Has the hard seltzer market peaked?

Hard seltzer aficionados Brian Cheung (Yahoo Finance Federal Reserve correspondent) and Zack Guzman (Yahoo Finance Live anchor) may find this news to be shocking, but we may have hit the peak of the hard seltzer craze. 

That's the vibe at least from Bank of America analyst Bryan Spillane. 

Spillane and his team cite several factors in their lukewarm assessment of the apparently one-time surging hard seltzer market, dominated for two years or so by White Claw and Truly. 

First is the cold hard sales data. 

Year-over-year retail sales for hard seltzers increased 10% for the four weeks ending June 5, according to data from Nielsen. That's a slower growth rate than the 12-week run rate of 16.2%. 

While double-digit growth would seem positive on the surface, it's not as Boston Beer-owned Truly has released new flavors (Lemonade and Punch), Molson Coors has launched Topo Chico hard seltzer in partnership with Coca-Cola, Constellation Brands' Corona Hard Seltzer is a newcomer that has carved out a niche and White Claw is selling a new concoction called Surge with 8% alcohol.

Couple that with aggressive advertising from the major alcohol companies on these new hard seltzer releases, theoretically sales growth should be accelerating

Unfortunately, they aren't. Spillane notes the growth slowdown likely stems from having to challenge the large year ago comparisons when everyone at home was stocking up on hard seltzer at the height of the COVID-19 pandemic. 

Meanwhile, Spillane says hard seltzer is being mentioned far less on social media right now. 

Per BofA's Hard Seltzer Sentiment Tracker (yes, there is one of these as Spillane says social media sentiment is a key driver of the hard seltzer business), the number of hard seltzer posts on social media in May increased 4.3% compared to April. That's below last year's sequential increase of 15.9%. BofA partnered with social media analytics company Social Standards to compile the data.

Says Spillane of the reduced social media love for hard seltzers, "In our view it's a function of the category becoming more mature and tough comparison as last year consumers were confined to their homes due to COVID-19 related restrictions and incorporated hard seltzers into their at home routines. Now with consumers quickly returning to the on-premise where hard seltzers are under-indexed against other alcohol categories summer related terms like "Memorial Day," "day drinking" and "pool" experienced at least a 17% decline in their respective share of hard seltzer posts."

As for the best alcohol stocks to own as the hard seltzer market matures, Spillane suggests staying selective.

"In our view, Constellation Brands (Buy; price objective $275) Corona [Hard] Seltzer could develop into a leading seltzer brand as it is part of the recognizable Corona franchise. Molson Coors' (Underperform; price objective $47) launch of Vizzy and Topo Chico hard seltzer have been positive offsets to the declining domestic light beer category. Brown Forman (Underperform; price objective $62) appears unaffected by hard seltzers."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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