In a hard seltzer industry already inundated with more than 200 brands and few defining characteristics to tell them apart, Spindrift's entrance this spring could have been easily dismissed as just another company chasing growth in a trendy category.
But despite a sea of competitors, the beverage maker remains optimistic it can replicate the early success of its sparkling water with the release of Spindrift Spiked. It hopes its use of real fruit and minimal ingredients will allow it to stand out in the $4.3 billion space dominated by brands such as White Claw and Boston Beer's Truly.
"We'll make up for the lateness with the quality of our product and how distinct it is from the other hard seltzers out there," said Sue Kim, Spindrift's vice president of brand strategy and marketing insights. "There isn't an offering like [Spindrift Spiked] out there right now."
Spindrift, which launched its sparkling water 11 years ago, started looking into hard seltzer for the first time in 2019 after it asked customers what products they would like to see from the company. Spindrift found more than half of its buyers were reluctant to try hard seltzers because of the artificial ingredients used — a perception many of its users had for sparkling waters as well — and the notion that the beverage was targeted to the college crowd and other young consumers.
Still, developing a hard seltzer took time. Despite the company's prior work with fruits such as lime and pineapple for its nonalcoholic beverages, it had to figure out how real fruit would interact with the alcohol base Spindrift used in the new drink.
“I can't imagine starting an entirely new brand right now in conditions that exist today," said Kim.
Spindrift Spiked first hit shelves in April, debuting close to its headquarters in Massachusetts and in neighboring Rhode Island, as well as in California where Spindrift has a strong following. It currently has four flavors — lime, pineapple, half and half and mango — on the market, and it is working on new ones. Spindrift also is looking at bringing its hard seltzer to other geographical markets where its water already is popular.
"It's pretty small but it's a big bet for us. The category is pretty big, and people are looking for an offering like ours," Kim said. "In terms of our expansion, we're doing it very, very carefully and methodically."
Truly and Mark Anthony Brands' White Claw collectively command 75% of the category, with others like Bud Light Seltzer, Topo Chico Hard Seltzer, Vizzy and Corona Hard Seltzer also fighting for market share.
While consumption of hard seltzer rose 130% in 2020, there are signs recently that growth is slowing. According to data from NielsenIQ, hard seltzer sales were up more than 51% for the 52 weeks ending July 10, 2021, but in the final 12 weeks of that period sales were only up 7.8%.
Boston Beer slashed its full-year guidance in July after overestimating demand for its popular hard seltzer brand Truly, wiping billions off its market cap. A few months later, it pulled its earnings guidance, citing continued weak hard seltzer demand.
Molson Coors announced this summer it was discontinuing Coors Hard Seltzer in the U.S. to focus on more promising offerings. And this month, Constellation Brands lowered growth expectations for its Corona Hard Seltzer and said the company would be changing the flavor and taste profile to align more with "changing consumer preferences."
The rush to capture growth has resulted in a flood of similar products on shelves that creates confusion among consumers and overwhelms retailers unable to stock them all. During Boston Beer's earnings call in July, President and CEO Dave Burwick cited data from IRI showing there are an estimated 220 brands and 1,000 SKUs, a figure that is about 50% higher than last year.
"The proliferation of brands in this category has occurred, there's a herd-like mentality in this business broadly. And I think people try to bring new brands into the marketplace and there's a sameness to these brands. There's a lack of originality," he said. The "specialistic segment for some consumers has been lost."
Spindrift is hopeful its focus on real fruit ingredients will differentiate itself from the scores of other hard seltzer offerings, and allow it to command a premium price tag. Kim said hard seltzers sell between $15 and $18 for a 12 pack, but Spindrift Spiked typically retails for between $20 and $25.
"There's room for everyone in this category," she said. "We're here to establish ours."