Hard Seltzer Marketing Strategy

Below is a summary of a hypothetical marketing strategy for A-B InBev’s Hard Seltzer product portfolio as a class project. This is an abbreviated version of a longer document submitted by my stellar team at Kellogg.

As a final project for a Marketing Strategy course with renowned and sought-after professors Jim Lecinski and Julie Hennessy, we were asked to choose a company we found interesting, and develop a marketing strategy as though we were the Chief Marketing Officers of the business.

My team chose to create a marketing plan for A-B InBev’s hard seltzer business because the category has become the new “it” category of the alcoholic beverage market. While the market has been dominated by White Claw and Truly, A-B InBev had recently launched 4 different hard seltzer products and gained 20% of the market across this portfolio. So, we asked ourselves as the pretend CMO: What are the strategic moves we can make to capture 30%?

We gathered thorough market research, conducted an industry SWOT analysis, segmented the market, and calculated market size estimates. We mapped each hard seltzer brand (ours and our competitors) to these segments. Based on how we understood the market, we began to lay out three different strategic initiatives that looked the most promising. From there, we made data-driven financial estimations of how much A-B InBev could expect to achieve by pursuing these initiatives.

Strategic Initiative 1: Steal Share through a Market Penetration and Product Modification Strategy

The market is competitive and becoming more saturated each day. However, we found that across the hard seltzer category, brands were being targeted to mid-range income consumers as a casual drink. We felt that customers at either end of the income spectrum were being ignored.

Higher-income consumers may be better served with a more premium offering than what was currently being offered. Seltzers are not often seen as options to accompany elevated dining or social occasions. Therefore, we proposed that 2 existing brands be re-positioned as the most premium brands for these occasions. This would require redesigning the packaging and flavors to convey more sophistication.

The recently released Natty Light Seltzer is already well positioned for young, low-income consumers (ages 18-24) who are familiar with the beer brand and are looking for a low-cost option. The segment is smaller, but highly valuable given that it is an entry point into the category for younger drinkers. The high loyalty in the category makes this is an especially attractive tactic.

Strategic Initiative 2: Grow Category through a Market Development of New Target Strategy

We recognized that competition will eventually erode the potential value capture opportunity in the existing user base. So we sought after and selected a new target group that has potential for growth: older consumers in the 35-44 age group. While young consumers are the heaviest users of hard seltzer, our research found that older drinkers have the strongest interest in trying new products.

Given health and wellness trends, many older drinkers are reducing their consumption of beer to lighter options. We proposed that A-B InBev capitalize on this trend by capturing these switchers. To execute this strategy, we recommended that the company use its recently launched Bud Light seltzer to attract older previous beer-drinkers, since many of them already know and trust the brand.

Additionally, we recommended the brand overcome barriers to trial through increased on-premise distribution and merchandising events. These consumers may be more willing to give the product a try while they’re out to eat or if there is a good deal at the grocery store. If the brand can win the consumer at trial, they will likely have a loyal consumer thereafter.

Strategic Initiative 3: Diversify into Adjacent Ready to Drink Categories

With overall alcohol consumption decreasing outside of ready-to-drink beverages, it’s important for A-B InBev to look in adjacent categories for sustained growth. Investing in the development and test of a CBD beverage would be promising, given that the CBD beverage market is estimated to worth over a $1 billion by 2023. With such forward-looking action, A-B InBev could potentially be the first large beer company to enter the US CBD beverage market.

In our research, we found that outside of health reasons, alcohol consumption is decreasing because many customers prefer to make their own drinks at home. Since these “home-tenders” make up nearly one third of alcohol consumers, A-B InBev should develop a product that is tailored just for them. Non-flavored variants or customizable mixer bundles would appeal to this segment and allow them to design their own drinks at home.

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