Brands like Bud Light, Topo Chico, Cacti Agave Seltzer and more have all been named in class action suits alleging misleading advertising. (Photo: Cacti Agave Spiked Seltzer)

Something is afoot on liquor store shelves.

Within the past two years, Bud Light Platinum Hard Seltzer, Topo Chico Margarita Seltzer, Dos Equis Ranch Water and Travis Scott’s Cacti Agave Seltzer were all hit by nearly identical class action suits. Budweiser owner Anheuser-Busch was even forced to pay out $6,000,000 on behalf of its popular Lime-A-Rita line of mixed drinks.

This growing mountain of lawsuits alleges that all of these drinks have one thing in common — they don’t actually contain tequila.

Amidst the ubiquitous imagery of agave plants and the frequent mention of recognizable cocktails like margaritas, palomas and ranch water, many consumers have felt misled by deceiving packaging used to sell what amounts to little more than “flavored beer.”

The reason for that deception — whether intended or not — lies in changing tastes and outdated taxation laws.

Death of the Hard Seltzer

A changing alcohol industry has created winners and losers in the beverage market. (Photo: The Image Party/Shutterstock)

The ready-to-drink (RTD) canned alcohol market has long been dominated by hard seltzers like White Claw and Truly that use a malted alcohol base not dissimilar to beer.

But the market is changing. Hard seltzers have been declining in popularity over the past few years, giving way to the rise of RTDs made with real distilled spirits. Canned spirit beverages like High Noon Vodka & Soda and Cutwater are projected to outpace the popularity of hard seltzers by 2026.

The shift happened quickly, leaving behind brands like Lime-A-Rita — made with malted alcohol — in a different era. Now, consumers are comparing these drinks to the increasing number of spirits-based RTDs and realizing that something doesn’t add up.

Despite the class action suits, producers probably won’t be switching up their formulas anytime soon.

States like New York have strict laws forbidding the sale of hard liquor in convenience stores and groceries. For brands hoping to sell their products to the broadest available market, using malted alcohol is an easy workaround to increase distribution.

More importantly, heavier taxes are levied on products containing hard liquor on both the state and federal levels.

In North Dakota, the tax rate on spirit-based RTDs is more than 15 times that of malt- or sugar-based RTDs even if they contain identical alcohol by volume.

A growing number of states are pushing to have these laws changed, but for now, it’s more economical for producers to sell a malted beverage that’s tequila-adjacent than an actual tequila beverage.

Still, the implications of these lawsuits are forcing alcohol brands to reconsider their messaging.

Bud Light Seltzer just launched a year-long “100% Hard Seltzer, 0% Beer” ad campaign to clear up public misconceptions surrounding the brand (and possibly to avoid another suit).

“We launched Bud Light Seltzer with the Bud Light name in 2020 because it came with immediate benefits in terms of recognizability and distribution,” said Steve Wolf, vice president of marketing for Bud Light Extensions.

“Understandably, it comes with some confusion that we need to make sure we hit directly on to make sure people are very clear what’s in our product.”

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