Hard seltzer pioneered a new category; can canned cocktails sustain long-term growth momentum?

The rise of hard seltzer profoundly reshaped the alcoholic beverage industry landscape in the late 2010s. Brands such as White Claw and Truly, under Boston Beer, quickly gained popularity with their 12-ounce canned sparkling drinks, becoming market benchmarks.

Since then, the canned cocktail category spawned by hard seltzer has evolved into a much larger ecosystem—from hard tea to drinks mixing whiskey, vodka, and Coca-Cola soda—as producers bet that ready-to-drink products are not a passing fad.

Spiros Malandrakis, head of alcoholic drinks research at Euromonitor International, believes the ready-to-drink canned cocktail category can be traced back to earlier alcoholic beverage trends, such as the wine coolers of the 1990s. He predicts that as consumption trends evolve, these drinks will continue to iterate, attracting consumers who in the past would have chosen cheaper beer and wine at social gatherings.

"Cycles have become shorter because everything is accelerating. We are now entering the latest phase—spirit-based cocktails—and I think this phase will last longer," Malandrakis said. "This won't be the last change; there will be more in the future. It's in the nature of the industry."

As consumers become more familiar with canned cocktails, demand for higher-end alternatives is also rising. According to the Distilled Spirits Council of the United States, sales of ready-to-drink cocktails made with real spirits like vodka grew 26.8% year-over-year in 2023, reaching $2.8 billion.

Malandrakis noted that the growth of canned cocktails is occurring against the backdrop of a "great convergence" in the beverage industry—driven by Gen Z consumption habits—where traditional category boundaries are increasingly blurred, and newly launched drinks often fit different or overlapping consumption occasions.

Meanwhile, sales of traditional hard seltzers made with cheaper malt alcohol have declined after peaking in 2021. This has impacted brands like Truly under Boston Beer, which launched a tequila seltzer earlier this year to adapt to the shifting trend. White Claw, the best-selling hard seltzer brand, also launched its own tequila seltzer this year, with unique flavor options including mango tamarind and lime prickly pear.

Matt Hughes, operating partner at beverage incubator Franchise Equity Partners, said the ready-to-drink category continues to attract new consumers seeking novel flavors, especially those who feel familiar with the products and find that they fill a gap in their needs.

During his time at Coca-Cola, Hughes helped push Topo Chico into the hard seltzer space, with the product launching in 2021. "Many Topo Chico fans were already using it in alcoholic drinking occasions, so when Coca-Cola partnered with Molson Coors to launch the product, it was easy for consumers to accept."

Spirit-driven growth

Although malt-based hard seltzers are often associated with younger college-age drinking demographics, the category has also attracted older consumers seeking pre-mixed drinks made with real tequila or vodka, which evoke the premium cocktails found in bars.

High Noon—a hard seltzer brand made with vodka and tequila, real juice, and no added sugar—has seen significant growth in recent years among consumers seeking real-spirit-based, low-additive options.

Britt West, executive vice president at Spirit of Gallo, High Noon's parent company, said 57% of the company's volume growth comes from consumers switching from beer and other hard seltzer products. But the company strives to remain adaptable. She noted that growth in ready-to-drink hard tea prompted the company's decision to launch High Noon Vodka Iced Tea this summer.

"The hard seltzer category was born out of changing consumer preferences, so it's not surprising that the market landscape evolves year by year as growth continues and more brands enter," West said. "We look forward to continuously monitoring consumption trends closely so we can innovate quickly and offer hard seltzer products that meet consumer needs."

Coca-Cola's canned cocktail strategy also reflects the shift toward spirit-based drinks. Last year, the company partnered with Brown Forman to launch Jack Daniel's and Coca-Cola. Earlier this year, it partnered with Pernod Ricard to launch a Sprite and Absolut vodka co-branded drink in Europe.

For new brands looking to stand out in the ready-to-drink alcoholic beverage space, Hughes said brands that can capture the zeitgeist will find niche success, especially local players that build larger fan bases. He cited Surfside as an example—a vodka-based hard tea and lemonade brand that built local traction in Pennsylvania and New Jersey before going national this summer.

"They got the formula right, the visual identity right, and the brand story right, and now they're expanding rapidly nationwide," Hughes said.

But Malandrakis pointed out that a potential downside of canned cocktail growth is that these drinks could cannibalize sales of traditional spirits.

"In the past, many of these products were positioned as adjacent to beer, so there was always a question: do they hurt beer or bring in new consumers?" Malandrakis said. "If you can grab a pre-mixed vodka cocktail right now, you probably won't buy an extra bottle of vodka."