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January 14, 2020 - Read in Browser
We're two weeks into January and already buzz is building about what was once just a "trendy summer beverage." Hard seltzer is poised for a much different, potentially much more competitive year among brand offerings, which we'll dig into below. Also this week: two takes on tariffs and more.

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INDUSTRY NEWS

"Seltzer Wars": Product Competition and Category Evolution

These days, hard seltzer needs no introduction. The flavored malt beverage has dominated industry news, trends, and product releases over the last year. 

After the astounding success of White Claw — which helped propel FMBs to capture
8% market share, equaling that of craft beer — the seltzer category as a whole has rocketed to the top of product development priority lists:
  • Last fall, Natty Light, Pabst Blue Ribbon and FourLoko all announced hard seltzer launches.
  • Yesterday, Budweiser released its 5%, 100 calorie Bud Light Seltzer, along with a hefty advertising campaign. (AB InBev is also parent to Bon & Viv Spiked Seltzer and Natty Light Hard Seltzer.)
  • Constellation Brands announced last week that it would spend $40 million in marketing alone on it's release of Corona Hard Seltzer (which clocks in a little lighter, at 4.5% ABV and 90 calories).
In short, the room is getting crowded. With big brands (and their big marketing dollars) now in play, it will be interesting to see if White Claw and Truly (the current market leaders) can retain such dominant share. 2020 could be a category brawl of galactic scale.

Whatever happens, the addition of these huge name brands has the power to accelerate seltzer's upward trend and cement it's bonefied subcategory status.

For even more evidence, look no further than the emergence (and growth) of craft hard seltzer -- a development that we predicted this past summer:
As was the case with beer years ago, smaller, regional, & craftier hard seltzers are now emerging and blossoming. CANarchy (parent of Oskar Blues & Cigar City, among other brands) and Avery Brewing Company have both released seltzer brands.

Most recently,
Ashland Hard Seltzer has emerged out of California to appeal to premium+ consumers.
As the hard seltzer category matures this year, we are anxious to see how it jockeys for market share not only with beer, but also with wine and spirits as well.
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LEGISLATION

Tariffs, Two-Ways -- Thoughts on the Potential Effects of a 100% Import Tax

As the administration continues to dangle the threat of 100% tariffs on -- among other goods -- all European wines, two camps have emerged.

Here, we give a (very condensed) breakdown of each.
  • Camp 1: A Dire Threat for Business
    On the business side of the argument are many industry professionals who believe that the potential tariffs "
    threaten every level of America's wine industry.

    This well-reported piece from VinePair outlinest this argument: the tariffs will end up detrimentally harming U.S. businesses and slicing $28 billion from the U.S. economy. Even if retailers move toward selling only domestic wines, the distributors who provide those U.S. wines may also have vital ties to European exporters, and could take a potentially detrimental hit.

    If the losses add up, this business-side collapse could have a negative effect on domestic wine producers.
  • Camp 2: An Opportunity for U.S. Wine Producers
    On the production side, some industry professionals think that the U.S. wine market is strong enough to overcome a loss of European wine.

    This argument gestures toward the strength of European styles coming out of California, Oregon and Washington. The Wine Institute notes that
    61% of all wine consumed in the U.S. is produced in California, and about 80% of the wine consumed in the U.S. is domestic.

    For retailers, there will be a shift to domestic wines, as well as other varieties from non-European countries (South America, Oceania, South Africa). But this argument thrives on the knowledge that "
    Americans will still buy wine. It will just be different wine."
These two arguments are not necessarily mutually exclusive -- they overlap in their acknowledgement that the tariffs would hurt U.S. distributors the most.
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QUICK SHOTS
This week: More on White Claw, Constellation Brands and tariffs, plus light and bright beers for the winter months.
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