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Hop water has carved out a space for itself in the non-alcoholic beer category, but as it looks to expand further, the segment is taking a page from the better drinks playbook.
Hop water, also known as the ‘Lacroix of beer’, is carbonated water flavored with hops, a flower that adds bitterness, flavor and aroma to beer. The drink was first introduced by home brewer Paul Tecker in 2014, and a few years later it became one of the first players in the non-alcoholic beer market, which began to gain popularity.
But despite being a pioneer in the non-alcoholic sector, hop water is still struggling to take off even as the non-alcoholic sector as a whole is growing explosively. Hop water generates about $28.5 million in U.S. sales, according to data from NielsenIQ., Small percentage of non-alcoholic segment set to reach $1 billion by the end of this year.
Sales of non-alcoholic beer were up 18% year-on-year in the 52 weeks ended Oct. 25, while hop water sales were down 7.3%, according to NIQ data.
But experts agree that there is still potential in the sector, especially with the rise of functional beverages with healthier properties such as sugar-free or low-carb. As alcohol sales decline, demand for beverages with added functionality has increased, including sodas with added prebiotics and energy drinks with added vitamins.
It can benefit from hop water. Unlike non-alcoholic beer, hop water typically has no calories, carbohydrates, sugar, or gluten.
Kaleigh Theriault, director of mainstream thought leadership at NIQ, said the product’s slowing growth signals a stage of maturity for the product after it was expanded by curiosity when hop water first launched. But she still sees potential for a revival due to the drink’s healthful properties.
“Despite the current downturn, Hop Water’s premium positioning and crossover appeal for health-conscious consumers presents new growth potential as the brand innovates in taste, functionality and distribution,” said Theriault.
The hop water segment has also attempted to establish itself in the THC-infused beverage category with products from Hybrid, Lagunitas, Hop Dreams Sweet Dreams and some local players. However, this segment may be disturbed for the following reasons: recent legislation This limits the amount of THC, the main psychoactive ingredient in marijuana, in the product.
Brewer Sierra Nevada has launched a line of hop waters named Hop Splash in response to the national trend toward theft of alcohol in 2022. The company sought to launch a product that would still create the feel of beer but be a healthier alternative to soda, said Ellie Preslar, Sierra Nevada’s chief commercial officer.
Looking ahead, hops manufacturers are working to expand their consumer base beyond non-alcoholic beer drinkers and meet the growing demand for health and wellness. Sierra Nevada’s Hop Water, which accounts for just 1% of the brewer’s business, has found its greatest success in wellness-focused spaces, including natural grocers.
“I think it’s because of what they’re looking for in terms of ingredients and quality,” Preslar said. “It seemed like a perfect fit. This is where this product was more popular than anywhere else.”
HopWtr, a beverage specialty company established in 2020, is focusing its marketing on promoting it as a functional beverage. Jordan Bass, the company’s co-founder and CEO, said one of its key differentiators is adding mood-boosting adaptogens and nootropics to its content.
Appealing to both beer consumers and wellness consumers will broaden the market, Bass said. But one of the biggest challenges facing the hop count sector is that many consumers don’t know what it is.
To generate interest, producers focus on new flavors and innovations, a tactic similar to what brewers have done to build the craft beer sector. Sierra Nevada sells its hop water in multipacks in several flavors, according to Preslar.
New flavor innovations were also central to Hop Wtr’s approach. Recently, thanks to the growth of hard tea, we launched a seasonal product that combines iced tea and lemonade flavors and spicy apple.
“Consumers always report taste as one of their top purchase drivers,” Bass said. “We felt it was really important to have a variety of flavors.”
