White Claw liquor trends

What Australia can learn from US liquor trends

October 22, 2019
By Alana House

Huge spirits growth, the rise of alcoholic seltzer, booming canned wine sales and the craft beer market reaching saturation point were among the key liquor trends explored at the latest Drinks Association Network breakfast.

Danny Brager, Nielsen Senior Vice-President, Beverage Alcohol Practice (US), discussed learnings the Australian drinks industry can take from liquor trends in the United States.

He also explored the need for innovation and the importance of giving consumers an experience with their drinks, whether it be yoga in a vineyard or axe-throwing in a bar, as being vital to growth.

“Innovation that blurs category lines is a consistent trend we are seeing in the liquor market – there is lots of collaboration between breweries, distilleries and winemakers currently in play,” he said.

“While still in its infancy in Australia, consumers now can find whisky brands with a hint of IPA beer, wines aged in whisky barrels and spirits brands venturing into the ‘ready-to-drink cocktails’ space.”

Heineken coolerpack; liquor trends

He also noted that packaging innovations were thriving, pointing to The Glenlivet whisky pod cocktails; Heineken’s “Coolerpack,” a 18-pack cardboard packaging that allows consumers to chill their Heineken bottles by simply removing the top of the case and adding ice; and STACKED Wines, a set of four 187ml pre-poured cups of wine that are sealed and stacked on top of one another. 

STACKED Wines

What’s winning in spirits

Brager said spirits are “really breaking away from beer and wine in the US” in terms of their huge growth trajectory.

Whiskey is the leading spirit category, with high single digit growth. Gains are being led by American and Canadian whisky, with increased interest in Irish and Japanese whisky, while flavoured whisky now has a 16% market share.

Tequila has a 10% share of off-premise, mainly due to the Margarita being the No.1 cocktail in the US and 13% growth overall.

Mini bottles of spirits are also performing highly, tapping into a consumer desire to sample a product before they buy it.

Ready-to-drinks cocktails are a smaller segment, but have the highest percentage growth of all spirit segments, led by innovation in cans.

Tito's vodka; liquor trends

Brager singled out Tito’s Handmade Vodka as the runaway success story in spirits. It is the No.1 spirits brand overall in the US – “40% bigger than Jack Daniels” – and is still growing by double digits.

While total spirits consumption has expanded by more than 23 million cases over the past five years in the US, more than a quarter of that gain has come from Tito’s.

Brager put it down to the founder of the brand, Tito Beveridge, building a strong, personal connection with drinkers and the vodka’s emphasis on authenticity.

“Consumers want transparency,” he said.

Ultra premium spirits are leading growth – up 11.5% and holding 21% of the market.

“People may not be drinking more, but they are drinking ‘better’,” Brager noted. “Cocktail culture and mixology is a key influencer.”

What’s winning in wine

According to Brager, rosé has reached “peak growth” in the US, after skyrocketing into high double-digits in the past few years. It now has 4% market share annually and 6% over summer and is still growing, albeit at a slower rate.

Champagne and sparkling wine are also still in growth, with Prosecco leading with double digit growth and almost a 25% share of all sparkling wine.

Cans are “exploding on the scene” with almost $1million in sales annually and now have a 1% share of the US wine market.

NZ Sauvignon Blanc is another bolter, continuing to grow in high single digits and now has close to 50% share of the sav blanc market, which is the No.3 white wine in the US.

When asked about the biggest liquor trends in off-premise, Brager said there was an increasing trend towards private label wine brands.

“Exclusive labels improve margins and build shopper loyalty,” he said.

Brager noted that some retailers in the US now stock 50-60% private label.

Meanwhile, direct-to-consumer is a highly viable channel for wine in the US. It attracts an average bottle price of $40, with consumers spending $3 bullion on shipments in 2018, reflecting 12% annual growth.

What’s winning in beer

Mexican beer now has a 15% share of the market in the US, led by the Constellation portfolio of brands, including Corona and Modelo.

Brager said “active lifestyle” brands, such as Michelob Ultra, were one of the big liquor trends for beer. They are growing by 25% and account for a quarter of category growth dollars.

Brew pubs and tap rooms are also exploding, driven by consumer desire to sample a variety of fresh beers in a friendly setting with knowledgeable staff.

As for craft beer, Brager said it is “not the growth engine of the past” but has 13% of the off-premise market and 34% of on premise. The best growth is coming from cans, especially slim styles.

Alcoholic seltzer – called “hard” seltzer” in the US – is taking market share from beer. It has recorded $1.1billion in sales in the last 12 months and has seen 200% growth.

The growth drivers for alcoholic seltzer were the multiple flavours available, plus its low-carb, gluten free and low calorie benefits.

“They literally can’t make alcoholic seltzer fast enough in the States to satisfy local demand,” Brager said.

Quincy alcoholic seltzer; liquor trends

Australia’s first major alcoholic seltzer launch was announced this week, with Lion releasing a range called Quincy in November.

Click here to read what Brager had to say about the health and wellbeing liquor trends that are sweeping the world.

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