Over the past few years, consumer demand for ready-to-drink alcoholic beverages has exploded with several new hard seltzer and canned cocktail brands entering the market. Even the major nonalcoholic beverage manufacturers have begun to experiment in the RTD alcohol category. Coca-Cola partnered with Molson Coors to introduce alcoholic versions of Coca-Cola’s Topo Chico and Simply product collections while PepsiCo collaborated with the Boston Beer Company to debut Hard Mtn Dew in several flavors.
The popularity of hard seltzer created a natural entrance into the market for nonalcoholic drink manufacturers, according to Caroline Magnesen, an analyst for consumer insights and data company Numerator.
“Hard seltzer was the first huge, standalone alcohol category that merely represented an “alcoholic version” of an existing beverage category – sparkling water,” she said. “If spiked sparkling water warrants its own aisle, why not spiked soda, spiked lemonade, spiked coffee, and beyond.”
Brand recognition in the alcohol aisle
The alcoholic drink market is crowded – especially with canned seltzers and cocktails – so standing out to consumers is a significant benefit. Magnesen and Beverage Marketing Corporation managing partner Brian Sudano agreed that nonalcoholic companies with already established and recognizable branding is likely to pique shoppers’ interest.
“These brands don’t necessarily drive overall beverage alcohol but provides some excitement and steels volume from other beverage alcohol formats, e.g. traditional beer or spirits,” said Sudano.
A Numerator analysis of purchase data yielded the Top New CPG Brands list for products that launched in 2022 and achieved the highest household penetration in the US. Simply Spiked and Hard Mtn Dew ranked in the No. 3 and 4 spots on the list, respectively.
“These brands are doing well for a variety of factors, including the combined production, distribution and marketing power of Coke and Molson Coors and PepsiCo and BBC, and the uniqueness of these products on the market – they’re not just another seltzer,” shared Magnesen.
Moving beyond experimentation
While both Coca-Cola and PepsiCo initially identified their forays into alcohol as experimenting, the two are committed to expanding their presence. Coca-Cola has indicated that the legacy CPG manufacturer is interested in competing in the category and want to find opportunities to become a fixture in the alcohol aisle.
“It’s going to be a cumulative impact on a number of initiatives that I believe will give us the wherewithal to see this as a material source of long-term growth,” said Chief Financial Officer John Murphy in an interview with Yahoo.
PepsiCo CEO Ramon Laguarta echoed similar ideas and shared that the company wants to create long-term value in the alcohol market by “participating from the consumer point of view and, also, from the infrastructure and execution and granularity of execution point of view as well.”
Magnesen and Sudano both emphasized that nonalcoholic beverage brands must remain vigilant about the fact that their original products are often enjoyed by minors. The distinction of marketing these new alcoholic versions of their brands to the above legal drinking age is crucial for success in this new space.
This can also provide a rare opportunity for these already established companies to even further grow their brand awareness. The entrance into alcohol “gives brand exposure to different (older) consumers offering the potential to expand brand user bases,” said Sudano.
These legacy beverage producers have made a big splash in the alcohol industry with media buzz and consumer interest. Coca-Cola and PepsiCo’s continued investment in the market prove that these new products from beloved brands are here to stay – and maybe even take over the alcohol category.
Read more like this from SmartBrief:
- How will the grocery industry weather 2023? Together
- Upcycled food helps brands, consumers combat waste
- Datassential forecasts 2023 macro trends for the food industry
If you liked this article, sign up for Wine & Spirits SmartBrief. It’s among SmartBrief’s more than 250 industry-focused newsletters.