Yahoo Finance Hard seltzer has ‘slowed down’ but will be ‘around for a long time,’ Heineken USA CEO says
In May of this year, as many Americans anticipated a "hot vax summer" of carefree fun, The New York Times ran a headline also predicting "a big summer for hard seltzer" in 2021.
Neither prediction really panned out. The Delta variant of COVID-19 arrived in the U.S. just in time summer vacation. By July, Yahoo Finance's Brian Sozzi declared the hard seltzer boom to be "over" after Truly hard seltzer maker Boston Beer (SAM) badly missed earnings expectations and saw its stock plummet by 26% in a single day.
In a new interview with Yahoo Finance, Heineken USA (HKHHY) CEO Maggie Timoney acknowledged the hard seltzer category has "slowed down" but contended that it's "still growing" — albeit at a slower rate than last year, when consumers were clamoring for their White Claws.
"The category has slowed down. But I think people just need to realize also that you're going off 2020 numbers," said Timoney, whose company makes a fruity hard seltzer called AriZona SunRise.
Hard seltzer sales in the U.S. hit $4 billion in 2020, up from $500 million two years earlier, The New York Times reported last May, citing NielsenIQ. That growth hit a speed bump this year, as bars reopened and drinkers turned to pre-mixed canned cocktails. Hard seltzer sales had just a 4% gain for the four-week period ending on July 11, Bloomberg reported, noting that the craze was losing its "fizz."
Despite this slowdown, Timoney said the beverage has staying power. "I think it's going to be around for some time," she said.
The CEO is not alone in her optimism. Yahoo Finance editor-in-chief Andy Serwer, who interviewed Timoney for his "Influencers" series, argued in a July column that hard seltzer is still America's "it" drink. That column came the week after Boston Beer attributed its huge earnings miss to weaker-than-expected sales of its Truly hard seltzer. Despite that miss and sell-off in Boston Beer stock, Serwer pointed out that hard seltzer still appeals to health-conscious consumers.
Indeed, while not exactly in the health beverage category, hard seltzer does have fewer calories than other booze — about 100 calories for a 12-ounce can versus 120 for wine; 150 for beer; or 360 calories for a grand coconut margarita from Chili's.
“What drove the segment to begin with is health and wellness and convenience — that’s still relevant. And that hasn’t gone away,” Nik Modi, an analyst at RBC Capital, previously told Yahoo Finance. “The reality is the seltzer category is still growing very nicely off of some pretty tough compares. The beer industry is underperforming quite dramatically. There’s significant market share seltzer is taking from beer. We think the category can grow double-digits for the next couple years.”
Speaking to Yahoo Finance, Timoney also noted that hard seltzer taps into "that health and wellness space." In that vein, she said Heineken would "absolutely not" make high-alcohol content beer.
“There's a beautiful side of our industry but there's also the side where people imbibe too much or they have the disease where they can't stop drinking and they become alcoholics,” she said. “I've grown up where you see the dark side of alcohol.”
During her time at Heineken, Timoney, an Ireland native, worked her way up through many areas of the company, including about five years at the headquarters in the Netherlands. Prior to this role, she was the CEO of Heineken Ireland. As CEO of Heineken USA, Timoney oversees U.S. operations of the company, which is headquartered in Amsterdam, and is involved in distributing a range of brands in addition to Heineken itself, including Dos Equis, Tecate, Red Stripe, and Amstel Light.
Additional reporting by Ben Werschkul, Max Zahn, and Andy Serwer.
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