The hard seltzer category is currently worth $550m but could grow to reach $2.5bn by 2021: attracting consumers from beer and other alcoholic beverage categories with a cleaner, healthier, low calorie image.
While seltzer’s success is a challenge to the beer category, Constellation Brands hopes its Corona hard seltzer launch will make the trendy beverage a friend rather than a foe.
Beer meets seltzer
Corona’s success to date has been primarily based on its classic Corona Extra and Corona Light brands: but this year it has been expanding Corona into a ‘comprehensive beer family’ with alcohol-spiked refresher Corona Refresca, Corona Premium and Corona Familiar.
And next up is Corona hard seltzer next spring – described by CEO Bill Newlands as one of the company’s ‘worst kept secrets’ – which hopes to embrace and build on the hard seltzer trend.
Corona hard seltzer will be introduced in four flavors: tropical lime, mango, cherry and blackberry lime. The 4.5% ABV beverage will contain 90 calories, zero carbs and zero sugars (for comparison, Corona Extra contains 148 calories per 12 oz bottle).
“Corona carries unbelievably strong brand equity as the number one most-loved brand among both Hispanic and total population drinkers age 21 to 54,” said Newlands, speaking in Constellation Brands’ Q2 2020 earnings call.
“And that's why we've decided to put the Corona brand name on our new seltzer.
“And of course, the refreshment characteristics of seltzers perfectly match Corona refreshment DNA.”
The hard seltzer category is an attractive one to enter for a number of reasons. Firstly, Constellation Brands eyes up the meteoric growth of seltzers this year as a trend that’s here to stay.
Furthermore, Constellation believes Corona hard seltzer can premiumize the market and offer something different to existing seltzers.
“We believe that seltzers are here to stay and will therefore accelerate the volume shift into category from the low end to the high end where we are the market share leader,” said Newlands.
Product differentiation in the hard seltzer category
“I think everyone has been somewhat surprised by the aggressive growth that we've seen in the seltzer business, particularly over the course of this selling season," said Newlands. "I think Corona brings a unique refreshment profile to this particular category.
“We would expect to gain a significant amount of share in the high end as we have with anything else that we introduce among our franchises. This is a zero carb, zero sugar product. I don't think you will find that with any of the other products that have been introduced into the market.”
While other beverage giants have launched hard seltzer brands as new, separate brands; Constellation’s hard seltzer will stay firmly under the Corona umbrella – “We felt that if we were going to enter this category, we would do it with a brand that had deep trust with the consumer,” said Newlands.
Beer vs seltzer: a tricky relationship?
Newlands admits that hard seltzer is a potential threat to the beer category: with both sectors going after similar consumers and occasions.
But he is confident that Corona hard seltzer will bring new consumers to the brand - rather than cannibalise Corona’s core beer volumes – given the response the company has seen to its other Corona extensions.
“We expect this [hard seltzer] to be heavily accretive to our overall beer franchise,” he said. “Obviously the growth that we've all seen in seltzers has had some impact on our franchise and many other beer franchises during the summer months.
"But I will take you back to what we have done most recently, which is Premier and Familiar, both of which had more than 50% accretion to our overall brand portfolio, with Premier being closer to 75%.
“So, we would certainly expect that this is going to be very additive to our overall portfolio for the Corona brand franchise going forward.”
The Corona brand family
Corona Extra: a pilsner-style lager first brewed in Mexico in 1925. It has been the #1 imported beer in the US for more than 20 years, the #5 beer brand overall.
Corona Light: The Light Cerveza and #1 light import in the US for more than a decade. It is a pilsner-style lager brewed for ‘outstanding light flavor with a fruity-honey aroma and distinctive hop flavor for a clean finish at only 99 calories’.
Corona Familiar: a full-flavored lager with a ‘bright, crisp taste’. Originally only available in a 32 oz bottle perfect for sharing, in 2017 Corona Familiar was introduced to the US market in 12 oz. bottles.
Corona Premier: a ‘smooth, perfectly balanced lager that’s low in carbs and low in calories for a mature, sophisticated consumer’. It contains 2.6g of carbs and 90 calories per 12 oz bottle.
Corona Refresca: a premium alcohol-spiked refresher which was launched in the US in April after a trial in three test markets. The ‘bright, flavorful malt beverage’ is a 4.5% ABV drink available in passionfruit lime, guava lime and coconut lime.
Corona hard seltzer: a 4.5% seltzer with 90 calories, zero carbs and zero sugar.