Ever wondered how much it costs to make hard seltzer?
This popular fizzy alcohol-based beverage has been in high demand recently.
Many are drawn to the clean refreshing taste and lower calories compared to traditional beers.
But the cost of production particularly for home-brew enthusiasts usually remains unclear.
Can this trendy beverage be made at home in an affordable way?
Cost Breakdown Of Hard Seltzer Production
The estimated startup costs for an alcoholic seltzer brand in 2023 range from $12 to $27209. These costs include the essential components like software expenses office space expenses inventory costs website costs and advertising & marketing costs.
Software-related expenses for an alcoholic seltzer brand may include file hosting services email marketing tools accounting and invoicing software project management software internal communication tools design programs and software IT support and social media management tools.
Office Space and Utilities
Office space is another significant cost for hard seltzer production. Renting or buying an office space incurs significant expenses.
Moreover expenses such as utilities like WiFi & Internet water and electricity are considered office space expenses.
Inventory Expenses and Website Costs
Inventory costs include not only the raw cane sugar base and flavorings but also upfront costs for inventory inventory storage package design shrinkage and distribution costs. Additionally website costs for an alcoholic seltzer brand may include items like domain name registration and a business email hosting service.
Advertising & Marketing Costs
Advertising and marketing represent a significant portion of the initial costs. These may include customer research and surveys affiliate marketing commission and fees influencer marketing press coverage Google Ads and Facebook & Instagram Ads.
Benefits Of Contract Brewing For Hard Seltzers
Entering the seltzer market via contract brewing can be a smart decision for both established and budding alcoholic seltzer brands. Contract brewing can help launch a hard seltzer brand quickly and at a lower cost.
By partnering with an experienced hard seltzer contract brewer brands can take advantage of the shorter simpler brewing process for hard seltzers. From recipe development to final seltzer hard seltzers can be ready for distribution in less than 10 days.
Attracting New Market Segments
Addition of hard seltzer to a brewery’s lineup can attract different market segments and diversify the brewer’s consumers. It also represents a potentially profitable offering in the fastest growing segment of the US alcoholic beverage industry allowing breweries to diversify their revenues and boost their bottom line.
Space and Cost Saving
Another significant benefit of contract brewing is the ability to save on tank space and production costs allowing breweries to focus on other important matters like marketing and distribution. This is especially beneficial for growing companies that might be short on resources.
Bringing Ideas to Market Fast
Contract brewers can bring hard seltzer concepts to market quickly enabling brands to stand out in a competitive crowded market. With the hard seltzer market experiencing explosive growth speed is critical to entering and securing market share.
Importance Of Recipe Development For Hard Seltzers
Recipe development is crucial to creating a standout hard seltzer. Utilizing unique and innovative flavors can make your brand shine in a crowded market.
The ingredient list should at the very least include a cane sugar base and flavorings. Flavors can range from traditional favorites like mango and watermelon to more exploratory versions such as apples oranges or even an herbal flavor.
Hard Seltzer Brewing Process
The brewing process for hard seltzers is shorter and simpler than brewing a traditional craft beer. It involves initial mashing boiling fermentation mixing flavorings and finally filtration and carbonation.
Production Costs and Time Span
In general hard seltzers can be ready for distribution in less than 10 days resulting in a faster and more efficient production cycle.
Growing Market For Hard Seltzers
There’s no doubt that hard seltzer is a rapidly growing category in the US alcoholic beverage industry. Nielsen CGA data showed that sales of hard seltzer increased by over 200% between 2019-2021.
Market Worth & Average Price Point
In 2019 the North American market for hard seltzers was valued at an approximate $2.7 billion. In the same vein the average price of hard seltzer is $34.99 per case equivalent noticeably higher than the $23.53 case equivalent for beer.
Craft Beer Purchasers & Hard Seltzer
Business Insider reported that craft beer purchasers are twice as likely as the average drinker to buy hard seltzer reinforcing its position as the fastest growing segment of the beer market. This implies that introducing hard seltzers could potentially attract different market segments and diversify brewery revenue streams.
Hard Seltzer & Beer Competition
Establishing a hard seltzer brand comes with both its challenges and benefits. Brewers need to ascertain whether hard seltzers can complement or dilute their existing beer brand equities.
It’s vital to consider strategic implications and future plans around entering this tough but potentially profitable market.
Let’s take a look at some key facts:
- The average startup cost for an alcoholic seltzer brand in 2023 ranges from $12 to $27209.
- Office space expenses may include rent utility costs WiFi/internet expenses.
- Advertising/marketing costs may include Google and Facebook ads press coverage influencer marketing etc.
- Contract brewing is a potential strategy to save on tank space and production costs.
| Production Time | Startup Cost | Average Price |
|---|---|---|
| Less than 10 days | $12 to $27209 | $34.99 per case equivalent |
Impact Of Hard Seltzers On Brewery Revenue
The rise of hard seltzers has significantly impacted the revenues of breweries. Between 2019-2021 hard seltzer’s explosive growth drastically increased to capture considerable market share in the US alcoholic beverage industry.
Brands like White Claw Boston Beer’s Truly and CANarchy’s Wild Basin have seen immense success. The Nielsen scan data indicates that craft beer purchasers are twice as likely to buy hard seltzer contributing to seltzer’s growing popularity.
With the average price of hard seltzer sitting at $34.99 per case equivalent compared to $23.53 for beer breweries have been hard hit. They have therefore had to adapt their offerings quickly giving a better insight into the vital role hard seltzers have played on a brewery’s bottom line.
However not all impact has been negative. Introducing hard seltzers to a brewery’s lineup has offered an opportunity to diversify revenue streams and attract different market segments.
The fast pace of hard seltzer production often being ready for distribution in less than 10 days combined with lower production costs allows for an easier transition.
Many breweries have adjusted to these changes while fully leveraging their established branding. An example of this is Wisconsin Brewing Company which displays how its beer and hard seltzer brands can complement each other.
Major breweries such as Truly and White Claw seized the opportunity to dominate the hard seltzer category. However the seltzer segment still offers a real trade-up opportunity for mainstream and craft breweries alike.
That being said breweries have to make calculated decisions. They need to consider potential volume losses and whether they can replace their established beer with a new seltzer brand.
Aligning the pricing and brand positioning of the seltzer with the craft beer it is competing with is another crucial element breweries need to address successfully.
Finally the decision to enter the hard seltzer category is not a light one. It requires strategic considerations and has significant implications for future business strategies.
However to keep up with market trends and ensure sustainable revenue streams it’s a step that many breweries find worthwhile.