7 minute read
INSIGHT P
Eople Are Raising The Bar For Alcoholic Beverages
Alcohol’s connection to enjoyment is essential to the category’s appeal. Whether choosing a cold IPA to watch the game with friends or pouring a spirit-based RTD for an end-ofthe-day pause, people associate an alcoholic drink with pleasurable events. But the lines between format and function continue to blur in beverages as people look for non-pill solutions for managing their health and well-being.
You can fnd iced tea with probiotics, favoured water with energy-boosting ingredients, and carbonated soft drinks infused with CBD. The interest in hybrid beverages is extending into alcohol, and brewers and distillers are responding with formulations that elevate the drinking experience.
Need For Natural Gaining Momentum
While most alcohol brands aren’t yet diving into functional benefts, the growing focus on health and moderation is leading developers to ofer more natural options. A quick search of ‘natural alcoholic beverage options’ returns more than 170 million results, with queries like ‘what is the cleanest and healthiest alcohol?’ and ‘which alcohol is most natural?’.
Brewers and distillers are responding to the call for cleaner formulas. Mintel’s GNPD shows North American introductions with natural claims grew 12% during the latest 5-year period, with more brands calling out the absence of preservatives or colours.
Organic alcoholic beverages are also on the rise, with Mintel reporting a 15% annual increase in launches since 2017.
US retail data from SPINS shows organic beer sales increased 20% across all channels in 2021, with RTDs showing similarly strong growth.
Results from a 2021 Drizly.com survey showed 17% of consumers consider sugar content when choosing an alcoholic beverage, and 20% cite calories (linked to sugar) as another infuential characteristic.
The number of North American alcoholic beverages launched with low/reduced sugar claims jumped +22% over the last 5 years, according to Mintel.
Low-calorie launches increased by +17% between 2017 and 2021 in North America, retreating in 2022.
DEMAND FOR ALCOHOL-FREE IS ACCELERATING
Alcohol-free is a hot topic with consumers. Social listening platform, Tastewise, shows that ‘alcohol-free’ is a top-trending comment in US posts about alcoholic beverages. A no-alc option enables alcoholic beverage drinkers to tailor their choice to the setting or daypart. Research from IWSR revealed that more than 40% of people selecting a non-alcoholic option are still drinking alcohol on occasion. Abstainers account for less than 25% of non-alc buyers.
In answer to the ‘ask’ for no-alc alternatives, North American brands more than doubled their launches of alcohol-free beer, wine, and favoured alcoholic beverages in 2022. The segment is small, representing less than 5% of NPD captured by Mintel.
Innova Market Insights data shows that low and no alcoholic innovation is happening faster globally.
• Beer brands contributed most (65%) of low and no-alcohol beverage launches through mid-2022, although the 5-year CAGR of +9% lags behind other segments.
• Low and non-alcoholic favoured alcoholic beverage innovation (includ- ing RTDs and seltzers) increased by +40% annually over the past 5 years, more than doubling the NPD share to 22%.
• In wine, the pace of no/low-alc development picked up +19% since 2017, but the segment has a smaller share (7%) of total low and no alcohol launches.
Launches of low and non-alcoholic spirits grew +12% annually, giving spirits a 6% share of NPD.
In an examination of the beer segment, GMI Insights shares that the global non-alcoholic beer market reached USD 22 billion in 2022, about 3% of the USD 732 billion market. Forecasters anticipate no-alc beer sales will double in 10 years, boosting market share to about 3.5%. The US non-alcoholic beer market is expanding rapidly, with sales up 20% in 2022, according to Nielsen IQ. The increase refects investment by major brands like AB Inbev, producer of Budweiser, Corona, Michelob, and Modelo. Reu- ters reports that AB Inbev plans to have 20% of beer volume be non-alcoholic or low alcohol by 2025.
The future looks bright for no-alc beverages as brewers and distillers expand distribution, increase marketing support, improve formulations, and boost innovation. Industry trend watchers anticipate no-alc beer will get additional exposure through on-premise on-tap sales.
In Canada, non-alcoholic beverages may become a ‘must-try’ innovation pathway for brands in response to new guidelines released last month by the Canadian Centre on Substance Use and Addiction. The agency recommends zero alcohol intake or, at a minimum, less than 2 glasses per week, a signifcant reduction from the 9.5 drink average among legal drinking age consumers. No-alc alternatives may also represent a more afordable solution for drinkers who are facing a 6.3% increase in the federal tax on beer, wine, and spirits on April 1, 2023.
Despite concerns about infation and rising food prices, people often turn to premium-tiered alcoholic beverages as ‘afordable luxuries.’ Premium cocktails link with consumer interests in tasty and attractive cocktails and beverages in social conversations gathered by Tastewise. Premium also connotes a healthier drink for some people.
Mintel’s GNPD shows North American launches of premium alcoholic beverages increased 3% annually in the past 5 years, jumping +8% in 2022. While social chatter and launch data ofer a helpful perspective on consumer attitudes, sales data demonstrates true intent.
IWSR recently shared insights about premium alcoholic beverage sales in the US in 2022.
• Volume sales grew for premium wine (+6%), cider (+11%), spirits (+13%), beer (+4%), and RTDs (+38%).
• The increases in premium oferings far outpaced total segment trends with a declining volume of wine (-2%), cider -4%, and beer (-4%) and moderate gains in spirits (+2%) and RTDs (+1%).
The US Brewers Association cheerfully celebrated craft brewers’ resurgence as a premium ofering. Sales rose 8% to 24.8 million barrels in 2021, and independent brewers’ volume share of the beer market bumped to 13.1% from 12.2% the prior year.
Craft beer sales are also on the rise in Canada, capturing 10% of the CAD 9.1 billion alcoholic beverage market.
The trends refect drinkers’ interest in alcoholic beverages with higher-quality ingredients, more careful distillation, higher ABVs, and a longer aging process.
THE POWER OF FLAVOUR TO SET EXPECTATIONS FOR TASTE, PREMIUMIZATION, AND SEASONAL FAVOURITES!
According to the US National Institute of Health, the human sensory system can distinguish about 100,000 flavours. Experiencing flavours goes beyond aroma and taste to include mouthfeel, temperature, and pain (usually delivered through sour or heat profiles). The name and smell of a recognized flavour evoke memories of the taste, leading people to pursue or reject a product based on prior knowledge. Flavours can create distinctive emotional connections for alcoholic beverage brands, leading to trial and repeated purchases.
FAMILIAR + NEW = AN APPROACHABLE FLAVOUR ADVENTURE
While people gravitate toward the familiar to reduce risk, they’re also intrigued by the promise of a new flavour. The potential excitement, adventure, and pleasure of a novel or exotic taste can reinvigorate a flagging brand or keep people engaged to see ‘what’s next?’ Formulators can use flavours to ‘cue’ a brand’s positioning.
If indulgence is the brand goal, favours like chocolate or peanut butter align with consumer perceptions.
For fun, favours such as orange dreamsicle or piña colada link to summer days or spirited occasions.
Flavour profiles can also carry health halos. For example, citrus fruit (orange, lemon, lime), ginger, or darker berry (elderberry, blueberry) flavours will trigger associations with immunity.
Flavours And Botanicals Lead The Way To Premium Territory
Flavours can also help deliver a premium message across the alcoholic beverage space through:
Provenance. For example, vanilla transforms into a premium favour by citing the source as Tahitian.
Varietals. An orange favour shifts into premium with a blood orange variety; grapefruit upscales with a red or pink favour note.
A growing set of favour profles that can help elevate alcoholic beverages into premium tiers is botanicals. Often found in gin bases, botanicals are emerging more frequently in RTDs (alcoholic and no-alc). Mintel GNPD reports launches of favoured alcoholic beverages calling out ‘botanicals’ increased +6% over the past 5 years in North America. European brands are using botanicals more often, with a launch CAGR of 21%.
Drivers of interest in botanical favours and ingredients refect evolving consumer interests:
Botanicals provide a ‘feel-good’ factor and a tangible, relatable draw across generations, but especially among Millennials, as:
• Clean, pure ingredients
Ofering taste appeal
• With favor notes that add complexity to spirits and ready-to-drink cocktails
Botanical ingredients help alcoholic beverage brands meet wellness and moderation priorities: Botanicals with health halos ft needs for functional benefts
• And when featured in lower ABV beverages, botanicals link with the desire for no/low-alc drinks
Botanicals can also cue seasonal tastes. People associate specifc spices and herbs with spring/summer and fall/winter, and incorporating seasonal favours into an alcoholic beverage can extend consumption throughout the year.
Seasonal Flavours Generate Buzz About Alcoholic Beverage Brands
A survey from Innova Market Insights revealed that 4 in 10 North American shoppers look for new flavours when shopping for foods and beverages. About 1 in 4 people report that seasonal flavours or limited editions influence their buying decisions. While tastes may have specific seasonal associations, like peppermint in winter, or s’mores in the fall, most are versatile and easily cross categories.
Link to Entire Report - https://hubs.ly/Q01H-t_20
More than 380 seasonal and limited-edition alcoholic beverage flavors hit North American retail shelves over the past 5 years. Seasonal launches increased by +4% on a compound annual basis over the past 3 years and represented about 5% of total NPD in 2022. Almost 40 new seasonal alcoholic beverages launched in 2022 with flavour profiles such as Blueberry Lemon, Mango Pineapple, and Spiced Rum.
When evaluating favour tactics for limited edition beers, North American introductions show warm favors such as cofee and familiar fruits like cranberry create connections in the Fall or Winter. Citrus, berry, and tree fruits (like apples, peaches, or pears) dominate the top 10 list for Spring and Summer.
RTDs draw on cocktail inspirations like Gin & Tonic for Fall and Winter, while lighter, brighter fruits such as peach and raspberry arrive in Spring and Summer.
Spirit brands shake up the seasons with rich, creamy favors such as Irish crème in Fall or Winter. Spring and Summer limited editions feature lighter fruit-forward favours like watermelon or pink lemonade.
Are you looking for inspiration for your next seasonal or limited-edition alcoholic beverage launch? Copy the link below to download FlavorSum’s Seasonal Flavour Guide! You’ll fnd favour ideas for Spring and Summer, Fall and Winter for beer, RTDs, and spirits. But check out seasonal favours trending in Ice Cream, Sweet Baked Goods, Confections, and Refreshing Beverages to fnd potentially winning crossover profles.
