Seltzer sparkling water-based alcohol: The next big trend to hit NZ's drinks market

Smirnoff Seltzer will hit New Zealand shelves on April 28. Photo / Supplied

Sparkling water-based alcoholic drinks are tipped to be the next big thing in New Zealand, that is, if trends in America and Super Bowl commercials, are metrics to go by.

Seltzers, often referred to as "better for you RTDs", have proven hugely popular in the United States and drinks companies believe this will flow through to Australasia as consumers increasingly move away from traditional sugar-laced ready-to-drink beverages.

Defined as alcoholic sparkling water containing fruit flavouring, seltzers are perceived to be healthier than RTDs, typically distilled with sugar cane or a spirit as an alcohol base resulting in less sugar, carbohydrates and fewer calories.

Seltzer can be made with any alcohol base; gin, vodka, rum, even wine or beer.

Corona recently launched its own drink deemed "a hard seltzer" advertising it to have 0g of sugar and 90 calories, while Wellington-based start up Native Sparkling which claims to be the country's first "hard seltzer" brand already has drinks on the market.

Brewing giant Lion is gearing up to launch its own range of vodka seltzers under its Smirnoff brand at the end of April. The drink, which is says has no sugar content and less than 70 calories, will be made in New Zealand, developed with the Kiwi taste palette in mind, and rolled out to international markets later in the year.

Smirnoff Seltzer is Lion's first move into the category, following DB Breweries, which launched its own range of fruity seltzers under the Odd Company brand in February.

Seltzers have experienced phenomenal growth in the States, growing at a rate of about 300 per cent over the past few years, driven by trends around consumers being more health-conscious and focused on wellbeing.

The market is estimated to be worth US$3.5 billion by the end of 2020.

As Amanda Lane, consumer insights and planning lead at the Auckland-based drinks company's Growth Hub division, put its: "That's even bigger than the total New Zealand alcohol market".

Lane said the company does not believe the seltzer craze will be short-lived, and it had become a segment of the market the company was increasingly focused on developing.

Lion brand manager Simon Warren said seltzers would undoubtedly become popular in New Zealand as the country adopted trends seen in the US about two or so years later.

"It's absolutely massive in the United States, it has been for the last three years, and we're excited to be the ones to bring it across to the New Zealand market," Warren said, adding that Lion was confident the trend would flow through locally.

Simon Warren, senior brand manager at Lion, and Lion Growth Hub consumer insights and planning lead Amanda Lane. Photo / Supplied

Seltzer had been on Lions' radar "for a while" and following a survey it conducted in New Zealand last year which found that 75 per cent of New Zealanders have a "high-interest in either low calorie or low sugar offerings", Lane said.

The company was now focused on developing other drinks within the seltzer category.

"The seltzer craze is not a short-term piece for us. As a business we need to always be innovating in spaces where consumers are looking for product. We can't talk too much about what's coming in the pipeline."

Seltzers were "re-defining" the RTD market, and traditional ready to drinks would as a result become healthier on the back of consumer demand. The industry had already seen trends towards this space in New Zealand, Warren said, with the fastest-growing segment of the alcoholic beverage market being vodka pre-mix drinks.

Bridget MacDonald, executive director of the NZ Alcohol Beverages Council, said seltzers were on the way to becoming a fast-growing trend in New Zealand.

"Over the next year or so we will start seeing the range broadening with more product options in the market – both imported products but also innovation in locally produced seltzers to suit local tastes," MacDonald said.

"Companies are working to keep up with consumer demand for more 'better-for-you' drinks so we are seeing an increase in options that are low-carb, low-sugar, natural flavours and lower alcohol. Seltzers meet those consumer needs."

Other trends the industry had begun to notice was product with "organic alcohol".

Seltzer ad dominates Super Bowl

Seltzers had grown to be so popular in the United States that drinks companies have swapped their usual beer advertisements during the Super Bowl in favour of pushing their seltzer products.

Budweiser's Bud Light, for example, enlisted the help of Post Malone to star in its seltzer advert promoting its Bud Light Seltzer drink during the Super Bowl in February. The ad its self acknowledged this with the plot line based on the American rapper not being able to choose between its beer or seltzer drink.

The slots for ads during the Super Bowl are estimated to be worth about $10 million for a 30 second feature.

"Historically, [Super Bowl ads] have always been about beer and now what they're doing is switching that so it is now based around seltzer," Warren said.

"There's a lot of eyeballs on this and clearly a lot of intent from global business."