Sparked by consumer preference, a new breed of beverage is bubbling to the top… bringing incremental sales to retailers’ alcohol business.
Market Size and Growth: IRI TUS MULC 52 weeks ending December 12, 2022
of Hard Beverages
The ground is shifting and the lines are being blurred across Beer, Wine, and Spirits. As a result a fourth category has emerged.
The Size of This Fourth Category
The Category is Growing...
The demand for this fourth category is turning on the spigot for new product launches. This flood of entrants brings opportunity but also creates confusion for shoppers, and retailers.
Anheuser-Busch is putting its insights to work to help industry members get it right. The nation’s powerhouse brewer did a deep dive into shopper preferences to understand the complexities of this emerging category. This knowledge positions A-B to provide recommendations to retailers to give them insight to keep up with rapidly shifting consumer beverage proclivities.
Make It Easy!
Hard Beverages fit today’s consumers’ lifestyles—shoppers don’t want to invest the time and effort required to assemble beverages from scratch—they prefer pre-mixed, low effort options. Further, shoppers expect that level of ease to translate to their shopping experience and rely on retailers to bring shoppability and clear navigation to simplify the store experience.
And for retailers to effectively manage this category and deliver the seamless experience shoppers are asking for, they must first appropriately define Hard Beverages and the products that fall within this category.
So, What Products Are Included Within Hard Beverages?
To successfully define the category, we must first understand what belongs in this category in the minds of consumers, and what does not.
Seltzers either Malt- or Spirit-based
What’s
Wine in a can or tetra-pak
Flavor is the Beacon
Eighty percent of spirit-based seltzers sales come from three brands; 50% of spirits-based cocktails sales are produced from two brands. For warm placement, research reveals that spirits-based hard beverages are equally productive warm versus cold. There is no need to sacrifice valued cooler space. The warm area is the perfect spot to highlight variety and drive incremental volume.
Three out of four shoppers are looking for malt-based choices in the refrigerator section—almost double that of Spirits-based products.
It is crucial to have representation of both spirits-based seltzers and spirits-based cocktails in the cold set because shoppers view see these as distinctively different and suited for different needs and occasions.
Create a cohesive department adjacent to the highly trafficked beer category. There is a 20-point conversion rate when Hard Beverages are positioned next to beer. This strategy also prompts product discovery.
Compact FMWB’s are suited for warm presentation. Shoppers are 2.5 times more likely to shop for these warm versus cold. Two-thirds of the segment’s sales come from singles. For multi-serve, with special sizes and lower turn rate, can also be successful merchandised warm.
Leading the aisle with Spirits-based Hard Beverages attract shoppers into the aisles and encourages trading up.
What's
...and Transactions are Gaining Traction
Year-over-year increases exceed $500 million
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Seltzers are lower ABV, lower calorie and associated with special occasions versus cocktails. Cold placement must be strategic and zero in on only the top performing brands.
LIGHT
FLAVORFUL
(Spirit-Based)
Malt/Sugar-based Seltzers
Cider
FMWBs Low-ABV
FMWBs High-ABV
Spirit-Based Cocktails
Multi-Serve
Seltzers
Sources
INS
OUTS
Ciders
Flavored Malt- or Wine-based
Multi-serve
Cheladas
Flavored Spirits or Beer
A look inside the numbers is telling...
+$500M
The
&
NOT
IN
24% of sales are incremental
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24%
2021
2022
Consumers tell us that all these products are not quite Beer, Wine, or Spirits. But rather Alcoholic Drinks, Made Easy. These are fully-formed drinks with less than 20% ABV.
Consumers tell us these aren’t Hard Beverages:
Wine in a can is simply Wine in a convenient package. Flavored Beer is Beer first, with a twist of flavor. Flavored Spirits are, at their core, Spirits first.
When consumers were asked what Hard Beverages mean to them, there was one common attribute that they all expressed: FLAVOR. This is their ‘mental map’ of the Hard Beverages category.
Behind Every Great Beer is a Visionary
Dreaming big is in Anheuser-Busch’s DNA. Always looking ahead, the company is writing the next chapter in its future– one of growth, innovation, responsibility and sustainability.
A-B is one of America's most iconic companies and the undisputed leader of the U.S. Beer industry. Proud of its history, the company remains committed to brewing the great-tasting, high-quality Beers that have satisfied Beer drinkers for generations.
In addition to America’s most recognized Beer brands, including top craft brews, A-B is a leader in the Beyond Beer segment. Through its broad portfolio, A-B is committed to meeting all customers’ needs for every occasion.
Click here to learn the Five Principles of
Hard Beverage Merchandising Success.
Seltzer made with real spirits offer consumers a choice for elevated occasions vs Malt-based Seltzers
In addition to the traditional flavors, such as Black Cherry or Mango, emerging sub-styles such as bolder flavor and high-ABV offers consumers a wider variety
Full flavored but typically for lower tempo and extended occasions such as kicking back with friends at a backyard BBQ
Full flavored but typically for more up tempo occasions such as a big night out
Elevated options made with real Spirits, but with much fuller flavor profiles ranging from refreshing to complex
DOLLARS
GROWTH
$340M
+94%
$4.1B
-10%
$437M
-4%
$2.5B
+16%
$1.4B
+10%
$384M
+61%
$346M
-3%
MARKET OPPORTUNITY
What's in a Name?
The first thing that must be done is to establish a title for the new category. A-B spent hundreds of hours talking to consumers to uncover a clear understanding of what they call this unique segment.
Consumers call this category a LOT of different things...
"Ready to Drink"
"Ready to Enjoy"
"Beer Alternatives"
"Non-Beer Options"
"Hard Beverages"
one name consistently rose to the top:
What does Hard Beverages mean to consumers?
What Constitutes a Hard Beverage In the Eyes of Consumers?
FMWBs continue to show strong growth, driven by key flavors such as hard teas and cocktail inspired options.
Malt/Sugar-based Seltzer represents almost half (43%) of all Hard Beverages, but is declining largely due to the traditional flavor options. However, within this segment, there are still pockets of growth through the emerging sub-styles such as bolder flavors and higher ABV offerings.
Spirit-based Hard Beverages represent only 8% of all Hard Beverages but are responsible for 33% of Hard Beverage growth.
KEY TAKEAWAYS
A-B went even deeper and asked consumers what Hard Beverages mean to them. They had varying opinions to describe what makes a Hard Beverage. The common theme that all consumers expressed was that Hard Beverages are....
Spirit-based cocktails
MASSIVE
OPPORTUNITY
MASSIVE
OPPORTUNITY
Spirit-based Seltzers
Spirit-based Cocktails
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This is how consumers see these products within this new category. Consumers told us that the products that make up Hard Beverages are not quite Beer, Wine or Spirits, but rather Alcoholic Drinks, Made Easy.
Consumers had varying opinions to describe what makes a
Hard Beverage a Hard Beverage...
The common theme that all consumers expressed was that Hard Beverages are...
"Drinks in a can"
"Bonus Buzz"
"Cocktails in a can"
Alcoholic Drinks,
Made Easy.
Consumers are looking for pre-mixed, low effort options to satisfy their needs.
Consumers see Hard Beverages as not quite Beer, Wine, or Spirits, but rather a fully formed drink, generally less than 20% ABV.
What to Remember
Consumers call this new fourth category... Hard Beverages.
Hard Beverages are Alcoholic Drinks, Made Easy. They are not quite Beer, Wine, or Spirits. Rather, these are fully formed alcoholic drinks with less than 20% ABV and served with minimal effort.
Flavor: Consumers' mental map of the category runs a spectrum from the lightest options with just a hint of flavor, to more complex options with a greater flavor intensity.
Spirit-based: Top brands & flavors within Spirit-based seltzers and Spirit-based cocktails, such as Cutwater and NÜTRL
Malt/Sugar-based Seltzer: Emerging sub-styles include bolder flavors, such as Bud Light Hard Soda, and higher ABV products, such as Bud Light Platinum Seltzer
FMWBs, Low & High ABV: Key flavors such as hard teas and cocktail inspired options
So, what should retailers focus on when looking for areas of GROWTH within Hard Beverages?
This is how consumers see products within this new category. They told us that Hard Beverages are not quite Beer, Wine, or Spirits, but rather a fully formed drink, generally with less than 20% ABV.
And they are easy. They are pre-mixed, low effort options that don't require the time or energy to create from scratch. This convenience factor is key to meeting consumer needs.
Flavor is not just all about sweetness, but rather the full taste experience of the drink. This experience encompasses a variety of dimensions, such as sweet or savory, level of carbonation, and presence of alcohol taste. It may also highlight a drink's resemblance to non-alcoholic profiles such as lemonade or tea, or to alcoholic profiles like margarita.
With flavor as the beacon, consumers segment products ranging from the lightest options with just a hint of flavor, to more complex options with greater flavor intensity. This, in turn, creates the Hard Beverage category structure below.