The meteoric rise of hard seltzers has been undeniable. Five years ago, the burgeoning beverage category accounted for $41 million in total revenue, according to market research firm T4. Flash-forward to 2021 and the fizzy drink is estimated to bring in nearly $2.5 billion across all markets, representing an average growth of 128 percent year over year.
Seltzer first splashed onto the scene when Bon & Viv launched as a spiked seltzer brand in 2013. The company, which was later acquired by Anheuser-Busch in 2016, lays claim to being the first hard seltzer on the market, but has since been eclipsed by the likes of White Claw and Truly. In 2019, White Claw accounted for 58 percent of the market share, with Truly (26 percent) and Bon & Viv (6 percent) rounding out the top three, per T4.
Other global brands, including Topo Chico, Coors, and Bud Light have all released seltzers in the last few years, but now a new trend is emerging. Consumers are seeking out smaller, more local brands concocting their own renditions. While White Claw and Truly continue to be the most recognizable names, newcomers like San Juan Seltzer and Summit Seltzer are throwing their names into the ring—with an in-person twist.
Until recently, seltzer has been almost exclusively available in cans, packaged like any other aluminum six- or 12-pack. San Juan Seltzer, which was initially available as a CPG, wanted to change that. The brand envisioned a location where fans could enjoy the product in a fresh, new way. The result was the San Juan Seltzery in Seattle, which features a taproom, kitchen, and bar where customers can try different seltzers and seltzer-infused cocktails.
“It took us almost a year to develop,” says Ron Lloyd, CEO of San Juan Seltzer. “We wanted a product that would solve the problem in the industry at the time. If you go back four years ago when you tasted these seltzers, they had a very medicinal finish. We weren’t going to launch a product until we solved that problem. And the only way to do it was to make it different.”
San Juan is owned by the Ethan Stowell Restaurant Group, which operates multiple restaurants across the Seattle area. All flavors of the brand’s seltzer are available on tap at San Juan Seltzery and in cans and on draft at nearly 2,400 locations across the Pacific Northwest, from restaurants and bars to grocery stores and even tourist hot spots like the Space Needle.
Lloyd, who has a wealth of knowledge from decades working in the beverage industry, says San Juan distinguishes its products from the pack through high-quality production practices. The company focuses on flavors unique to the Pacific Northwest and sources its ingredients from farms throughout the region. But as for the specifics, like the names of its farm partners and the details of the production process, that’s proprietary information; even San Juan’s investors don’t know everything about the process.
“When they come and tour, there are certain pieces of our equipment they don’t get to see because that’s part of our secret sauce,” Lloyd says. “We do not tell people who our suppliers are. They can replicate the flavor name, but they can’t replicate the flavor and that’s what we’re about.”
The proof is in the pudding, or rather, seltzer. Lloyd says San Juan is growing four times faster than the category itself and that the company’s margins are nearly 10 percent higher than it had estimated. It’s quite the feat, especially considering that the brand is less than four years old.
“We’ve had to purchase 600 new kegs, 400 half barrels, and 206 barrel kegs this year to keep up with demand,” Lloyd says.
Seltzer’s success isn’t limited to the West Coast.
Across the country in Charlotte, North Carolina, Summit Seltzer is running a similar operation. The brainchild of Kristin Cagney, Summit Seltzer was first conceptualized while she was studying for her MBA. The concept stemmed from Cagney’s love of being outdoors. As she describes it, seltzer allows the imbiber to remain active and not feel sluggish while enjoying a cold beverage outdoors.
“It’s just easy to drink,” Cagney says. “It tastes good. It’s low carb, low calorie, it’s more approachable than a lot of other beverages. We’d be up in the mountains in Colorado skiing, having a few beers, and we would end up feeling super bloated and slow. The great thing about seltzer is that you can have a few of them and not feel like that.”
Summit Seltzer focuses on what Cagney calls “seltz and wellness,” which is the idea that enjoying a few seltzers and maintaining a healthy lifestyle are completely compatible. Without any added sugar and usually no more than 100 calories, the beverage attracts many demographics—something she recognized when formulating her initial business plan.
“At first, seltzers were definitely marketed toward women,” Cagney said. “But seltzers are for everyone. I think our success shows that.”
Unlike San Juan, Summit’s initial introduction to the market coincided with the opening of its taproom. In September 2020, Summit Seltzer debuted a brick-and-mortar location, which serves its house-made seltzers on tap. Customers can also grab the seltzer in cans for to-go purchases on premises when available. Despite the pandemic, Cagney says COVID hasn’t slowed the brand’s growth. The CPG version of Summit Seltzer isn’t available yet in stores, but consumers can find the product on tap throughout the greater Charlotte area.
“We have around 50–60 accounts with restaurants, bars, breweries, and we just partnered with a third-party distributor,” Cagney says. She sees Summit Seltzer’s expansion in lockstep with consumer interest. By her estimation, hard seltzer isn’t a flash-in-the-pan trend, but instead reflects a greater lifestyle shift.
“I think as long as people are feeling the low carb, low calorie lifestyle, seltzers aren’t going anywhere,” she adds.
San Juan’s Lloyd shares a similar viewpoint; he believes the category has strong staying power—and the numbers back it up. Seltzer on tap can boost profit margins for restaurants and bars alike.
“This is why it’s important for bars and operators. If they do seltzer right, it’s the most profitable pour. It doesn’t foam, so they can sell a 16-ounce glass filled with ice and it’s about a 12.5-ounce pour. They have virtually no waste,” he says. “I think every bar and restaurant has to have a seltzer, possibly two or three. And the reason is: The consumer wants it. And if [restaurants] don’t have it, they’ll go to another bar.”