Fizzy fad’s bubbling growth going flat

U.S. seltzer producers seeing ‘stunning collapse’ after long boozy boom

Wander the shelves of any LCBO, Beer Store or bottle shop these days, and you’re bound to see dozens of hard seltzers, in a seemingly endless array of flavours.

But slumping sales and projections at two of North America’s biggest producers has some observers wondering whether the fizz has gone out of the booze world’s biggest fad of the past decade.

Boston Beer Co., makers of Truly seltzers, announced recently it was withdrawing its financial forecasts for the rest of the year because the U.S. market was likely going to sell 100 million fewer cases of hard seltzers than had been forecast in May. Sales data from market research firm Nielsen IQ recently showed that even market leader White Claw had seen doubledigit year-over-year decreases in the past few months.

For a category that had been doubling and tripling in size for the previous few years, it’s a startling and speedy slowdown, said beer and spirits author and consultant Stephen Beaumont.

“That’s just since the May forecast. That’s a stunning collapse,” said Beaumont.

“We believe there will be continuing uncertainty about hard seltzer demand trends for the remainder of 2021. As a result of this uncertainty and its impact on our volume trends, the company is withdrawing its 2021 financial guidance,” Boston Beer announced Sept. 8, a day that saw the company’s shares plunge nearly 10 per cent.

In late July, the company saw its shares fall 26 per cent in a single day after lower-than-expected quarterly earnings it blamed on slumping seltzer sales.

The market in the U.S. and Canada has been dominated by larger brands like White Claw (produced by Mark Anthony Group, which also makes Mike’s Hard Lemonade) and Boston Beer Co.’s Truly.

Other big brewing and consumer product companies, including Molson-Coors and Coca-Cola, have made major investments in the seltzer market.

For major brewing companies that have seen sales of their long-time flagship beer brands falling for the better part of the past two decades, the seltzer craze had been a pleasant change of pace, said Beaumont.

“The major brewers have all been doing it because they couldn’t afford to be left behind. Their major brands have been slipping for years,” said Beaumont.

Adam Collins, chief communications and corporate affairs officer at Molson-Coors, acknowledges that the breakneck growth in the seltzer category is slowing down, but insists that the company is still happy with sales of its Vizzy seltzers, as well as the Topo Chico line of hard seltzers it produces for CocaCola.

There’s still plenty of life in seltzers yet, Collins said — this isn’t a modern day Zima.

“It’s had triple-digit percentage growth for the last few years. We never expected that kind of growth to continue forever,” said Collins. “At the end of the day, seltzers are here to stay.”

According to a recent report from Morgan Stanley analyst Filippo Falorni, U.S. sales of Molson-Coors’ seltzers were up 89 per cent year over year in the four weeks ending Aug. 28.

In the same time period, Mark Anthony saw a 16 per cent slump, while Constellation Brands, which produces Corona Hard Seltzer, crashed 39 per cent. AB-Inbev, which produces Bud Light Hard Seltzer, grew by just two per cent.

According to an LCBO spokesperson, seltzer sales are still climbing at the provincial alcohol retailer. Still, the U.S. sales plunge has caught the eye of Canadian producers.

“I don’t think anyone’s really surprised there’s been a slowdown.

“But the fact it’s happened this soon caught a lot of people offguard, including us,” said Todd Lewin, president of Muskoka Brewery, which produces several varieties of seltzer under the name Hard Sparkling Water.

Lewin said sales of single cans have been well short of forecasts this year, although cases of 12 and 24 have been holding up.

The eye-popping sales growth south of the border over the past few years drew many craft breweries, both in Canada and the U.S., into the world of hard seltzers.

Some of them probably shouldn’t have jumped in with both feet, said Lewin.

“I think people saw some of the numbers coming out of the U.S., where it was going up 250 per cent a year, and looked at it with rose-coloured glasses. They figured it was an easy category to get into,” said Lewin. “I think some producers, especially small ones, didn’t realize how much work it was building a brand.”

Still, hard seltzers are unlikely to disappear completely, at least not for a while, said Beaumont.

“Are hard seltzers here to stay? For the immediate future, yes. Would I be confident in saying they’ll be around in 10 years? Not necessarily.”