The US beer segment has lost share due to the rise of Hard Seltzer. The Hard Seltzer market is growing at a spectacular rate, drawing consumers away from other alcoholic beverage categories. Hard Seltzer and other Seltzer-like products are expected to combine to drive the ready-to-drink category, making it the fastest-growing beverage alcohol in the U.S. over the next five years.
Hard Seltzer is a highball drink that contains carbonated water, alcohol and often fruit flavoring. The popularity of this drink has skyrocketed in recent years, and the reason is that it has entered the market at just the right time, while the product itself has attracted a wide range of consumers. According to Nielsen, Hard Seltzer is most popular among Caucasians between the ages of 21 and 44 from affluent areas, while it attracts both genders equally. In addition, the development of an immense wellness market reflects that now more than ever, consumers are prioritizing lifestyle and taking control of their own well-being. Low in calories, refreshing and with a ABV comparable to most light beers, it is undeniable why the hard seltzer market is having its moment of brilliance. Moreover, ready-to-drink beverages, or RTDs, like hard seltzer are packaged for immediate consumption at the time of purchase. According to ForMarkets, the global RTS market is expected to reach $17.67 billion by 2025, growing at a CAGR of 7.2% from 2018to 2025, which is why companies such as White Claw, Truly, Bon & Viv, and others are capitalizing on this opportunity. This trend also appeals to beer drinkers who are looking for something different, spirits lovers who want something lighter, and casual drinkers who don’t like strong alcohol and prefer drinks with a lower ABV.
The hard seltzer category, now worth about $550 million, could grow to $2.5 billion by 2021, according to a UBS study. Many companies have now entered the war zone of the FMB market. White Claw leads with a 40.8% share, followed by Boston Beer (19.99%), Anheuser-Busch, which launched in January (9.9%), Diageo Molson Coors (6.6%), Constellation Brands, which launched Corona Seltzer this spring and invested in a $40 million marketing push (3%), and other brands (11.5%).
Since its launch in May 2016, White Claw has been the most popular hard seltzer and has made its founder, Anthony von Mandl, a rock star in the spirits world. Before launching White Claw, he built a fortune with Mike’s Hard Lemonade, and he has built some of the best wineries in the world, where Prince William and Kate Middleton had paid visits via British Columbia in 2016. Von Mandl has been dubbed “Tony Baloney” by many media outlets 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 its launch that the company faced a shortage in September 2019 after the “summer of White Claw” when Trevor Wallace released a YouTube video that has since received 4 million views. The drink, which has since been widely memed, “has captured the zeitgeist of American drinkers as it sits at the intersection of health, wellness, and convenience.” To keep up with demand, the manufacturer White Claw Mark Anthony Brands is investing $385 to build two new production facilities in the U.S. this fall. In 2019, White Claw was the number one seltzer in the U.S. with sales of about $1.5 billion, according to Sanjiv Gajiwala. The company holds the title of “best hard seltzer” to this day.
White Claw Hard Seltzer combines the simplicity of seltzer water 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 company’s marketing goals have long focused on generating awareness, connecting, and engaging consumers through a 360-degree approach that extends its influence beyond the brand’s digital channels into traditional media and retail. Hard seltzer is an entire category created for Millennial sensibilities, and White Claw is undeniably a major pop culture force and the best-selling hard seltzer brand in the world.
Trends Driving White Claw’s Growth:
In recent years, the term wellness has come to mean much more than physical health, exercise, and nutrition. It is a multidimensional term that includes physical, emotional, and social health. For consumers, the rise of wellness culture means embracing a personal sense of holistic well-being, while brands are reinventing their values to match this trend. Brands are advertising “aspirational lifestyles” on social media, and Millennials are the first to grasp and buy into the wellness mentality. According to data from Eventbrite, 78% of Millennials would rather spend money on a desirable experience than buy physical products. White Claw quickly followed this trend by creating a product that is only 70-100 calories, 3.7% alcohol, 0 grams of carbohydrates, is naturally gluten-free, comes in a standard 12-ounce can, and has amazing fruit flavors like black cherry, mango, natural lime, raspberry, ruby, pineapple, clementine, and grapefruit.
2. Appealing to its fans’ tastes
Listening is important, very important indeed. The company tapped into its internet fans and selected these flavors based on 70,000 requests from social media. Paying attention to the preferences of your fans who reach out can go a long way. Positive word of mouth has been the strongest marketing advantage for White Claw. In March 2020, the company introduced three brand new flavors to its lineup, adding to the six flavors it already had. At the same time, it introduced the 12-can variety pack as it wanted customers to try all the flavors the brand had to offer. According to Danelle Kosmal, vice president of Nielsen’s Beverage Alcohol Practice Area, variety packs play an important role for Hard Seltzer as they are the best-selling flavor packs for almost every brand and account for 63% of Hard Seltzer’s total sales.
3. Increase in market demand for Hard Seltzer
Hard seltzer has proven to be the most resilient segment within the overall alcohol industry, impacted by the sudden closures of bars, restaurants, and tasting rooms amid the COVID -19 pandemic. According to Nielsen, hard seltzer sales grew 255% in the week ending July 6. As David Henkes, senior principal at Technomic, a company that tracks trends in the restaurant and foodservice industry, mentioned, “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 businesses are realizing that this change cannot be ignored. What has made White Claw successful in all of their marketing campaigns is that they make no assumptions about what their customers are looking for based on their gender and take a gender-neutral approach. Their product is aimed at 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 to their socialization. They want to spend time together and do the same things.”
White Claw, which uses the phrase “Made Pure,” is named after the term for a breaking wave and is marketed more like premium sparkling water than a beer. Zara Flynn, the marketing partner at creative agency Rothco, explains, “It wasn’t about going along with what the beer industry is doing right now. It was about smashing all those norms and creating something really fresh and unique.” White Claw was able to come out on top because it was for everyone and no one. It’s 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 achieving an affordable price point. They have become a “lifestyle brand” by creating experiences around the product itself and prioritizing shared moments with friends instead of materialistic goods. Millennials, their target audience, are experiencing rising costs and lower wages, which ultimately leads them to prefer experiences instead of status symbols. Hard Seltzer has embraced this idea by combining affluent experiences like windsurfing, boating, hiking, etc. with the product itself without spending too much money.
6. Standing Apart
In a market full of choices, White Claw has been relegated. White Claw receives 171,000,000 search volume in Google, 12 times the search volume of “SpikedSeltzer” (307,000 results) and “hard seltzer” (13,400,000 results) combined. The brand’s greatest strength is that they seem to have the ability to read the market well and the willingness to devote resources to the best of what they do. Standing Apart’s success is the result of a campaign by Mark Anthony Brands, to create a drink that consumers crave and give them reasons to share that craving.
7. Viral Marketing
From the beginning, White Claw has been very selective about ad placement. As of October 2019, the brand has cut its ad spend by 30% year-over-year to $11.1 million in the first seven months of the year, according to data researcher Kantar. White Claw spent 91% of its tracked media budget on cable TV, 6% on magazines, and 2% on spots TV. The broader product category spent 75% on cable TV, 10% on network TV, and 4% on outdoor advertising, according to Kantar. Gajiwala points out that Kantar doesn’t count social media spend, where White Claw spends much of its advertising on Instagram, Facebook, and Twitter. The brand has long benefited from earned media, with much of it coming from fans who run social media accounts like “whiteclawmeme” and “whiteclawchronicles.” After all, word of mouth is the best marketing strategy. One of PR’s biggest breakouts came in the summer of 2019 when Trevor Wallace released its video popularizing the phrase “ain’t no laws when you are drinking Claws.” After that, the brand became the unofficial party drink of Americans and created a huge buzz around the brand trending online, while even police departments felt the need to remind citizens that laws do indeed apply when you are drinking White Claw. The company’s policy was mainly to let consumers know and define the brand.
These are some of the lessons to take from the success of White Claw such as:
- Brands need to be transparent and aware of changing norms in society. A marketing strategy for a specific gender audience does not exist for many brands.
- Being first gives you an edge over the competition, but it doesn’t eliminate the competition that comes next.
- Brands need to be clear about their vision and constantly communicate it with their audience while remembering to be fearless.
- Be innovative. Technology is always making us think of new ways for our brands to reach consumers, which directly impacts product design. Embrace this change and discover ways to use technology in 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 in the minds of consumers is a very powerful marketing strategy, competition with new entrants is getting tougher. According to Nielsen, sales of Hard Seltzer in off-premise channels grew 213% last year to about $1.5 billion, and $496 million in 2018, up 169% year-over-year. This year, the market continues to experience triple-digit growth, driven by increasing consumer demand, expanded availability of established brands, and new product launches. It remains to be seen, but we are confident that White Claw will remain the market leader, even if its share of the larger market is smaller.