Beverage Feature

Beverages Maintain Buoyancy Through COVID-19

The COVID-19 pandemic has done many things to markets worldwide, but the beverage industry is perhaps a good barometer for other categories to watch.

Interestingly, most beverage suppliers are optimistic in the face of the impact of the pandemic, like based on New Zealanders’ increased appetite for locally-produced, locally-sourced and New Zealand-made products since March 2020.

A key driver to the sector’s growth comes from consumers reacting to supply chain disruptions mid-pandemic. Consumers voted with their wallets. They looked not at just what was missing from the shelves but what they could do to support Kiwi suppliers.

Consumers would much rather buy local and have that craft quality. Though already a conscious trend over the last few years, the pandemic has brought it to the forefront of consumer buying patterns. Particularly with consumer spending being driven more towards products that make them feel better.

While a trend for some years, health and wellbeing products have picked up the pace with the advent of COVID-19. The pandemic has encouraged brands to reformulate and newcomers to look to superfood ingredients to bolster the health and wellbeing aspects of their products.

Consumer demand for zero or low alcohol and functional beverages has increased over the past two years. Using hemp, CBD and terpenes, among other ingredients, beverage manufacturers are answering that demand.

The long-running trend towards drinking less but better quality in many mature markets has seen the emergence of craft beverages gain strength. Premiumisation in the spirits category continues to grow at a fast rate. The growth of craft has also helped to fuel the demand for spirits generally.

And then there’s Gin. The gin revolution continues to expand its reach and draw new consumers to the category. This year tonic is having its mini-revolution too, with new and exciting flavour developments.

Though flavour innovations are helping to entice new demographics into spirits, millennials’ demand for low and no alcohol is also a dynamic area of growth in established markets. Here in New Zealand, we have seen the rise of craft in beers and spirits, nonalcoholic and functional drinks.

Pubs and taverns have been severely disadvantaged in lockdowns, with social distancing requirements sending most operators into a rethink of their operations. D2C, subscription or club memberships for wine, beer and craft spirits are growing, and this disruptor is garnering brands more sales in their niche categories.

Water looks next to join this D2C model. Major players are also picking up artisanal brands as their experimentation with flavours shows real promise.