Beer Quarterly Q1 2021: The Rise of Hard Seltzers in the US and Beyond

The latest quarter has not been brilliant for brewers, but at least it was much better than during the first lockdown in Q2 2020. The recovery of volumes seen in Q3 2020 has stalled as the on-trade faces renewed restrictions in certain parts of the world. Volumes were affected most in highly on-premise markets, especially in Europe, while most global brewers saw a mid-single digit decline in revenue/hl, due to changes in their channel mix. Profit, especially in the US, is driven significantly by premiumization, in the fourth category, and in newer above-premium light lagers.

Report summary

In this Beer Quarterly, we look at hard seltzers in detail. We ask if the product will be facing saturation in the US any time soon and whether the phenomenon can spread to other parts of the world.

North America: Hard seltzers are the success story of the US beer market, driving new consumers to the segment, with massive levels of innovation, significant marketing and capex investment, and even some M&A activity. This category is expected to sustain significant growth for many years to come. For many brewers, seltzers provided a notable tailwind in a challenging 2020 – and virtually every player in the US beer space has major plans for new products in 2021. However, the category boundaries are rapidly blurring, and the marketplace is getting very crowded.

Europe: Hard seltzers in the UK are following the US and are seeing strong growth from a low basis. In continental Europe, the number of new product introductions is high. The presence of leading US hard seltzer players like A-B Inbev, Molson Coors and Heineken in the region is also helping the category, but there is more competition from established traditional products such as gin & tonic. On the demand side, there is a consumer focus on low calorie products, but SKUs with reduced alcohol content are also on the rise.

Asia: Australia is leading the hard seltzer push in Asia-Pacific and will remain the top destination for companies. Japan has considerable potential for hard seltzers as well. A large flavoured-alcohol consumer base is common to both markets and is the target segment for hard seltzer brands. In the rest of Asia, brands will need to innovate the route-to-market and their positioning in order to build consumer traction and consumption occasions for hard seltzers. The young, health-seeking, conspicuous consumer is the target segment in the rest of Asia, limiting the reach of hard seltzers to highly-urbanized micro-markets in the region.

  • Francois Sonneville

    Senior Analyst - Beverages
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  • Sudip Sinha

    Senior Analyst - Beverages
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  • Jim Watson

    Senior Analyst - Beverages
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