The US beer segment has been losing share due to the rise of hard seltzer. The hard seltzer market is growing at a spectacular rate, drawing consumers from other alcoholic beverages categories. Together, hard seltzer and other seltzer-like products are expected to drive the ready-to-drink category, turning it into the fastest-growing beverage alcohol in the US over the next five years.
Hard seltzer is a highball drink containing carbonated water, alcohol, and often fruit flavoring. The popularity of this drink has skyrocketed in the last couple of years and the reason is that it has hit the market at just the right time, while the product itself has attracted a wide range of consumers. According to Nielsen, hard seltzer is particularly popular with Caucasians between the ages of 21 and 44 years from affluent neighborhoods while it attracts both genders equally. Moreover, the development of an immense wellness market reflects that consumers are now, more than ever before, prioritizing lifestyle and taking their well-being into their own hands. Low-calorie, refreshing, with an ABV comparable to most light beers, it is undeniable why the hard seltzer market is having its moment of shine. Furthermore, ready-to-drink beverages, or RTDs, like hard-seltzers are packaged ready for immediate consumption upon purchase. According to ForMarkets, the global RTS market is predicted to reach $17.67 billion by 2025, with a growth rate of 7.2% from 2018-2025 and that is why companies like White Claw, Truly, Bon & Viv, and others are capitalizing on this opportunity. This trend appeals also to beer drinkers who seek something different, spirits enthusiasts who want something lighter, and casual drinkers who don’t enjoy strong alcohol and prefer drinks with a lower ABV.
Hard seltzer category which is now worth about $550 million, could grow to reach $2.5 billion by 2021, according to research from UBS. A lot of companies have now entered the FMB market war zone. White Claw is leading the way with 40.8% share, followed by Boston Beer (19.99%), Anheuser-Busch which was launched in January (9.9%), Diageo Molson Coors (6.6%), Constellation Brands, that launched Corona Seltzer this spring investing in a $40 million marketing push (3%), and other brands (11.5%).
Introduced in May 2016, White Claw has been the go-to hard seltzer and has made its founder, Anthony von Mandl, a rockstar in the spirits world. Before releasing White Claw, he built a fortune off of Mike’s Hard Lemonade, and he has built some of the finest wineries in the world, where Prince William and Kate Middleton had paid visits in 2016, across British Columbia. Von Mandl has been called by many media “Tony Baloney” because of his talent for creating compelling stories to sell his products, Business in Vancouver reported in 2014.
White Claw Hard Seltzer has been so popular since it launched that the company was faced with a shortage in September 2019 after “the summer of White Claw” when Trevor Wallace released a YouTube video that has received 4 million since then. Widely memed since then, the drink “captured the zeitgeist of American drinkers, as it sits at the nexus of health, wellness, and convenience.” To keep up with the demands, White Claw maker, Mark Anthony Brands, are investing $385 this fall to build two new production facilities in the US. In 2019 White Claw was the nation’s number one seltzer, generating about $1.5 billion in sales according to Sanjiv Gajiwala, the company’s senior vice president of marketing. The company still holds the “best hard seltzer” title until today.
White Claw Hard Seltzer combines the simplicity of seltzer water, along with a gluten-free alcohol base, and a hint of fruit flavor. The alcohol comes from fermented sugars derived from malted gluten-free grains. The marketing goals of the company have been long focused on generating awareness, connecting, and engaging with consumers through a 360 approach, extending their influence beyond the brand’s digital channels into traditional media and retail. Hard seltzer is an entire category born catering to the millennial sensibility and White Claw is undeniably a major pop culture force and the biggest-selling hard seltzer brand in the world.
Trends Driving White Claw’s Growth:
In recent years, the term wellness has been much more than just physical health, exercise, and nutrition. It is a multidimensional term that includes physical, emotional, and social health. For consumers, the rise of the wellness culture implies embracing a personal sense of integrated wellbeing while brands are reinventing their values to cater to this trend. Brands are advertising “aspirational lifestyles” through social media, and millennials are the first to grasp and buy into the wellness mentality. According to Eventbrite data, 78% of millennials choose to spend money on a desirable experience rather than buying physical products. White Claw was quick to follow this trend by creating a product which has only 70-100 calories, 3.7% alcohol, 0g carbs, is naturally gluten-free in a standard 12-ounce can, and has amazing fruit-flavors such as black cherry, mango, natural lime, raspberry, ruby, pineapple, clementine, and grapefruit.
2. Appealing to its fans’ tastes
Listening matters, it matters a lot. The company tapped into its internet fans and chose these flavors based on 70,000 requests from social media. Paying attention to your fans’ preferences who are reaching out goes a long way. Positive word of mouth has been the most powerful marketing advantage for White Claw. In March 2020, the company introduced three brand new flavors, adding to the six flavors that they already had, to its lineup. At the same time, they launched the 12-can variety pack because they wanted their customers to try all the brand’s flavors. According to Danelle Kosmal, vice president of Nielsen’s Beverage Alcohol Practice Area, variety packs play an important role for hard seltzers since they are the top-selling flavor packs for nearly every brand and account for 63% of total hard seltzer sales.
3. Increase in market demand for Hard Seltzer
Hard seltzer has proven to be the most resilient segment within the entire alcoholic industry, which was influenced by the sudden bar, restaurant, and on-premise tasting room closings amid the COVID-19 pandemic. According to Nielsen, in the week ending July 6, hard seltzers grew 255% over the seven days. As David Henkes, a senior principal at Technomic, a company that tracks restaurant and food service trends, has mentioned before, “consumers are looking for refreshing alternatives that are ‘better for me’ although what ‘better for me’ means is open to interpretation.”
4. Embracing the future of gender norms
Gender norms are changing and companies are realizing that this shift cannot be ignored. What White Claw has been doing successfully in all its marketing campaigns is that they don’t make assumptions about what their customers are looking for because of their gender and take a gender-neutral approach. Their product is directed to everyone, male and female consumers. Sanjiv Gajiwala claims that “Millenials and Gen Z, more than any other generation before, don’t see gender as a barrier or guardrail for their socialization. They want to spend time together and do the same things.”
White Claw, which utilizes the phrase “Made Pure”, is named after the term for a cresting wave and is marketed more like a premium sparkling water than a beer. As Zara Flynn, marketing partner at Rothco, a creative agency, mentions “It wasn’t about joining in what the beer industry was currently doing. It was smashing all those norms and creating something really fresh and unique.” White Claw was able to get to the top because it was for everybody, and it was for nobody. It is an inclusive way to have a good time with friends (the experience).
5. Income Inequality
White Claw as well as other brands in the industry have become aspirational brands while hitting an affordable price point. They have become a “lifestyle brand” by creating experiences around the product itself, prioritizing shared moments with friends instead of materialistic goods. Millennials, their target audience, are experiencing rising costs and lower wages which ultimately turns prioritizing experiences instead of status symbols. Hard seltzer has embraced this idea, by relating affluent experiences, like windsurfing, boating, hiking, etc. to the product itself without spending too much money.
6. Standing Apart
In a market full of choices, White Claw has made it stand apart. White Claw gets 171,000,000 search volume in Google, 12x the search volume of “SpikedSeltzer” (307,000 results) and “hard seltzer”(13,400,000 results) put together. The biggest strength of the brand is that it seems that they have the ability to read the market well, and the willingness to commit resources to the best it makes. The success of standing apart is the result of a campaign by Mark Anthony Brands to create a beverage that consumers would crave and give them reasons to share that craving.
7. Viral Marketing
Since the beginning, White Claw has been very selective with ad placements. In October 2019, the brand also slashed its ad spend by 30% to $11.1 million during the first seven months of the year compared with a year earlier, per data researcher Kantar. White Claw spent 91% of its tracked media budget on cable TV, 6% on magazines, and 2% on spot TV. The broader product category spent 75% on cable TV, 10% on network TV, and 4% on outdoor advertising, per Kantar. Gajiwala points out that Kantar does not count social media spending where White Claw dedicates a lot of its advertising on Instagram, Facebook, and Twitter. The brand has been long benefited from earned media with lots of it coming from fans who run social media accounts such as “whiteclawmeme” and “whiteclawchronicles”. After all, word of mouth is the best marketing strategy. One of the biggest bursts of free PR came over the summer of 2019 when Trevor Wallace released his video, popularizing the phrase “ain’t no laws when you are drinking Claws”. After this, the brand became the unofficial party drink for Americans, generating a huge buzz around the brand which was trending online, while even police precincts felt the need to remind citizens that laws actually do apply when you’re drinking White Claw. The company’s policy has been mainly to allow consumers to drive awareness and define the brand.
These are some of the lessons to take from the success of White Claw such as:
- Brands have to be transparent and aware of the changing norms in society. A marketing strategy for a specific gender-related target audience doesn’t apply in many brands.
- Being first gets you ahead of the competition but it doesn’t remove the competition created next.
- Brands need to be clear on what their vision is and communicate it constantly with their audience, all while remembering to be fearless.
- Be innovative! Technology continues to make us consider new ways that our brands can reach consumers, which has a direct impact on product design. Embrace this change and discover ways to turn technology to your favor, instead of viewing it as an obstacle.
All things considered, will new entrants take market-share away from White Claw? Even though being first to market and first in the mind of the consumer is a very powerful marketing strategy, competition with new entrants is tightening. According to Nielsen, hard seltzer sales in off-premise channels combined for a gain of 213% last year to about $1.5 billion, up from $496 million in 2018, when dollar sales registered a 169% gain over the previous year. This year, the market is experiencing continued triple-digit growth, driven by surging consumer demand, expanded availability of established brands, and the launch of new products. Only time will tell, but we are sure that White Claw will continue to be the market leader, even with a smaller share of the larger market.