Nielsen predicts consumer interest in health and wellness within the alcohol space will be the driving trend in off-premise sales for 2020.
Danny Brager, Nielsen Senior Vice-President, Beverage Alcohol Practice (US) said: “Younger generations are leading this shift, and it will affect drinking quantities and preferences. Consumer desires will also drive more transparency in labelling and supplier product innovations.”
Brager (below, left) was guest speaker at a Drinks Association Network Breakfast last year, discussing what Australia could learn from US trends.
When asked by event host and Drinks Association Executive Director Jeff McKenzie what he’d put his last dollar on in the drinks category, he said his money was on “the conscientious drinker”.
He said he felt mindful drinking was a “trend not a fad” and a “big deal” for both the industry and consumers.
“Australians are reducing the alcohol they consume with one-in-four claiming they have done so recently,” he explained. “This is more pronounced for men aged over 40. When exploring the reasons behind the reduction in alcohol intake, 32%” of beer drinkers said they are opting for a healthier lifestyle.”
As with any category or industry, Brager said the change doesn’t mean that a revenue stream has evaporated.
“Near-beers, premium soft drinks, mocktails, low- and non-alcoholic options, kombuchas and botanical tinctures all offer a wealth of opportunity for on-premise establishments to experiment with and promote to consumers,” he added.
This week, Brager said 2019’s leading indicators into the future of alcoholic beverages will kick into high gear in 2020.
“From the continued rise of hard seltzer and ready-to-drink cocktails to the stability of sparkling wine, alcoholic beverage players have their work cut out in keeping pace with a consumer base whose choices are often motivated by health and convenience,” he noted.
Brager said the off-premise could expect to see growth in the following:
- Spirits/cordials that are lower alcohol by volume (ABV)
- Lower ABV ready-to-drink cocktails
- Lower ABV and lower calorie IPAs
- More alternative beverages with no/low sugar and carbs, and low-calorie options
- A greater selection of non-alcoholic craft beers, with major craft brewers starting to play in this space
- Active, lifestyle-oriented drinks that tie into consumer interest in their active routines
Spirits will drive the most consistent growth
Building on an already upward trajectory, Brager said spirits will experience the most growth in the off-premise from whiskey, tequila, cognac, ready-to-drink/prepared cocktails and Tito’s Handmade Vodka, the top-selling spirits brand, which is still experiencing double-digit growth.
Premium and ultra premium segments will continue to lead the category’s growth, at the expense of lower price tiers.
According to Brager, spirits have the advantage of a versatile product range with multiple drink types, flavors, styles and mixing opportunities—meeting the desires of the cocktail culture, and appealing to a broad consumer base (age, gender and race/ethnicity).
Beer industry growth will focus on nearly everything BUT beer
Brager said we can expect to see more acquisitions—particularly by big beer companies—in spirits and some selected growing segments of wine.
“Brewers of all sizes will invest and innovate in ready-to-drink cocktails—and even traditional spirit products,” he noted.
“Beer brands will continue to try to play in the space adjacent to cannabis through products that use hemp and emulate the olfactory experience of cannabis.
“Craft beer will continue to find success with styles found in more traditional beer segments (eg American and Mexican lagers).”
Hard seltzer growth will continue
Brager predicts the number of players in the hard seltzer space will double in 2020, adding products from big brewers/mainstream brands, craft brewers and spirit companies.
“Additionally, we will see an increase in sub-segments of hard seltzers, focused on attributes like higher ABV, healthy ingredients and features, bolder flavours, and heightened product development and innovation around hard kombucha and hard coffee,” he said.
“These options won’t make as big of a punch as leading seltzers on the market today, but they will attract a different type of consumer/drinker.
“We don’t expect growth rates for hard seltzer to match those of summer 2019, as the base of business grows substantially. At the same time, the introduction of so many new brands by new players, along with the introduction of new flavours, packaging and formulas by existing players, will help to fuel growth.”
RTDs will boom
Brager predicts packaging will focus on the convenience of slim cans and alternative packaging. Consumers will increasingly see traditional cocktails with a twist to make them more interesting (e.g., Mezcal Mule).
Off-premise will continue to focus on convenience, through tactics like prepared cocktail displays, regardless of the alcohol base.
Opportunities remain for wine
Brager said table wine sales will decline as long as the economy continues to be healthy, with the biggest losses coming from lower-priced wine in bottles.
Pockets of growth in wine will including the following:
- Sparkling wine, driven largely by Prosecco
- Rosé, though growth is unlikely to be more than single digits
- Wines from New Zealand and Oregon, with potential also from Eastern European countries
- Wines in cans and alternative packaging
- Wine spritzers and wine-based cocktails in cans
- Firm entrance into the health and wellness conversation, via lower ABV and biodynamic wine
Pictured main: Seedlip’s Grove Cup non-alcoholic cocktail.
