Move over, seltzer. Non-carbonated drinks are taking the spotlight

LivestreamMenuMake ItselectUSAINTLLivestreamSearch quotes, news & videosLivestreamWatchlistSIGN INCreate free accountMarketsBusinessInvestingTechPoliticsVideoWatchlistInvesting ClubPROLivestreamMenu About a decade ago, sales of LaCroix began to skyrocket. Soon, flavored seltzers were everywhere, from grocery store refrigerators to liquor store shelves. But the era of bubbles looks like it is winding down, thanks to seltzer fatigue. Now, non-carbonated drinks, from Liquid Death to Surfside Iced Teas, are taking the spotlight. "If you think about where there's more growth, where there's more consumer interest relative to a few years ago, it's a shift more to still, across both [alcohol] and non-alc," said Randy Burt, Americas director of consumer products at consulting firm AlixPartners. That's not to say seltzers and other carbonated beverages will disappear. But their growth has slowed, as Generation Z increasingly seeks out options without bubbles and beverage companies focus more of their innovation efforts on fizz-free drinks. Look no further than the alcohol category. Malt-based hard seltzers, which includes White Claw, saw volume drop 1.1% in the 52 weeks ended April 26, compared with the year-ago period, according to data from market research firm Circana. On the other hand, ready-to-drink premixed cocktails saw volume grow 46.4% in the same time, fueled by growth from Surfside, Sun Cruiser, BuzzBallz and Anheuser-Busch InBev's Cutwater Spirits, which has both carbonated and non-carbonated options. Much of the driving force behind the switch from bubbly to noncarbonated drinks is coming from Gen Z, which is typically defined as people born between 1997 and 2012. Over their lifetime, soda consumption has dropped dramatically from its peak in 1998, reusable water bottles have become a staple accessory, and a plethora of new drinks like refreshers and dirty soda have gone mainstream. Broadly, Gen Z wants to try new products. While older generations show more brand loyalty to their favorite beer or cocktail, younger consumers have a different mentality. "We're seeing a lot of promiscuity within consumption and alcohol around new products," said Scott Scanlon, executive vice president of alcoholic beverages for Circana, citing the rise of White Claw and Truly about eight years ago. "Now what we're seeing is then consumers jump to the newest product — that's Surfside, Sun Cruiser because of that." He sees a generational shift between Gen Z and their predecessors, millennials, who couldn't get enough of seltzers. As Gen Z reaches drinking age, their alcoholic preferences reflect that generational divide. Non-carbonated alcoholic drinks like Surfside and BeatBox are stealing "share of throat" from hard seltzers, which have seen their growth slow. "Gen Z is a lot more likely to order tea-based beverages at happy hour, and they're sort of moving from carbonated — or seltzers — as their default, 'better for you' pick," Burt said. "I think that's part of the shift, toward wellness and functionality that you're seeing happen, especially from a Gen Z perspective." For fans of some beverages, like functional teas and coffees that target stress relief or immune support, going fizz-free makes more sense, given the drinks' non-carbonated base. Plus, some consumers do not view carbonation as the healthy option. Carbonated water is slightly acidic, which can wear down tooth enamel when consumed in large quantities, especially if the seltzer uses citric acid for flavoring. Plus fizzy drinks can cause bloating and burping for some people. And then there's the association bubbles of any kind can share with sugary sodas. Alcohol is leading the trend, thanks to the meteoric rise of Surfside. Indie vodka distiller Stateside Brands launched the hard iced tea brand in 2022. The ready-to-drink beverage uses vodka as a base and iced tea and lemonade as a mixer. At the time of its launch, carbonation was everywhere across the alcohol industry. "Among the options out there were carbonated iced tea and carbonated lemonade, which is a little less unusual, but we were just like 'What the heck, man? Who carbonates iced tea?' That seems unholy," said Stateside co-founder and CEO Clement Pappas. Consumers seemed to agree. By 2024, Surfside was the fastest-growing alcohol brand in the U.S., based on Nielsen IQ data. "I think there was a huge pent-up demand for non-carbonated options," Pappas said. "There are very few out there, especially in a ready-to-drink format." Surfside's customer base skews female. Pappas said that many of the brand's fans dislike carbonation because they find it leads to bloating, particularly after consuming several drinks in a sitting. Stateside is leaning further into fizz-free beverages with its latest brand: Super Lyte. The brand still uses vodka as a base, but the mixer is inspired by classic sports drinks. While Surfside may have popped the seltzer bubble, other non-carbonated alcoholi

Move over, seltzer. Non-carbonated drinks are taking the spotlight

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