Hard seltzer shakes up North Coast alcoholic beverage sector

The North Coast has carved out a venerable reputation in the alcohol craft beverage sector, whether its wine derived from organically grown grapes from the Russian River Valley, rye harvested in Petaluma for use in whiskey or the expertise of regional brewers.

But in the past year, the industry has been rocked by a decidedly noncraft product: hard seltzer. It’s a drink with low-alcohol content and filled with various fruit flavorings produced at interchangeable factories across the country. A customer can pick up a multipack of cans or bottles for less than $20.

It was initially derided as the second coming of Zima — the clear, flavorless alcoholic drink from the 1990s that later turned into a punchline for people like late night talk show host David Letterman. No one is laughing now after $3.2 billion worth of hard seltzer drinks were sold a year ago in retail outlets, according to Nielsen. It was a small but rapidly growing slice of $145.2 billion of total retail spending on alcoholic beverages last year.

During the pandemic, consumers have been buying even more hard seltzer. From March to August, U.S. sales have been $2 billion, more than double the total from the same period last year.

“We’re only at the beginning. I don’t think this is a fad at all,” said Jon Sebastiani, founder of the Sonoma Brands investment firm, which has a minority stake in Vintage Wine Estates and management oversight at Viansa winery.

Viansa plans early next year to release a wine/kombucha drink called Raye that will be produced with vineyard-designate grapes and be priced at a higher level than typical seltzers.

“I think for any manufacturer, particularly wine or beer, they just have to consider entry into the (hard seltzer) space,” Sebastiani said. “It’s already big and I think most people will believe it will be much bigger.”

Consumer excitement over hard seltzer is reverberating in area craft beer and wine sectors. Producers are paying attention and trying to figure out if there is an opportunity for them.

Barrel Brothers Brewing Co. of Windsor, known for its wide variety of craft beers from porters to various India pale ales, in April released a drink called Seltzer In Place. It started with a black raspberry flavor and now has a tropical lime hard seltzer for sale on its website. A seedless watermelon flavor is coming soon. The drinks are only 100 calories per can with 5% alcohol content.

A major lure for younger drinkers is the low calories, said Bart Watson, chief economist at the Brewers Association, which represents independent brewers. Hard seltzer now represents as much as 10% of the total value of the beer sold on U.S. retail shelves, he said.

“People want different attributes than they (previously) wanted. So things like gluten-free or low- or no-carb are more appealing to people,” Watson said.

Also, many drinkers are intrigued by having a new beverage to keep their interest, said Wesley Deal, co-founder and brewmaster at Barrel Brothers.

“It’s an add-on. You can have your beer and if there is someone in your party that doesn’t like beer, give seltzer a try,” Deal said. “It’s always going to be a nice plus one.”

The big challenge, he said, is whether consumers will pay more for a craft seltzer product like Barrel Brothers’ hard seltzer priced at $12 for a 12-ounce pack of four.

The U.S. hard seltzer drink market is dominated by two companies: White Claw, owned by Mark Anthony Brands, the maker of Mike’s Hard Lemonade, and Truly, owned by Boston Beer Co., maker of Samuel Adams beers. The two brands had a combined U.S. market share of over 75% in the latest data available, according to Nielsen.

Other regional and national beer and wine producers such as Corona, AB InBev and Gallo are entering the fray. In 2018, just 10 hard seltzer brands were on the market, according to Nielsen. That increased to 26 brands by the beginning of 2019, and to more than 65 by this summer.

Last month, iconic Coca Cola said it would take its popular Topo Chico mineral water brand from Mexico and make a hard seltzer version. The move was interesting to industry analysts who noted Coca Cola’s disastrous entry into the wine market in 1970s when it bought Taylor Wine, and exited a few years later.

“I wouldn’t put a big bet on Coke succeeding,” said Jon Moramarco, a wine industry analyst.

He said while Coca Cola may have distribution capabilities, it likely doesn’t have business partners that adequately understand the alcoholic beverage business.

Executives of alcohol beverage firms are trying to understand the seltzer market. Hard seltzer drinkers remind Moramarco of Baby Boomers in the late 1970s who latched onto white zinfandel and wine coolers, and he thinks they will eventually look to branch into more premium drinks.

“I think beer, wine and spirits all have an opportunity to take those hard seltzer drinkers and evolve them into their category,” he said.

Outside of Boston Beer, large independent craft brewers have been hesitant to produce hard seltzer because they have developed a following of beer aficionados who value authenticity rather than treating beer as a mere commodity.

One notable exception is Sierra Nevada Brewing Co. of Chico, a craft brewing pioneer. The brewer has introduced Strainge Beast hard kombucha. Sierra Nevada’s founder Ken Grossman said recently he has no qualms about the product — a fermented tea with alcohol — as “long as the product has some providence and reason for being and resonates with who we are, I’m open to playing around.”

Deal said he hasn’t heard any blowback on Barrel Brothers from craft beer consumers who are concerned hard seltzer represents a sell-out for his brewery.

“They haven’t gotten into my face at least,” Deal said. “But we are in such a fluid industry and the beverage industry is changing so constantly and trends are coming up ... we cannot wait for ways to innovate.”

Traditionally, the wine industry has been even more conservative than the beer industry in offering new products, but that is changing with seltzer. For example, Trinchero Family Estates of St. Helena, the fourth-largest wine company in the country, in the spring unveiled its Del Mar wine seltzer brand with 4% alcohol per can.

Most of the hard seltzers are malt-based, which places them in the beer category, and Trinchero saw an opportunity because it anticipates that consumers will be more concerned about sourcing of the product and be open for alternatives, said Brie Wohld, vice president of marketing for Trinchero.

“We anticipate it’s only a matter of time before consumers begin questioning the mystery ingredients of a malt-based seltzer and instead looking for alternatives made from simple, premium ingredients they understand,” Wohld said. “We entered the space with a premium wine-based alternative to deliver on that unmet need.”

Trinchero executives also think the seltzer boom has legs because the product is low in sugar and alcohol, making it more attractive for those who are health conscious.

“We’re confident this hard seltzer and the wellness mindset that comes with it is here to stay for the foreseeable future,” Wohld said.

Steady annual sales growth of hard seltzer drinks will continue though no one interviewed knew at what point seltzer will plateau. “It will evolve. If I could tell you with 100% certainty where it will evolve to, I would make a lot of money,” Moramarco said.

Deal, the Barrel Brothers’ brewmaster, said he expects more rivals to jump into the hard seltzer market. But he doesn’t see the drink boosting the local tourism sector by drawing visitors as craft breweries and wineries do. He views it as a niche product to allow beer and wine producers to keep up with changing consumer trends or get left behind.

“The tough part about seltzer is … there is really no regional specificity to it,” Deal said. “No one is going to say, ‘I need to go to Sonoma County so I can try their locally made seltzer.’ It’s just made to be sold anywhere.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or On Twitter @BillSwindell

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