The effervescent sales growth for hard seltzer in the past few years seems to have lost much of its fizz in the past several months, as major beer companies report disappointing sales for the beverage.
But a local craft beer maker continues to find success after adding the beverage to its rotating lineup of seasonal and special brews after its taproom was forced to shutter early in the coronavirus pandemic.
Windsor-based Barrel Brothers Brewing first came out with the label Seltzer in Place but has since released more than a dozen variations under several labels, according to co-founder and brewmaster Wesley Deal.
“It was a way to get an add-on customer,” Deal said. “We’re a brewery first, so there had to be a synergy with the beermaking operation. Consumers want something new, so we create a base then do a craft spin on it.”
Of the 7,500 barrels the brewer expects to produce this year, about 500 are of seltzer. Newer additions to the brewery’s lineup are Bubbles, a fruit-flavored line, and Beer Friends, based on the “smoothie seltzer” developed on the East Coast.
Also known as alcoholic seltzer, spiked seltzer or hard sparkling water, hard seltzer took the beverage alcohol world by storm in 2018 with low-alcohol (commonly 4% to 6%), lower-calorie (often around 100 calories) alternatives to beer. Dominant national brands have been White Claw, produced by Mark Anthony Brands, and Truly, produced by Boston Beer, but other major players jumped in, namely AB InBev, E.& J. Gallo and Constellation Brands.
After a surge in hard seltzer sales in the past few years, large-scale producers now aren’t as bubbly about the beverage. Sales were up 178.5% for the 52 weeks ending Nov. 14, 2020, from a year before, according to NielsenIQ. But annual growth was just 17.3% for the 52 weeks ending Nov. 13 this year and was virtually flat (down 0.4%) for the 13 weeks ending in the middle of this month.
In the same periods, the overall beer category, which also includes other flavored malt beverages and cider, had growth of 14.8%, negative 1.7% and negative 5%.
“Sales were growing like gangbusters and then they seemed to hit a wall in May-June,” said Jon Moramarco, managing partner of beverage alcohol industry consultancy BW 166. The beverage it still selling, but the number of producers making it and the amount of growth they built into their business models was far higher than retailers were willing to take on amid their own trimming of products they carry, he said.
“That’s the nature of fast-growing products,” Moramarco said. “Everybody was excited by it, and all of a sudden it has reached its limit with consumers.”
That limit has been seen in financial reports from the top producers. In early October, top U.S. beer and wine producer Constellation Brands was the latest major producer of the drink to signal that its high growth rate was easing, according to CNBC.
The upper New York state–based company reported underwhelming quarterly earnings — adjusted net income of $2.38 a share, compared with the analyst consensus expectation of $2.77 — blaming the miss significantly on slowing sales of hard seltzer.
Constellation launched hard seltzer under its Corona imported beer brand last year, and in the latest quarter took at $66 million obsolescence charge because of excess inventory.
“Our entire miss was because of the obsolescence charge,” CEO Bill Newlands told the news channel.
He said hard seltzer would continue to be a key component of beverage alcohol but at a “much lower growth rate.”
“Certainly, the seltzer category has had a bit of a lid put on it in the last, say, eight weeks or so, and everybody overestimated what the growth profile was going to look like for this year,” Newlands told CNBC’s Jim Cramer.
Boston Beer, maker of the Truly seltzer brand, in September revised its earnings guidance after that fizzy drink was a factor in weaker-than-expected quarterly results this summer, the news outlet reported. And in October, the company told CNBC it was destroying “millions of cases” of excess inventory.
Closer to home, Napa Vallley-based Trinchero Family Estates, the fourth-largest wine company in the U.S., in spring of last year introduced the Del Mar wine seltzer brand. But by this fall, the company told the Business Journal that it no longer produces the brand. Further comment on that move wasn’t available.
Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.
The Link LonkDecember 02, 2021 at 12:45AM
https://www.northbaybusinessjournal.com/article/article/north-coast-hard-seltzer-makers-adjust-to-less-fizzy-sales/
North Coast hard-seltzer makers adjust to less fizzy sales - North Bay Business Journal
https://news.google.com/search?q=hard&hl=en-US&gl=US&ceid=US:en
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