AB InBev is introducing Natural Light Seltzer later this month in a bid to attract college-age fans of Natural Light, according to The Wall Street Journal.
The new product comes in two varieties: peach-mango and black cherry-lime. It is priced 20% lower than other mainstream brands, or about $1 less for a 12-pack, and comes with a higher alcohol by volume of 6%. "The key word here is portfolio," Ricardo Marques, vice president of marketing for the brewer’s value brands, told the newspaper. "There’s a gap in the market that Natural Light Seltzer can address … We believe this is an offering that will disrupt the segment."
Although AB InBev is the world's largest brewer, it hasn't taken full advantage of the hard seltzer trend, The Wall Street Journal noted. Currently on top of the U.S. market is White Claw hard seltzer, made by Mike's Hard Lemonade Co., followed by Truly Spiked & Sparkling from Boston Beer Co.
With this impending launch, AB InBev is piggybacking on the popularity of its relatively cheap Natural Light brand and also tapping into the hard seltzer trend. It recently launched a strawberry lemon lager called Naturdays that the company told CNN was doing well.
AB InBev might have better luck with a hard seltzer bearing the Natural Light label than it had with its previous attempt. After buying Boathouse Beverage, the maker of SpikedSeltzer, in 2016, the company recently rebranded it to Bon & Viv hard seltzer to boost sales. That product is marketed to millennial women as a healthier offering with no sugar and fewer calories.
But that move hasn't been enough to bring AB InBev closer to the top in the U.S. hard seltzer rankings. An analysis of Nielsen data by Beer Marketer's Insights quoted by The Wall Street Journal showed Bon & Viv with a 7.4% share as of July 6, while White Claw continued to dominate with 54%, followed by Truly Spiked & Sparkling at 29%.
However, by marketing its new Natural Light Seltzer to college-age beer drinkers, AB InBev is hoping to disrupt the segment. The timing also is good since the product will likely be available just as the academic year is starting.
Pricing the product 20% lower than competitors and making it available in 24-can packs instead of four-packs is also a smart strategy to appeal to the younger demographic. College students and other Generation Z beer drinkers are more likely to grab a larger quantity of Natural Light Seltzer — and at a lower price point — than they can get either with White Claw or Truly.
AB InBev has plenty to gain if this approach works. Retail sales of hard seltzer hit $515 million for the year to date, according to The Wall Street Journal. And while the category currently comprises just 3% of the overall beer and flavored malt beverage market, there could be space for additional brands, especially those from already well-established labels such as Natural Light.
Projected growth backs up this view. UBS expects the hard seltzer category to reach $2.5 billion by 2021, which would mean a 66% annual growth rate and a consumption spike from 14 million cases last year to 72 million by 2021. According to Nielsen data reported by Markets Insider, hard seltzer sales soared 164.3% in the four weeks ended July 30 and about 200% during the past year.
Consumers are buying plenty of hard seltzer brands, along with flavored malt beverages and domestic super-premium beers. As millennials and other adventurous beverage drinkers look for something different, major beer companies have been trying to lure this demographic group back with trendy flavors and styles — and hard seltzer could be one more way to do that.
For AB InBev, which has experienced falling sales of its flagship Budweiser and Bud Light brands, the gamble is a smart one. It also shows the brewing giant is ready to provide whatever today's consumers are looking for — whether it's hard seltzer, fruit ales, craft beers or any other alcoholic or nonalcoholic beverage. The challenge going forward for AB InBev is to do that before its competitors have already established a strong foothold and the company is left trying to catch up like it is here with Natural Light Seltzer.