Heineken: Hard seltzer has not yet ‘moved the dial’ in the UK

Despite big expectations for the category, hard seltzers in the UK are “not yet moving the dial from a scale point of view”, according to Heineken’s UK marketing director Michael Gillane.

Drinks companies have pounced on alcoholic seltzers with much excitement over the past two years. Although the category is still very new, 2020 alone saw BrewDog, Kopparberg, Smirnoff and Coca-Cola all launch hard seltzer products in the UK.

According to figures from Kantar, the UK hard seltzer market was worth £11.7m in 2020. Last year, IWSR predicted this figure would surge to £75m by 2027.

As such, in 2021 Heineken launched hard seltzer brand Pure Piraña across Europe. At the time, its global head of flavoured beverages, Cecilia Bottai Mondino, told Marketing Week that if the category did take off in Europe, Heineken wanted to be “the biggest player” in it.

The launch was supported by activity on social media, with influencers lined up to spread the word to the brand’s core target audience of 25 to 35-year-olds

However, the category still only accounts for around 0.3% of overall beer and cider value sales in the UK, Gillane says, adding the UK is being held back by a lack of consumer familiarity around soft seltzers.

“While the UK seltzer market continues to show value and penetration growth in its third full year, the segment is not yet moving the dial from a scale point of view and has a long way to go to match the success of seltzers in the US,” he says.

“The US already had a very developed soft seltzer market, with some great brands and great flavour varieties. So that was a bridge where you could just add alcohol.”

We’ve always got to make sure that we have a portfolio of brands that meet evolving consumer needs.

Michael Gillane, Heineken

The launch of Pure Piraña came as part of Heineken’s new product development strategy, which looks to capitalise on the two “macro-trends” in beer and alcohol consumption of “health and wellness” and “taste”.

Moving forward, Heineken will invest in its Pure Piraña brand “in line with the opportunity as we see it”, Gillane says. However, the business now sees other opportunities in health and wellness to strike a more familiar note with British consumers.

Heineken’s cider brand Strongbow launched its ‘Ultra Dark Fruit’ product in March 2022, a lighter version of the popular Dark Fruit product which contains 95 calories per can.

“That product has been built against a suite of functional and emotional needs that skew younger, more unisex, and more health and wellness focused – which is similar to seltzer, but it’s coming from an understood brand and an understood category of cider with its own natural credentials,” Gillane explains.

This product is so far faring well in the UK market, he adds, predicting that by the end of the year, Strongbow Ultra alone will be outperforming the entire hard seltzer category in the UK.

The launch of the Ultra product saw Heineken launch its biggest marketing campaign for Strongbow Dark Fruits to date. The ‘Drink the G.O.A.T.’ campaign represents a £12m investment from the company and was launched across television, social media and video-on-demand channels.‘We want to lead’: Heineken jumps on emerging hard seltzer trend

Meeting evolving needs

When it comes to the beer industry’s second macro-trend of taste, Heineken has observed two concurrent patterns, says Gillane. One of those patterns is a growth in demand for “more challenging tastes” in products like craft beers, something which Heineken has been working to introduce in its beer portfolio.

The other pattern is increased demand for “easier drinking beers”, he says. Heineken launched Heineken Silver, a lighter lager, earlier this year.

“Heineken Silver is designed to speak specifically to that opportunity to be an easier drinking product, and therefore more accessible from a taste profile point of view than the Heineken mother brand or many of the other brands in the mainstream and premium beer category in the UK,” Gillane says.

“We’ve always got to make sure that we have a portfolio of brands that meet evolving consumer needs.”

Those evolving needs apply as much to price point as to health and taste innovation. Gillane admits that Heineken “plays in the discretionary income game” and so will see an impact from reduced spending among consumers during the cost of living crisis.

However, he says he expects Heineken to be “affected, but not catastrophically so, because [beer and cider] are a relatively affordable treat”.

Heineken: Beer brands have missed an opportunity to innovate around flavour

The business has “a very balanced portfolio”, he notes, with brands like Foster’s and John Smith’s at a very accessible price point, standard brands like Amstel and Heineken, and premium brands like Birra Moretti.

While Gillane is confident that Heineken has brands that can meet consumers’ needs, he admits that inflation is a “big challenge” for the business.

“At some point pricing has to be part of the equation. We will manage that alongside our retailers so that we can minimise the impact on the shelf edge,” he says.