THE GIST
In its first week since hitting shelves March 29, Molson Coors Beverage Company’s Topo Chico Hard Seltzer captured a 3.1% share of the U.S. hard seltzer market—from sales in just nine states, plus seven large metropolitan areas. In its first four weeks, the hard seltzer generated more than $6.2 million in chain retail sales tracked by market research firm IRI, nearly as much as all of Boulevard Brewing Company’s portfolio in the same stores so far this year. A full, national launch is coming later this year.
It’s a strong debut in a still-growing category that amassed $4.3 billion in chain retail sales last year, about 2.5 times its sales in 2019. With a flood of entrants, hard seltzer is becoming increasingly fractured as new brands—large and small—challenge the dominance of Mark Anthony Brands’ White Claw Hard Seltzer and Boston Beer Co.’s Truly Hard Seltzer.
According to sales data from Fintech InfoSource and the National Beer Wholesalers Association (NBWA), the three largest hard seltzer brands in the U.S. have seen their share of the overall seltzer market decline since their peak in 2019—mostly losing ground to huge debuts from direct rivals Anheuser-Busch InBev (ABI), Constellation Brands, and Molson Coors. Still, this shakeout is taking place as hard seltzer continues to make up an even greater share of overall alcohol purchases. In 2019, sales of the top three hard seltzer brands (White Claw, Truly, and Smirnoff Seltzer, at the time) accounted for 89% of hard seltzer sales. Year to date in 2021, the top three (now White Claw, Truly, and Bud Light Seltzer) make up 82% of the market, about $940 million. For comparison, Bud Light, the best-selling individual beer brand, sold about $1.4 billion in the same timeframe.
WHY IT MATTERS
Within this shifting market, Topo Chico Hard Seltzer will be a test case, showing to what extent a new hard seltzer brand, backed by a multinational corporation and with built-in brand recognition, can steal share from the long-dominant players. Other recent hard seltzer debuts have been similarly splashy: Cacti, produced by ABI and backed by rapper/entrepreneur Travis Scott, was the number-10 hard seltzer brand year-to-date on April 11, after it debuted March 15.
Despite the proliferation of new hard seltzer brands, there is still room for newcomers to perhaps not unseat the category’s titans, but at least capture a lucrative percentage of sales. Early data shows promise on that front for Topo Chico.
No doubt the Topo Chico brand is doing the bulk of the lifting for the hard seltzer extension: Molson Coors, which partnered with The Coca-Cola Company (owner of Topo Chico Agua Mineral sparkling mineral water), acknowledged as much. Adam Collins, the company’s chief communications and corporate affairs officer, told GBH in November that it’s fair to say that established reputations make spin-off products an easier bet than brand-new beverages.
Topo Chico is a 125-year-old brand that enjoys “cult-favorite status” in numerous large cities across the U.S.—and it was those same cities where Molson Coors targeted its launch: Boston, Chicago, northern New Jersey and New York City, Seattle/Vancouver, Washington, and Washington, D.C. In Texas, a state where Topo Chico mineral water is especially popular, Topo Chico Hard Seltzer notched a 20% share of seltzer in the state.
It’s just one of two new hard seltzer launches Molson Coors has slated for this year. Spirits-based Proof Point seltzer is set to debut in key markets this month, with a full rollout by mid-May. Those will join the company’s existing hard seltzer brands, Vizzy Hard Seltzer and Coors Seltzer, which are the sixth and thirteenth best-selling seltzer brands so far this year in U.S. chain retail, as tracked by IRI.
There’s plenty of churn among any hard seltzers that aren’t White Claw or Truly. Bon & Viv Spiked Seltzer, a $95.6 million brand in 2019, is now on its way out, on pace to sell about $21 million this year. Bud Light Platinum Hard Seltzer, just launched in September, is on pace to sell $41 million this year. Brands outside the top five boom-and-bust and jockey for position, which is why major companies need their stars (ABI has Bud Light Seltzer; Constellation has Corona Hard Seltzer) as well as a bullpen of smaller brands that may hit it big—or be quickly scrapped. Molson Coors is still looking for its headliner, and it may be Topo Chico.
Topo Chico is already champing at the bit to become Molson Coors’ top-selling seltzer in just its first month of existence. During the week of April 4, Vizzy and Coors Seltzer combined to command 3.2% of the hard seltzer market; recall that Topo Chico commanded 3.1% that same week. If Vizzy and Coors Seltzer can maintain their share while Topo Chico and forthcoming Proof Point grow, the company could achieve its stated goal of capturing double-digit share of U.S. hard seltzer sales by the end of 2021.
Zooming out, Topo Chico’s strong debut speaks to just how much opportunity still exists within the dynamic and still-growing hard seltzer sphere. In 2018, just five hard seltzer brands netted more than $3 million in IRI-tracked chain retail sales all year. With just a third of 2021 over, 18 hard seltzer brands have surpassed the $3 million mark in IRI sales—Topo Chico did so in just a few weeks.
Yes, more brands, both large and small, are fighting for a slice of the pie. But the pie has grown so much larger than it was just three years ago that those slices, however pluralized, are still worth millions. In 2018, hard seltzers represented just over 1% of the total U.S. alcohol market; today, that figure is almost 8%. Hard seltzer brands will earn in 3.5 months of 2021 what they earned in all of 2019.
It’s true that the growth rate for hard seltzers overall has slowed from its explosive pace a couple years ago, but crucially, the category is still growing. A study by Nik Modi, an analyst for financial firm RBC Capital Markets (quoted in Brewbound in February) noted that hard seltzer still “is far from its peak and could grow another 150% by 2025, reaching the same size as beer imports today.” Imported beer sold $9.4 billion in chain retail stores in the U.S. last year, according to IRI, while flavored malt beverages (FMBs), including seltzers, were a $7.3 billion category in the same stores. Hard seltzers have effectively set their floor at 60% of FMB dollars moving forward, while the FMB category, which also includes hundred-million-dollar players like Twisted Tea, has grown larger than IRI’s craft beer category.
Topo Chico hard seltzer doesn’t have to rival the White Claws or Trulys of the world to make millions in revenue for Molson Coors. If the clothes are expensive enough, even coattails make for a nice ride.
Words by Kate Bernot