A popping and fizzing sound filled barbecues, beach bachelorette parties, and tailgating events this summer. It was the sound of millions of Americans opening a can of spiked seltzer and enjoying the refreshing, alcoholic beverage.
Spiked seltzer is relatively new to the spirits market, first introduced in 2013. With the segment of the market valued at $550 million and projected to grow to $2.5 billion by 2025, according to Insider, Constellation Brands (STZ 1.57%) announced it will make a second attempt at entering the sector. The Corona-branded spiked seltzer will hit shelves in spring 2020, but the product will have to face several almost-impossible hurdles. Here's why.
Image Source: Getty Images.
Customers already have brand loyalty
White Claw, often seen as the consumer brand favorite, saw sales grow a staggering 283% to $327.7 million in July 2019, compared to the same time period in 2018. Sanjiv Gajiwala, the vice president of marketing at Mark Anthony Brands, which owns White claw, told Forbes, "Over 30% of consumers who buy White Claw once, buy it again. That doesn't sound like a splat to me."
Besides White Claw, there are other already well-known brands on the market such as Truly and Anheuser-Busch InBev's Bon & Viv. Truly is owned by Boston Beer Co, which claims that Truly and non-beer sales make up for over 75% of the company's sales.
While Constellation's Corona beer is a fan favorite, it's going to struggle to enter an already crowded and highly seasonal market.
Constellation already failed at spiked seltzer
Constellation is a global powerhouse in the spirits industry for a reason, so they didn't completely miss the spiked seltzer frenzy. The company released a Svedka Spiked Seltzer in 2018 for the summertime. The product came in three flavors and was only 100 calories, targeted at a female demographic.
But in a summer where other spiked seltzer brands' sales caught on quicker, Constellation killed Svedka Spiked Seltzer within its first year due to disappointing sales. According to IRI, Svedka Spiked Seltzer did pass the $1 million in sales threshold, but that wasn't enough for Constellation to keep the brand, as missed expectations and was widely regarded by the company as a flop.
While Constellation is planning to change the brand association from its number one-best selling vodka to its beloved light beer brand, it's not clear much else has changed. Constellation will need to put serious fire-power behind its marketing strategy if it hopes to have this new product take off.
Constellation already has a different successful Corona-spin off product
Constellation already released something similar to spiked seltzer, Corona Refresca, in May 2019 and sales have been encouraging. The beverage comes in three flavors: coconut lime, guava lime, and passionfruit lime. Corona Refresca ranked as the company's third best-selling new product, Constellation CEO Bill Newlands said during the company's second-quarter earnings call in October.
But Constellation isn't out of the woods yet. Releasing a different Corona-branded spiked seltzer product seems overly repetitive and likely to drain sales from the already successful Refresca product. It's too similar for both products to truly flourish.
Constellation is a powerhouse in its industry and there's so much the company does well, unfortunately, spiked seltzer likely will not be one of them.
