‘It’s the fizz’: How seltzer is upending coffee and beer
Sparkling water sales have nearly tripled since 2008 as brands such as White Claw and La Croix add flavors and alcohol
When Kati Aleckson is craving something sweet, she drinks a flavored sparkling water. When she needs an afternoon pick-meup, she reaches for a caffeinated one. And when she’s out with friends, her go-to-drink is hard seltzer.
The 29-year-old used to drink Dr Pepper during the day and hard cider on date nights. But she wanted to cut back on sugar and now drinks two or three sparkling waters a day. “It’s the fizz,” said Ms. Aleckson, who works at a Minneapolis nonprofit. “It kind of feels like a treat but not a bad treat.”
Sparkling water sales are soaring in the U.S. as consumers like Ms. Aleckson ditch soda for healthier, more natural beverages. And with that explosion has come a wave of variants: caffeinated and alcoholic versions, sparkling coconut water and coffee, even seltzer laced with cannabis.
Americans will buy an estimated 821 million gallons of sparkling water this year, including imports like S. Pellegrino and domestic brands like LaCroix, according to industry tracker Beverage Marketing Corp.
That is nearly three times as much as 2008.
U.S. retail sales of nonalcoholic sparkling water, seltzer and club soda totaled $2.7 billion (U.S.) in the year ended June 30, surpassing fruit juice sales, which were $2.5 billion in the same period, according to Nielsen.
Beverage giants are investing heavily in the category. CocaCola Co. last year bought Topo Chico, a sparkling water bottled in northern Mexico that has a cult following in Texas. That was in addition to the carbonated versions of Coke’s two bottledwater brands, Dasani and smartwater.
PepsiCo Inc. this year launched a new flavored seltzer brand called bubly, and last week announced a $3.2 billion deal to buy SodaStream International Ltd., which makes countertop seltzer machines.
“I think we were late to the flavored sparkling water category,” PepsiCo’s outgoing Chief Executive Indra Nooyi told investors in February. “I wish we had launched bubly a couple of years ago.”
National Beverage Corp.’s multiflavored LaCroix brand remains the market leader with 19% of sparkling water and seltzer sales in the four weeks ended July 14, according to a Wells Fargo analysis of Nielsen data.
Meals and festive occasions have “been the last stronghold for carbonated soft drinks,” said Andrius Dapkus, general manager of domestic brands for Nestlé Waters North America. That is where sparkling water is making inroads, he said. The company this year relaunched the fizzy versions of its regional spring water brands including Poland Spring and Arrowhead with new packaging and flavors like pomegranate lemonade.
The small-but-growing caffeinated sparkling water category— including brands such as Phocus and Limitless—offers drinks with an energy kick minus the sweeteners. Anheuser-Busch InBev, the world’s largest brewer, last year bought Hiball Inc., a San Francisco-based company that makes caffeinated sparkling water. And the flavored-water company Hint Inc. plans to release a caffeinated fizzy water this fall.
Jess Faulstich, 36, of Los Angeles is so hooked on flavored sparkling water that she takes one to bed in case she’s thirsty during the night. She loves coffee but drinks caffeinated sparkling water to keep her teeth white. A technology trainer by day and a stand-up comedian by night, she gained several pounds in the past year from drinking alcohol at clubs. Now she drinks hard seltzer, when she can find it, because it’s light on alcohol and on calories.
“I’m surprised my blood stream is not carbonated,” she said.
Sales of hard seltzer are small but surging, stealing market share from beer. Sales of alcoholic fizzy water totaled
$295 million in the year ended July 14, up from $106 million the previous year and $11 million two years ago, according to Nielsen. Hard seltzer now represents about 10% of all flavored malt beverage sales in the U.S.
Sam Adams brewer Boston Beer Co. credits the success of its hard seltzer brand Truly Spiked & Sparkling with helping the company turn around this year after a two-year slump, though sales of its flagship beer continue to decline.
The Truly Spiked drinks have about 100 calories and two grams of carbohydrates—about the same as a vodka and soda but with less alcohol.
“A year ago, it was questionable whether this was sustainable—was this a fad or a trend,” Boston Beer CEO David Burwick told analysts in July. The explosion of seltzers—with or without alcohol—is “a reflection of consumers wanting to put good stuff in their bodies or not put bad stuff in.”
And at Mike’s Hard Lemonade Co., maker of the leading hard seltzer brand by volume, White Claw, shipments to retailers of hard seltzer have more than tripled since January, said Sanjiv Gajiwala, the company’s senior vice president of marketing.
Consumers are looking not just for healthier, lower-calorie options but for lots of flavor, Mr. Gajiwala said. White Claw has about 100 calories, 10 less than a Bud Light, and slightly more alcohol—5% compared with Bud Light’s 4.2%. It’s equally popular among women and men, he said. The most popular flavor is black cherry.
Heineken NV, for its part, has a different type of buzz on tap. The company’s Lagunitas brand in July launched an IPA-inspired sparkling water line infused with cannabinoids. Its name: Hi-Fi Hops.