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Trends in the Alcoholic Beverage Industry - US and Europe

How cocktail category growth, premiumization, conscious cocktailing, cost-sensitivity and e-commerce will impact alcohol marketing strategies.

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    Introduction

    There have been significant shifts in drinking trends and habits across the global alcohol markets. The pandemic led to an increase in at-home consumption, during which time people began experimenting with new kinds of alcohol and ‘cocktailing’ became both a verb and a hashtag.

    With loosened on-premise and travel restrictions, consumers are showing an eagerness to get back out to bars, nightclubs, breweries and distilleries. But that doesn’t mean that we can expect to see a total return to pre-pandemic lifestyles. Rising inflationary pressures in Europe and the US are having consumers think carefully about their choices, prioritizing higher quality beverages and opting for more moderate consumption overall.

    In order to help our brand and agency partners navigate the year ahead, we’ve put together a primer on some key trends to watch out for in the alcoholic beverage markets and offer up some strategies to contend with today’s changing consumer profile (after reading, see also our recent post about Alcohol Marketing Strategies).

    People holding drinks
    Globe_Alcohol

    Current landscape of the alcohol industry

    The US and Europe have both seen pandemic-influenced growth

    Revenue from alcoholic drinks

    $297.7B

    USA

    14% up from the previous year
    8.8% Expected growth annually (CAGR 2023-2025).

    Market Value

    Beer

    $125.4B

    Beer is still the overall favorite

    Europe_Stat

    Europe

    9.81% Expected growth annually (CAGR 2023-2025).

    Market Value

    Wine

    $179.8B

    Wine is still ascendent

     

    At-Home cocktail consumption has led to new category growth

    In the US, Spirits sales reached all-time highs due to the popularity of cocktails,

    The ready-to-drink (RTD) category became the fastest growing category of 2022 in the US, with premixed cocktails seeing the most growth,

    Preferences_vs_Growth_

    Preferences_vs_Growth-2-


    Retailers are paying attention: 71% of retailers surveyed said growth in the RTD category has permanently changed how and where they stock their products.


    Consumers are splurging on premium alcohols, while discount shopping at the lower ends

    In the US, premiumization bolstered revenue in all the main categories of spirits, beer, and wine. Nearly 82% of the US spirits industry’s total revenue increase was from the sale of high-end spirits brands, and the wine category also has seen premium offerings drive sales, with $20+ bottles outperforming lower price points.

    European consumers are showing more value-seeking shopping strategies, waiting for favorite brands to be on promotion before buying, and – in some markets – switching retailers to get better prices. In the UK, 25% of alcohol consumers say they purchase their beer and wine in discount retailers, up from around 16% in 2021 .

    Preminum vs Discount

     

    People holding drinks
    Strategies

    Six Marketing strategies for the alcoholic beverage industry

    A key outcome of pandemic-influenced consumption is that drinker profiles are blurring and changing. There are no hard and fast rules anymore: whiskey, for example, is no longer a man’s drink as women now represent 30% of U.S. whiskey drinkers, with 27% of consumers purchasing a combination of beer, wine and spirits in 2022. Similar trends are occurring in the UK where 20% of customers say they’re keen to sample drinks they would never have tried pre-lockdown.

    Brands have unique opportunities to appeal to far broader audiences than ever before, and attract new fans via some of the following approaches:

    1

    Appeal To Gen Z’s Appetite for Authenticity & Responsibility

    For premium products in particular, brands need to communicate their values effectively, which for the most part revolve around showcasing their heritage and their efforts towards their broader community. Highlighting traditional practices, or brand sustainability initiatives may help consumers make the leap into higher-priced offerings and foster brand advocacy.

    Gen Z in particular makes buying choices that reflect a desire for ethically ‘trustworthy’ drinks – but authenticity is the name of the game. Simply ‘greenwashing’ a marketing campaign can backfire badly, as 41% of consumers said they boycott brands they see as exploiting public sentiment.

    tequila Patrón__

    Super-premium tequila Patrón created a video campaign that focused on the traditional, artisan-led processes around their distillery in Mexico, where each bottle is touched by a community of 60 hands—including local farmers, fermenters, distillers and bottlers - underscoring that the way Patron is made “is the same way it’s been done for 400 years".

    tequila Patrón_Example

    Heineken_

    Heineken launched Inch’s Cider in 2021, championing sustainability and innovation in its locally-sourced production, with all apple wastage turned into green energy. The campaign utilized only recycled paper and encouraged viewers themselves to make small changes to reduce their own household carbon footprint. The campaign significantly increased sales and galvanized the cider category by bringing in newer, younger drinkers at scale.

    Heineken_Example
    2

    Create a Halo Effect From On-Premise Activations

    Brand activations have become an important way to engage consumers, especially for the alcohol industry, as 75% of drinkers tend to repurchase a drink for home if they tried and liked it in a bar, restaurant or club. This ‘halo effect’ can be vital for brands who will need to create a lasting impression in an increasingly competitive landscape.

    Research shows that people are much more open to experimentation on-premise: 41% of US consumers like to try new or different drinks brands when out, increasing to 47% for 21–24 year-olds. Similarly, 38% of European on-premise consumers are more open to trying new and different drinks, while 59% are more likely to trade up for a premium drink. It’s clear that the on-premise will be key for brand exploration.

    Create a Halo Effect

    Ian Macleod_

    Ian Macleod Distillers-owned single malt brand Smokehead created a fully functional mobile bar attached to a Ducati motorbike that will tour the UK and Europe. Outfitted with whisky, ice and glasses, and a seat for fans of single malts and motorcycles to take a ride, the “Smoker Sidecar” will make appearances at local festivals.

    Ian Macleod_Example_

    Korean soju Jinro_

    The world’s biggest-selling spirit brand, Korean soju Jinro, created a massive activation as sponsor of London’s All Points East festival in 2022. A two-floor bar was built, themed on a giant case of Jinro where festival-goers could step into an oversize world, featuring a neon bar, a Polaroid Zone, and prize-led games based on traditional Korean games. The brand has, from such efforts, seen a 26% increase in purchase by local consumers compared with Korean residents.

    Korean soju Jinro_Example
    3

    Surprise & Delight to Encourage Social Media Shareability

    Strong social media strategies are key for younger consumers to truly engage with abrand. For about one-third of those aged 18 to 34, posting about a new experience, drinkor meal is crucial for the event to feel ‘complete’. Considering that they’re willing to pay more to drink less, premium alcohol brands can’t afford to underestimate the power of a strong social initiative to capture the attention of Gen Z and Y.

    Cocktails in particular are among the most shareable food and drink items, and brands are working with on-premise partners to design drinks that can be served in memorable, Instagrammable ways. Using technology to ‘surprise and delight’ on-premise consumers is an easy extension that can create brand ‘stickiness’: integrating drink personalization to a digital menu, for example, can provide a customized experience that stands out and encourages social media shares.

    Guiness Logo

    During an extended period of travel bans in Korea, Guinness Korea launched a campaign called “travel the world with Guinness”. Consumers could scan a QR code to open a web app, upload their selfie, and choose a desired travel destination as a fun background. These personalized photo frames were printed on the foam atop their pints, and in most cases, also shared on social media.

    Guiness-Example-
    4

    Enable Virtual Experimentation

    Technology research firm Gartner predicts that by 2026, 25% of people will spend at least one hour a day in the metaverse to work, shop, socialize or consume entertainment . Alcohol brands are now exploring web3 strategies including gamified content, virtual concerts, and non-fungible tokens (NFTs) to engage with this cohort of digitally savvy younger consumers that are typically difficult to reach via traditional advertising channels.

    De Soi_

    De Soi, a mocktail brand co-founded by pop star Katy Perry, is partnering with metaverse social app company FlickPlay to give away beverages to consumers who collect NFTs while playing the tech company’s augmented reality game. Billed as a web3 optimized crossover between Tik Tok and Pokémon Go, FlickPlay is an app employing augmented reality (AR) tech to allow its users to collect NFTs and other digital assets by exploring their local communities.

    De Soi_Example

    Angels Envy_

    US whiskey brand Angel’s Envy has unveiled its ‘meta distillery’ in virtual destination Decentraland, comprising a gamified and educational site production tour. The meta distillery included a Bourbon-making experience, an interactive cocktail challenge, a proof of attendance protocol token, and a NFT wearable giveaway. US consumers were able to buy physical items from the Angel’s Envy web shop and have a metaverse cocktail delivered to their homes via Cocktail Courier.

    Angels Envy_Example
    5

    Promote Digital Initiatives via Packaging Innovations

    Drink labels can have a huge influence on buying decisions, as consumers are increasingly trying to understand ingredients and processes in a more meaningful way. Prior to the pandemic, QR codes were falling out of fashion, but brands expanded their applications over the past few years as a touch-free way to interface with consumers.

    By scanning a QR code or Augmented Reality label on a bottle, potential shoppers can, for example, access a video showing a behind-the-scenes glimpse of how the product they’re considering is made. As sustainability initiatives in packaging are substituting glass for paper bottles or cans, the entire bottle can be a digitally-enabled surface for engagement!

    19 Crimes_

    Australian-based winery 19 Crimes became known for augmented reality (AR) labels that work to tell the story of the person on the label. Its partnership with rapper Snoop Dogg on a series of wines gives fans the opportunity to hear Snoop Dogg rap his iconic track “Who Am I (What’s My Name)?” by using the AR label. This innovative partnership worked: 36% of its first year volume came from new consumers of wine.

    19 Crimes_Example

    Budweiser Logo

    Budweiser’s Track Your Bud campaign: The global beer brand Budweiser introduced QR codes on its bottles to share its brand story. Consumers could scan the QR codes to learn about the history and origin of the brand and to trace the origin of their beer to one of 12 Budweiser breweries in the United States.

    Budweiser_AR_Example
    6

    Offer Cost-Conscious Consumers a Reason to Indulge

    Consumers are concerned about their financial situations leading into 2024 and will be looking for ways to keep costs down. Brands that meet consumers’ tighter budgets are more likely to see volume traction than their more premium counterparts.

    Contests, promotions, digital sweepstakes and rewards initiatives are all ways in which brands can give these consumers a reason to keep buying their drinks of choice, all while providing highly targeted and actionable information to marketers for future engagement.

    Anheuser-Busch_

    Anheuser-Busch sought a way to drive incremental sales for its various craft beer brands at retail outlets. Snipp created a unique text-based loyalty program that created incentives for purchase using rewards and sweepstakes, while also sharing recipes and ideas for consumption.

    Anheuser-Busch_Example

    Mike’s Hard Lemonade

    Mike’s Hard Lemonade created a limited-time program, “Mike’s Time Off,”, where consumers could “apply” for the chance to receive $200 for one day’s worth of time off. The promotion grabbed the attention of both younger and price-conscious consumers, and, by collecting valuable consumer data for entry, helped the brand better cater future efforts to its audience.

    Mike’s Hard Lemonade_Example
    People holding drinks
    Conclusion

    Conclusion

    The trends summarized in this primer point to a few key insights: alcohol consumers expect much more from their drinking experiences, opting for quality ingredients, responsibly consumed; and the alcoholic beverage industry will – despite underlying positive trends -- face some uncertainty.

    Given the rise of inflation, half of all adult drinkers in key markets surveyed by IWSR expressed an intention to moderate alcohol consumption, a trend particularly strong in European markets where confidence in the economy is lower.

    On the flipside, consumers in the US and Europe are willing to spend more money on the right product, and will continue to go on- premise to bars, clubs and restaurants to treat themselves. Brands at the extreme ends of the pricing spectrum will need to appropriately target value-conscious consumers looking to save a few dollars and euros; and redouble efforts in the luxury space.

    New experiences continue to be key ways to win over consumers, with virtual and digital experimentation expected to reach new levels in 2024.

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    For over a decade, we have worked with the world’s leading organizations in both B2C and B2B spaces, across industry verticals including CPG, retail, pharma, utility, home and outdoor, alcohol, tobacco, lifestyle and more.

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