USA – Anheuser-Busch, the American subsidiary of Belgium-based brewing giant AB InBev, is investing US$50 million in its St. Louis brewery in an effort to expand its seltzer production capacity.
The investment, part of Anheuser-Busch’s US$1 billion investment in US facilities, will include the addition of a new dedicated seltzer building and an upgrade on one of its can lines.
The new seltzer building will also be equipped with systems and equipment for making popular products such as Bud Light Seltzer and Michelob Ultra Organic Seltzer.
Anheuser Busch also revealed that the brewery also is being outfitted with equipment that “allows for the streamlined addition of flavors to the seltzer liquid.”
Investment in flavor addition capabilities could indicate that more than other categories, consumers who partake in hard seltzers demand new flavors to keep them coming back.
Last fall, for example, Anheuser-Busch sold a Fall Flannel variety pack that features three new flavors — Pumpkin Spice, Maple Pear and Toasted Marshmallow — and fan-favorite Apple Crisp.
Investment in hard seltzer capabilities comes at a time when the category has faced a rough awakening after posting triple-digit growth for several years.
Boston Beer saw billions wiped off its market cap last year after it admitted to overestimating demand in the category.
Constellation Brands CEO William Newlands said in October that the hard seltzer landscape “has shifted considerably,” prompting the maker of Corona Hard Seltzer to lower growth expectations for the product.
The largest beer import company in the US further announced a record a “sizable obsolescence charge” of US$80 million.
And Molson Coors announced in July that it was discontinuing Coors Hard Seltzer in the U.S. to focus on more promising offerings.
Despite the slowdown in sales, there is no sign that hard seltzers are going away anytime soon and remains a lucrative one for beer giants such as AB InBev searching for growth.
The fact that Anheuser-Busch is willing to spend $50 million in part to expand and improve its seltzer production shows the company’s confidence in the segment.
As of early last year, Bud Light Seltzer was in third place in the category with a 9.7% market share, with no other seltzer brand above 3%, according to Evercore ISI.
Bud Light Seltzer has quickly grown into a formidable market player since its launch two years ago, and the company wants to make sure it can keep up with demand for the offering.
The investment will thus bolster its production and innovation capabilities, enabling to better battle industry leaders like White Claw and Boston Beer’s Truly.
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