With the success of major hard seltzer brands such as Truly and White Claw, craft breweries want to see how they can start their own hard seltzer brand without a big investment. Fortunately, brewers have options to add a potentially profitable offering to their lineups—and contract brewing can be the perfect way to get it done.
Short process gets hard seltzers to market fast
Whether it’s being referred to as spiked sparkling water, hard seltzer, or its industry category name, Flavored Malt Beverages (FMB), hard seltzers have seen rapid growth throughout 2019–2021. Business Insider called FMB the fastest growing segment of the US alcoholic beverage industry, with sales up over 200%.
It’s no wonder. Hard seltzers can go from end to end and be ready for distribution in less than 10 days—and sometimes even one or two days. Here’s a high-level roadmap of the brewing process:
- With no initial mashing or straining steps, hard seltzer’s water and raw cane sugar base goes directly into the boil kettle.
- Hard seltzers don’t require hopping, caramelizing, or isomerization.
- Instead of boiling for hours like wort, the hard seltzer base can be boiled for minutes, then cooled and transitioned to fermentation tanks.
- Fermentation can kick off in 12 hours or less.
- Full fermentation typically completes within 10 days. Depending on the target ABV, water might also be added at the end of fermentation to lower ABV.
- After fermentation, flavorings can be added as the final seltzer is prepared for packaging and distribution.
“You batch and are canning the same day,” explains Kaitlin Shea, CPA, and production manager for Wisconsin Brewing Company in Verona, WI. “If you’re outsourcing your sugar brew, there’s no aging required.”
The takeaway: With a short ingredient list and smaller production load than typical beer brews, seltzers have a natural lower overhead than beer. Their fast production time helps you get seltzer out the door and into the market faster, where it can diversify revenue and buffer your bottom line during dips in beer sales.
Why add hard seltzer to your brand’s lineup
“Hard seltzers don’t seem to be going away,” says Kaitlin. “There is still market share out there to be taken.”
While customers have bellied up for the flavors, lower carbs, and perceived wellness profile of FMBs, breweries have been embracing hard seltzers too. The relatively lower production costs, shorter time to market, and profit margin are convincing breweries that adding an FMB under their own brand can diversify revenue streams, attract different market segments, and grow the bottom line.
Your roadmap for adding a hard seltzer to your lineup can be fairly straightforward:
- From a TTB regulatory standpoint, the “beer” category encompasses both sugar-based and malt-based hard seltzers. That means federal beer rules apply, including a Brewer’s Notice.
- If your base recipe includes malt, you’ll also need to follow the same labeling and advertising rules (27 CFR Part 7) that you would for beer.
- Adding colors or flavors to your seltzer will require TTB review and approval of the formula.
- Financial projections include sourcing the cane sugar base and any flavorings, as well as overall costs from your contract brewing partner. Overall costs for a hard seltzer tend to be lower than costs for brewing a comparable volume of beer, but that will vary depending on recipe and sourcing.
- Your contract brewing partner can advise on your options for packaging and distribution.
- Internally, discuss how you plan to brand your hard seltzer: How can you help it stand out in your distribution area?
“It’s a tough market to get into though, since there are so many players,” says Kaitlin. “You have to find a way for your product to stand out whether it be with packaging, competitive pricing, flavors: likely a combination of all three.”
The takeaway: While there are many players in the hard seltzer market, you can make a space in your distribution area for an FMB that’s under your brewery’s trusted brand.
Why hard seltzer and contract brewing are a good fit
That simple process, though, has some pitfalls. Additional ingredient sourcing and storage. Precise brewing and filtration. And yet another product taking up tank space and packaging capacity. It’s no wonder that breweries may be interested in adding a hard seltzer brand to their line-up—but that doesn’t mean they want to brew it themselves.
Craft breweries aiming to maintain supply and staffing may not want to devote personnel to figuring out all the ins and outs of dialing in hard seltzer. While the overall production process is simpler than producing craft beer, those exacting brewing, pitching, filtration, and process constraints may lead breweries to outsource production to an experienced hard seltzer contract brewer instead of making it in house.
“Hard seltzers are quick to produce,” says Kaitlin, “and the cost of rent is low in tank space.”
Brewing hard seltzers can be akin to producing lagers: Pure clarity and totally clean flavor are just the baseline. When a craft brewery works with a contract brewing partner to produce their hard seltzer, they can continue their own operations without interruption. The contract brewing partner takes care of the rest, including those tricky production particulars.
The takeaway: Instead of adding a new product category in-house, contract brew your seltzer with a trusted, experienced partner. They take care of production, while you can focus on marketing.
Challenges in recipe development and production
Brewers can coordinate with their contract brewing partner to nail down recipe particulars, such as any hopping, how to introduce flavors via extracts or fruit mashes, and what final ABV to aim for.
“Coming up with creative ideas that will pop off the shelf is a challenge,” says Kaitlin. “The seltzer market is crowded, so setting yourself apart with a flavor profile is tricky.”
The key to adding hard seltzer to your lineup speaks to the strength of the craft brewery. A local brewer’s awareness of local culture and preferences can help you be nimble and targeted on flavor development.
“Everyone seems to have a mango, a watermelon, a black cherry. Those don’t stand out anymore,” says Kaitlin. “I think ones that will pop are ones that have the combination of a fruit and an herbal flavor, or ones that taste real and have real fruit juice.”
The takeaway: A single larger batch of hard seltzer can be split into multiple batches that receive different flavors prior to packaging. Iterate innovative and tried-and-true flavors in your tasting room and with select partners to see which flavors appeal to your market.
Build your brewery’s bottom line by contract brewing hard seltzer
As a craft brewer, you and your team can define your hard seltzer recipe, along with your plans for packaging and distribution. From there, you can coordinate with a contract brewing partner who can take care of the heavy lifting.
Hard seltzer is a brewing category that has great potential for breweries. Adding an FMB to your lineup can help you acquire customers, give steady customers something new to try, and bolster your brewing business with a revenue stream that can buffer ups and downs in other parts of the market. When your brewery works with a solid contract brewing partner, they can focus on production, and you can focus on marketing, distribution, and service.
The takeaway: A contract brewer can get your brewery’s hard seltzer concept to market.
You are so right about focusing on marketing and let the contract brewing handle the production. It will bring great benefit for the business.