The short, six-year history of spiking sparkling water with alcohol starts with a story about women ordering vodka sodas. Nick Shields, considered the creator of the first hard seltzer, combined beer-making techniques and aimed for the lightness of vodka, substituting fermented sugar for malted barley. The name SpikedSeltzer was a natural choice for Shields -- about as easy as Anheuser Busch InBev's decision to buy the company four years after its 2012 inception.
At least a dozen brands offering more than 20 flavors followed SpikedSeltzer to market. A few newer entries have shifted from the sparkling malted beverage model and added vodka or tequila to the mix. The brands focus on fruit flavors, whether straight up, like cherry, lime, or grapefruit, or blends like orange-mango or cranberry-lime. The beverages have 4%-6% alcohol per volume (ABV), minimal carbs, and range from roughly 90 to 140 calories per 12-ounce container. A few are gluten-free. They're roughly comparable with some light beers in ABV, calories, and carbs.
The emerging category's first-half sales in 2016 were $8.5 million. Sales spiked to more than $250 million for the first half of 2018, and are expected to hit an effervescent $500 million for the full year.
What's driving spiked seltzer's growth?
The hard seltzers are an adult version of the increasingly popular sparkling water category, where leading brands generated more than $1 billion in sales last year.
While some spiked seltzer brands target female audiences, others focus on the broad appeal of a "better-for-you" product that has lower ABV than liquor along with low calories and carbs and no added sugars. Popular with consumers who like wine and clear spirits, spiked seltzers are also marketed as mixers, adding flavors without calories to cocktails. This versatility as a stand-alone drink or an option to spruce up cocktails may be contributing to the supercharged sales growth.
Constellation Brands is in on the trend, too
Constellation Brands (NYSE:STZ) launched the three-flavor line of Svedka spiked seltzers in 10 East Coast markets in June of this year. The seltzer is targeted at "the female consumer, who is looking for better-for-you light options that fit an active lifestyle," according to CEO Robert Sands.
Nationally distributed competitors include Anheuser-Busch InBev's SpikedSeltzer; Diageo's Smirnoff spiked sparkling seltzer; Mark Anthony Brands' White Claw; Truly Spiked & Sparkling from Hard Seltzer Beverage Company, which is affiliated with Boston Beer Company; and MillerCoors' Henry's Hard Sparkling. Regional brands like Nauti Seltzer and Briggs Hard Seltzer are gaining traction by relying on interest in local products and differences like real fruit juice. With the big brands as drivers, spiked seltzers now represent about 10% of flavored malt beverages, double the market share of hard sodas.
Constellation Brands' extension of the company's premier vodka brand doesn't contain vodka, which may surprise some consumers drawn in by the Svedka name. Instead, the brand touts its "natural fruit and botanicals" flavors, which are aimed directly at women: Tangerine Hibiscus, Strawberry Elderflower, and Cucumber Basil. Like competitors, Svedka's seltzer is low in sugar, carbs, and calories. Svedka spiked premium seltzer aims to be gluten-free and is vegan-friendly, according to the company, and it's made at a "state-of-the-art" facility in Daleville, VA.
Variety packs are top-sellers in some markets, reflecting consumer desire for flavor choice. Constellation Brands' assortment of blended flavors is unique, but the narrower female focus may limit the brand's appeal. With only three flavors, Constellation Brands currently has less to offer than some competitors with four to five unique flavors, in addition to variety packs.
Constellation Brands may be new to spiked seltzers, but it isn't too late to the game. It's only been two years since Anheuser-Busch InBev purchased SpikedSeltzer, and only one year since White Claw, Truly Spiked & Sparkling, and Henry's Hard Sparkling launched. This summer's limited market release will tell whether the Svedka Spiked Seltzer strategy is succeeding, and whether the brand will have staying power over the long haul.