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America is running out of White Claw hard seltzer

The CNN Business article, “America is running out of White Claw hard seltzer,” discusses the recent nationwide shortage of White Claw, the rising trend toward low-calorie alcoholic beverages, and the rapid growth of the spiked seltzer industry that has led to the unanticipated issue the company faces. White Claw has faced a rapid increase in the demand for its spiked beverages and is in the process of recovering its normal safety position while conducting sales domestically. This relates to AEM 2600 as we have begun to discuss the results of increasing demand while simultaneously keeping supply constant. In the model practiced in class, both the quantity demanded and equilibrium price would increase. This would eventually lead to a shortage, similar to what White Claw is facing, unless the supply is increased to meet the demand.

Sanjiv Gajiwala, White Claw’s vice president of marketing, has given the statement: “We are working around the clock to increase supply given the rapid growth in consumer demand”. Unfortunately, little information is known on how exactly the company plans to increase its supply of the product and how much time it will take for that to occur. Over this past summer, White Claw has encountered a massive increase in sales by roughly 283%, accounting for $327.7 million in July alone. This spontaneous increase in demand has allowed the company to visualize its potential in the spiked beverage market, but the rise did however defeat expectations and resulted in the under-production of its products. The rising demand will hopefully be met with an increased supply as Mark Anthony Brands, North America’s most diversified private beverage company and owner of the brand, plans to allocate its product to distributing partners and maintain its current stock until further production can be potentially recognized. 

Additionally, the low-calorie alcoholic beverage market has seen massive increases in demand in recent years. These products are primarily marketed to college-aged drinkers and are desirably priced for the target population. The increased demand in recent years of spiked seltzers has been met with a decline in sales of beer, a closely competitive beverage choice. Consumers have begun to recognize and follow current health trends leading to hard seltzer being preferred over other alternatives. Competitors like Anheuser-Busch have taken steps in producing its own line of spiked seltzers that has the same marketing appeal as White Claw has. Consumers’ tastes and preferences have shifted toward these alternatives and are allowing brands to realize the potential gains for producing such drinks. As trends shift toward healthier low-calorie options, White Claw and competitors alike will continue to experience similar increases in demand and increased sales; identical to what was experienced this past summer.