltzer is a heavily flavour-led category, with consumers chasing variety and newness,” Evans noted.
In particular, Gen Z and millennial drinkers are driven to try new flavours in the on-premise. Of course, maintaining a core of the most popular flavours will prevent disappointment, but a regularly updated seltzer selection will keep consumers interested in the segment.
In particular, Australians are looking for nostalgic flavours, as CUB Premium Beverages key account manager Glenn Crisp explained at the recent ILG conference.
“When we look at flavour, […] we’re bringing back classic flavours, what we call pub flavours in some of our brands,” Crisp said.
These classic flavours include pub squash, creaming soda, and portobello, which are reminiscent of favoured soft drink flavours in many consumer’s childhoods. The increased entry of Australian producers to the sector will help cater to these distinctly Australian tastes.
The importance of local drinks was evident to Matt Fox-Andrews, manager at Perth’s Windsor Hotel. The Windsor Hotel offered a local seltzer from Cheeky Monkey Brewing Co. as its first hard seltzer offering.
“We were one of the first venues in WA to offer hard seltzers on tap, and it was really popular initially,” Fox-Andrews said.
However, this has changed in recent months, with previous seltzer consumers opting for lowcarb or mid-strength beers. This is not unique to the Windsor, as CGA’s February Consumer Pulse also reported a slight drop in seltzer sales over the cooler months. Generally, FoxAndrews believes that the hard seltzer craze has been less prominent in Western Australia than the eastern states. In particular, he has seen limited success with large international seltzer brands.
“In WA, drinks from WA are really important. We try and stay local as much as possible,” he explained.
As more Australian brands enter the hard seltzer market, operators have the potential to capitalise on the enthusiasm for local drinks. Smaller craft producers are also willing to support venues serving their drinks, and can direct dedicated brand fans to the on-premise.
PUTTING THE FUN IN FUNCTION
The hard seltzer segment is buoyed by the “better for you” trend, which has seen drinkers place increased importance on their physical wellbeing when it comes to their drink choices. In fact, CGA reports that 18 per cent of seltzer drinkers choose the category because they represent a “healthier” option. Thirty-six per cent of all on-premise visitors are more likely to base their decision on whether a drink is low in sugar, and several hard seltzer brands capitalise this by emphasising low sugar levels.
Additionally, many hard seltzers have an ABV comparable to midstrength beer, allowing consumers to moderate their alcohol intake. Venues have seen seltzers as a popular choice for work events and pub lunches, where patrons may choose to drink alcohol, but wish to moderate their intake.
Seltzers also provide an option for consumers with dietary requirements, with a number of vegan and gluten-free brands available. Particularly when offered on tap, gluten free seltzers can provide a useful alternative for venues with a smaller selection of gluten free beers.
The flipside of this is the emergence of higher ABV seltzers, with several new releases at an ABV of 6.5 per cent. This is also a driver of growth in the broader RTD sector, especially in white spirit RTDs. As with beer, providing both mid- and high-strength seltzers will appeal to a broader range of customers.
We can expect to see another boost in the popularity of seltzers over spring and summer, as consumers seek out cold and refreshing drinks in the on-premise. This will not be a short-lived bump, however, as it seems that the category will continue to grow over the coming years. The on-premise has a significant role in the future of hard seltzers, as offering and promoting seltzers in venue will drive traffic to this new and buzzing category.
