Rethinking a not-so-beer niche which fell flat in the 90s
Learnings from the claws of the reborn Hard Seltzer
The year was 1993. Bill Clinton was president of the United States. The world trade centre was bombed(not a lot of people know this). Buckingham Palace opened its doors to the public. Sleepless in Seattle & Shindler’s list came out that year. NASA lost contact with the Mars rover flushing 980million of U.S taxpayers money. The most intriguing of all: Zima came out in the market.
Zima sure sounds like an aphrodisiac. It was not, at least not what it was intended for. Zima was a hard seltzer — A clear beer — a carbonated alcoholic beverage with fewer calories. It grew rapidly in its first year, then it flopped gradually.
Beer was perceived & positioned as a macho drink then(stupid times). Zima was largely ridiculed as it became widely popular with women in the 90s.
There are some things which everyone tries once and that’s it. That was Zima
If you can pay attention to the above four lines, you can build a billion-dollar Hard Seltzer brand now. How?
Let’s find out.
What is Seltzer?
Seltzer is the simplest of the waters, made by carbonating plain water with carbon dioxide (CO2). Owing to its neutral profile, seltzer water is occasionally flavoured using natural fruit essences and oils, as in popular brands like La Croix and Spindrift.
The carbonated water trend started in the 1980s with the increase in consumption of flavoured carbonated beverages.
Fun fact, Vodka, Seltzer and a splash of cranberry was JFK’s mother Rose Kennedy’s favourite drink.
Introducing Hard Seltzer, again.
Zima was a Hard Seltzers, it terribly failed. But, Hard Seltzers are back in the market. The category did $1.6 billion in sales in 2019, growing at more than 200% pace.
Every major player in the beer industry is coming up with a Hard Seltzers of their own: Bon and Viv by Anheuser-Busch InBev(the brand behind Budweiser), Boston Beer Co.’s Truly which has a 15% market share, Henry, Nauti, and Press are among other players in the Hard Seltzers game.
By 2019, there were more than 80 Hard Seltzers brands in the United States alone with a market of $4.4 billion. Whitelaw founded by serial wine entrepreneur Anthony von Mandlby is the 50% market shareholder in the Hard Seltzers niche.
In the 1990s, Hard Seltzers brand Zima terribly failed and was ridiculed frequently on David Letterman.
Let’s understand what changed the Hard Seltzers business in the past 20 years.
A. Understanding Cultural Change
I. Closing the gender gap
The brands of the 1990s were aimed at 25% of people who didn’t like beer but wanted to hold something in their hands while conversing at parties and attending barbeques.
It was also aimed at soccer moms to enjoy from the cooler while watching the game, a drink to keep them engaged while they ran errands, just how men were portrayed with beers and a wrench.
The 30-year leap has closed the gender gap significantly. Characteristics of Men and women are not(entirely) based on stereotypes anymore.
Hard Seltzers which is a type of light beer and known for lesser calories became popular, not just among women but it appeals to men.
Use this, how?
The gender gap card has been played by brands for a long time, it doesnt work anymore. Sweetgreen, a salad company as per old norms could only have been popular among women. In reality, thats not the case at all.
You can read the full essay on Sweetgreen here
II. Rise of the adjacent market — Sparkling water over the years
The most un-American event has been shaping up in The United States. The number of soda drinkers is falling, rapidly.
Soda is the new tobacco and people now know it. Sugar is being debated as more addictive than cocaine by many researchers. Soda consumption is drastically declining as water gains momentum. The trend of health consciousness is gaining. The internet age, millennial mindset and information about calories is driving decisions.
Quite recently in a press meet, Christiano Ronaldo replaced Coca-Cola kept in front of him with water while proclaiming: “drink water”.
All of these events have had a snowballing effect on the rise of health-conscious drinkers, ultimately leading to a rise in the consumption of sparkling water and Hard Seltzers.
B. Understanding Business & Consumer Strategy
I. Convenience & Price
Hard Seltzers are 5% ABV(alcohol by volume) which enables the brands to sell them at various grocery and convenience stores, which is not the case for hard liquor. Seltzers like White Claw are even available at Walmarts.
The Hard Seltzers are priced at $12 for a pack of 12, while conventional beers are available are for $16/12pack.
II. Ready to drink cocktails are on the rise
The success of Hard Seltzers can also be contributed to the rise of the emerging malt-based cocktail segment leading the pack of packed cocktails in growth. Annual sales in this segment are up 574%, and malt-based cocktails now account for $4.7 million in annual sales.
III. Healthier Lifestyle & safely Gluten-free
Insights
According to this survey: Millennials define being healthy as having good eating habits (24 %) and regular physical activity (22 %), compared with the older generations.
Millennials have been labelled the most “health-conscious generation ever” due to various reasons such as visiting nutritionists (65%), dieticians (58%), or personal trainers (54%) about their food choices.
Another study showed that 9 out of 10 millennials consider healthy eating to be one of the pillars of wellness. Statistically, 77% exclude whatever is harmful to their health. This is compared to a mere 12%of baby boomers.
Strategy
Comparable to beer in terms of alcohol, Hard Seltzers are healthier. It is comparable to beer in terms of calories(100) and it is healthier than beers as it contains very very less sugar content.
IV. Drinkability
Insights
Sugar in beers causes our insulin to spike, leaving us wanting more, more and more. It is a biochemical phenomenon that cannot be helped.
On the split side, when we switch to low-calorie foods, the consumption automatically increases(unless it’s high on fibre) due to our irrational behaviour. The mindset that we are consuming low calories gives our mind permission to consume more quantity. It ultimately leads to us consuming more.
Hence, the low calories and low sugar content act merely as a marketing play and communication for the brand, it doesn’t contribute much to the health factor as much as we want it to. I like to call it the “peanut theory”.
Unless you have it under control, which rarely happens.
C. Brand Strategy
I. Design
The Zima launched in the 1990s, kept appealing to men despite being continuously shot down. It got some acceptance by soccer moms but Zima badly wanted to play the macho card. It even launched Zima XXX — a stronger version of the clear beer to influence the opinion of men. It failed, yet again.
The Hard Seltzers of the 21st century are gender-neutral. Let’s take White Claw — the Hard Seltzers which has 63% of the US market share among 80 Seltzers.
It is a gender-neutral white in colour. It comes in flavour variants like Mango, Natural Lime, Ruby Grapefruit, Watermelon, Blackcherry etc. One of the major effects of snowballing into the market is catering to both men and women, unlike beer which has majorly catered to men.
The typography and packaging are simple and is not made for a specific target group — for everyone age 21+.
II. Positioning:
Hard Seltzers brands are positioning themselves as lifestyle brands rather than beverage or spirit brands. The strategy is for consumers to feel the power and freedom to choose a lifestyle.
In communication, brands like White Claw portrays men and women at beaches playing frisbees, on boats enjoying the summer vibe and in concerts. The Hard Seltzers brands are trying to become a part of the summer and party lifestyle of millennials & GEN-Z. It is very unlike being a conversation drink like beer.
III. Community building & Social Media
Social media did not make White Claw what it is today. It is an unfortunate misunderstanding of marketers that every millennial brand is made by social media. If that was the case, every brand on Instagram would be famous.
White Claw positioned itself to appeal to Millenials and GENZ.
The strategy was simple: showcase a lifestyle resonating with the audience and become a part of the conversation.
Party anthems like “Ain’t no laws when you’re drinking Claws” was popularized by a parody video of YouTuber & Comedian Trevor Wallace which has more than 4 million views on YouTube.
D. Challenges Ahead
It is not beer
The Hard Seltzer brands are not providing an alternative to beer, rather they are competing with the beer brands. Beers are a very different beverage than Hard Seltzers.
When compared purely on the merit of “quality of beer” which is the category they are competing in, beer wins, hands down(personal opinion).
This could be the biggest threat to Hard Seltzers despite the growing market.
Thank you for reading. See you in the next one.
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