One of the most important characters of classical mythology is Dionysus: son of Zeus, “father of men and gods,” known as the divinity who invented wine. From ancient Greece to now, alcohol has been central to culture, and to celebrations of all kinds. Talking business, alcohol is one of the sectors that has historically been more engaged in the pursuit of growth.
We are talking about a very diversified industry, largely split between three segments: beer, wine, and spirits. The global market for alcoholic drinks shrunk by 1.3% in 2016, compared with an average rate of 0.3% growth over the previous five years.* Nevertheless, the sector is betting on a return to this trend in the next five years, forecasting consumption to rise by 0.8% until 2021.* Growth in emerging markets with huge populations like India and China, and also other big markets like Russia, will be key to this turnaround—alongside the other transformations currently under way in this industry. In order take advantage of this predicted growth surge, businesses need to be proactive. Like any good bartender, they should know their customers well and anticipate what they want before they order the next drink.
In the spirit of health
New trends in health and social behavior have changed the way alcohol brands are seen by consumers. It is not only government institutions but also society in general that is questioning the sector: underage consumption, driving under the influence, health implications, etc. Furthermore, new generations of consumers, including millennials, are not consuming as much alcohol as previous generations did. Instead, they’re showing greater interest in health and wellness and looking at lower alcohol content, lower calorie levels, and altogether “lighter” drinks to moderate their alcohol intake. All of these factors are influencing purchase decisions and consumption.
Changing tastes for alcohol
Several behavior and lifestyle trends are affecting consumption, and this is particularly evident among people in their 50s and older, as they are the largest and fastest-growing consumer cohort, with considerable socioeconomic power.** And while younger millennials are drinking less alcohol, they’re also looking for different brand and consumption experiences based on preferences like:
- Sharing drinks with friends at home more than older generations did.
- More fusion-based drinks and blends between different classic categories; all types of cocktails would fit this preference.
- The fusion of traditional drink categories with ready-to-drink formats.
- A higher appreciation for all things crafted/artisanal.
Going top shelf
Premiumization: this trend is helping grow the market in all age ranges. Millennials, in particular, have embraced tequila as a premium product. Many tequila brands have done an excellent job of emphasizing the artisanal tradition and handmade qualities behind this ancient spirit. Johnnie Walker Platinum Label is an example of the premiumization of the spirits market, targeted at an older group of individuals who consider themselves connoisseurs of Scotch whisky.
Niche spirits also have a place in this much-diversified high-end market. Examples include Moët Imperial Rosé Limited Edition, for the most sophisticated lovers of champagne, and Tequila Pasión Blanco Rosas, for those with a particular taste for tequila blanco.
Everyone loves a good story
Craft, heritage, and authenticity are also in rising demand. In this slow-moving consumer goods sector, brands need to stay relevant and top of mind. The currency of time is dictating the interaction between brands and people. Activating your brand properly, telling authentic stories, and creating meaningful connections with consumers are imperative to growing your business. Jack Daniel’s is a good example: it is one of the industry leaders, always building and maintaining brand authenticity and consistently interacting with its consumers. The brand’s pop-up store is a prime example of bringing the customer closer to the brand, translating the story into a higher-touch experience.
Blending analog and digital
In this complex and changing world, digital plays a core role for alcohol brands. Digital media is bigger today than TV, especially in the context of mass media’s legal restrictions. Social conversations start with digital devices, so using social media to bring brands and experiences to life is critical for success. Brands that exploit digital channels can interact faster and better with consumers, communicate their messages, and gain new markets without heavy investments in traditional distribution channels.
Budweiser is a beer company that had ground to break with the millennial set and, so, took its lower-calorie Bud Light brand to Vine to create clever spots for its #UpForWhatever campaign. It’s also taking advantage of Instagram Story as a “new creative canvas” for its “Famous Among Friends” campaign this year.
Technology is also creating opportunities for direct business growth, as new sales platforms arise. More and more consumers are purchasing directly from the web or even a combination of brick-and-mortar stores and websites through the fast-growing click-and-collect phenomenon. Alcohol brands should also take stock of on-demand delivery services like Saucey, Drizly, Minibar, and Thirstie in the US, and Bevy, which is breaking into the European market with its all-night delivery model.
Toasting to new opportunities
The Dionysian spirit is still very much alive in our culture, but the story may change with people’s preferences. New times demand that the sector evolve to keep growing: not only by understanding the changing tastes and lifestyles of consumers but also by integrating technology in order to deliver top-shelf experiences and engaging brand stories. Leveraging the spirit of their brands, businesses will drive differentiation, as the context for their brands shifts, and spin new stories for the future.
*Source: the IWSR Global Database
**Source: the drinks business