- In the past nine months, cult alcohol brands White Claw and Japanese RTD Strong Zero have launched in Australia, betting young Aussies will flock to their products.
- Branding around health and wellness in the alcohol space is driving demand for hard seltzer, Lion’s consumer and brand director Anubha Sahasrabuddhe told Business Insider Australia.
- Forecasts indicate hard seltzer sales in Australia could be as high as $300 million by 2025.
- Visit Business Insider Australia’s homepage for more stories.
As a new generation that prefers working out to blacking out becomes old enough to legally drink, cult international alcohol brands are setting their sights on the Australian market.
One in five hard seltzers sold in Australia in the past seven months has been a White Claw, according to Anubha Sahasrabuddhe, consumer and brand director at Australian alcohol giant Lion.
The cult US hard seltzer brand, which hit sales of US $4.1 billion in 2020, up from US $400,000 in 2018, launched in September 2020 in Australia with Lion as its local distributor.
And while the pandemic dampened what the company was hoping would be “the summer of White Claw,” it still made a significant dent in the market.
According to Lion, the brand sold out in Dan Murphy’s and Liquorland, it’s two key stockists, in its first few weeks.
The launch represents a wider push by cult single serve alcohol brands into the Australian market, including, recently, -196, a rebranded version of Japanese RDT Strong Zero.
“There is a cult-like following of Strong Zero in Australia,” Kay Oh, director of innovation at Beam Suntory, told Business Insider Australia.
Strong Zero, the canned premixed concoction of the Japanese spirit shochu, vodka, soda and lemon, is ubiquitous in Japan – found everywhere from railway station vending machines, to convenience stores like 7/11 and Family Mart.
The global alcohol conglomerate quietly launched an Australian version of the drink, relabelled “-196” due to Australian laws around the use of “zero” to denote zero sugar products, at a few independent outlets in June.
Oh said that in Japan the drink’s appeal was broad and tended to be “30 to 50 year old males, who are looking to relax.”
“Strong Zero is the one of the leading RTDs in Japan,” Oh said.
In 2020, Suntory sold 25 million cases of Strong Zero in Japan, Oh said, which is “about six times that of the biggest RTD brands in Australia.”
However, Oh said the company’s market research found that the audience for the beverage in Australia was younger; members of a cohort that makes Japan the fifth largest market for Australian international travel.
Both Sahasrabuddhe and Oh told Business Insider Australia their research presented the Australian drinking public — particularly young people — as ready-made markets of desire. Australians are wealthy early adopters who are tapped into global trends from both the East and West, and its the reason why companies as diverse as Muji and Zara have made the jump into the local market, Sahasrabuddhe said.
Rather than prime new markets for expansion, much of the time Australia is just waiting for access to brands they already know, she said.
FOMO drives demand
In the past five years, the seltzer market has exploded, with buzzy non-alcoholic brands like LaCroix alongside alcoholic labels like White Claw, Truly, and CBD-infused Recess combining millennial-focused branding with low-sugar, low calorie ingredients that position them as the more enlightened alternative to soft drinks.
In a sign the trend has reached its peak, in March this year, American rapper Travis Scott announced he was launching an agave-spiked seltzer named Cacti in partnership with multinational drinks conglomerate AB InBev.
Data analytics and market research company IRI has forecast hard seltzer sales in Australia could be as high as $300 million by 2025, though it warned that companies that have decided to “lift and shift from the US,” as they put it, shouldn’t expect to see instant success.
A slew of Australian companies have already jumped in. The Australian and New Zealand hard seltzers stocked at BWS – often mimicking the the matte, pastel, sans serif aesthetic popularised by American CBD-laced seltzer brand, Recess – include Good Tides, Saintly, Brix, Hint, Rainbird, Batch & Co, Delvi, Hard Fizz, Pals and Pure Bay.
Smirnoff, which still retains the top spot in Australian sales, according to Sahasrabuddhe, has also diversified with a line of spiked seltzer that uses a colour palette almost identical to White Claw’s.
Chris Thomas, CEO of brand forecasting agency PLAY Market Research, told Business Insider Australia over email that the bragging rights and “Instagram-worthy appeal” of international brands gave them an edge over locally produced drinks as alcoholic seltzers “flood the Australian market.”
Sahasrabuddhe said the demand was immediately obvious in Lion’s market research.
“Australian consumers have cottoned on via social…that this was something they wanted to be part of,” Sahasrabuddhe said.
Due to the fact that there are “no barriers or boundaries to seeking out brands and products,” businesses with global reach are as likely to respond to consumer demand as proactively scope out new markets, she said.
Lance Friedman, RTD category manager at Endeavour Group, the parent company of Dan Murphy’s and BWS, told Business Insider Australia via email that White Claw was its most anticipated drinks launch of 2020.
“It was so in demand we made White Claw pre-orders available for customers two weeks before they landed in stores,” Friedman said, claiming it was the first time Dan Murphy’s had set up a pre-order campaign for a premix drink.
Sahasrabuddhe also said a factor in Lion’s research was an awareness of “how established our RTD market is,” specifically name-dropping the infamous vodka cruiser.
“What I mean by that is Smirnoff,” she said, “and, of course, the 45 other entrants that have since piled on.”
The success of Smirnoff’s vodka cruiser in intoxicating generations of young adults meant that while the offering for that age bracket was already crowded, they were also primed for a new spirit-driven mixed drink.
Oh said Beam Suntory’s research also led it to identify a younger consumer.
“That’s due to the dynamics of the RTV category being consumed by younger customers,” Oh said, adding that “our view is that -196 will go well with anyone over legal drinking age to millennial.”
While Australia’s drinking preferences have endured, the mentality of the next generation of drinkers has transformed the sector.
Gen Z thinks about drinking differently
In a New York Times profile of hard seltzer company Recess, writer Kate Carraway described its approach as the “aggressive marketing of commodified wellness.”
But Sahasrabuddhe said marketing to Gen Z and millennials with messages about wellness — which almost all the seltzer brands mentioned above do — speaks to a more profound mindset shift that, while easily mocked, actually rings true with consumers.
“Health and wellbeing are possibly the biggest global macro trends across industries across categories,” she said.
And what successful marketers need to “really understanding, particularly amongst ‘zillennials’” (the combined category of millennials and gen Z), is that “people absolutely want to drink, but they want to drink better.” Sahasrabuddhe said.
While an incorporation of drinking culture into the wider holistic wellness movement is global, it has found particular purchase in Australia. Trends led by Gen Z, and to a lesser extent millennials, translate well to established local values. This includes exploring the ‘sober curious’ movement, and embracing brands that align with specific ideals as an extension of identity.
White Claw is “at the core … a lifestyle brand,” Sahasrabuddhe said.
“When I say lifestyle brand, I actually mean that the product or the brand actually is a reflection of the life they lead,” she said.
“And so when we think about something like White Claw, it’s the idea that health and wellness in its totality is important.
“It’s about someone that believes that everything needs to be integrated and holistic,” she said. “It actually means everything just needs to be fit for purpose.”
Sahasrabuddhe said the appeal of low-alcohol mixed drinks aligned with Gen Z’s desire to incorporate drinking into worldviews that rejects the idea that the payoff of pleasure is suffering.
“It’s actually about not compromising and not feeling dissonance after consumption, which often happens with more extreme products.”
White Claw fits into the same category as brands with similar appeal, like Lululemon, Sahasrabuddhe said.
They’re brands that home in on an idea that consuming or wearing or using the product is “just a natural organic part of how people live their lives,” she said.
‘Summer of seltzers’
White Claw entered Canada, the UK, and Ireland last year along with Australia, and is set to expand to other European countries over the last months of 2021.
Australia was the “perfect combination of the right macro trends” to lead this charge, Sahasrabuddhe said, though the pandemic slowed what Lion had hoped would lead to an explosion in sales, on par with the brand’s meteoric US growth.
As reports out of the US point to a new wave of sales for the growing list of competitors entering the seltzer space, Friedman said he believes that, barring extended lockdowns, this upcoming summer will be the season sales actually shoot up.
“We actually think that this upcoming summer will be the real summer of seltzers.”