The Growth of Low- & No- Alcohol
Tapping into the health & wellness trend, the low- and no- alcohol category is likely to see some of the most innovation and evolution across the whole industry, offering consumers more variety, better tasting and higher quality products. The biggest challenge will come to wine producers, who will need to invest in R&D to create an alcohol-alternative that appeals in terms of both quality and taste.
Other innovation within the health & wellness movement will come from an increasing consumer demand for gluten-free, low- and no- sugar, low calorie and low carbohydrate products; beverages that are light and fresh to drink will also likely see increased uptake, as will products that offer functional wellness.
Ecommerce & Technology
Primarily driven by a demand for convenience, the IWSR forecasts the ecommerce channel to be worth US$45.5bn by 2024, significantly outpacing the growth rate of total trade over the next five years. China remains by far the biggest online market for alcoholic drinks, with a turnover of over three times the size of the next largest markets, France and the US, as shown by the IWSR’s study of ten key ecommerce markets in the IWSR Global Ecommerce Strategic Study.
2020 will likely see brand owners continue to integrate the online channel into their route to market strategies. Amazon’s launch of its own-label Tovess gin in the latter half of 2019 signals the marketplace’s ambitions in the premium spirits space, and brand owners will need to be conscious of the implications this brings.
Brand Ethics & Packaging Innovation
As consumers become more environmentally aware, there will be increased demand for brands to share consumers’ approach to ethical and sustainable living. Sustainability is having an impact on everything from packaging to production methods and ingredient sourcing, with drinks producers looking at activities such as waste reduction, eco-friendly packaging programmes and carbon footprint levels. Products that are organic, vegan, free from additives, and/or that offer label and ingredient transparency, will strive to match consumer ethics as well.
Within eco-packaging, innovation will come from drinks producers exploring ways of reduced packaging, paper formats, recyclable materials, or even forgoing packaging altogether. Premium packaging poses a key need for innovation, as much of this packaging contains gold and metals that are non-recyclable.
Packaging trends will also be shaped by consumer demand for convenience, primarily driven by millennials. Products such as canned wines have already gained popularity in markets such as North America. However, this format is likely to gain bigger footholds in markets around the world too, as quality concerns become increasingly quashed. Non-glass packaging allows products to cater to a wider variety of drinking occasions, such as the beach, outdoor events, sporting events and hiking. Further innovation from brand producers could come in the shape of draft cocktails, bags and boxes, to name a few.
The Shakeout and Future of Gin
The much lauded ‘ginaissance’ gathered pace in 2018, posting the largest gain in global beverage alcohol consumption of any category: a rise of 8.3% globally versus 2017. By 2023, the gin category is expected to see a volume CAGR of 4.2% globally.
However, gin was up 32.5% in the UK in 2018; no category can keep repeating that performance. As gin’s pace of growth slows down in the UK, much of its growth will be driven by flavoured gins. There will be a shake-out of gin producers globally, and premium gin will be gaining momentum in several key countries. The most interesting developments for the category, however, will come from non-traditional and emerging markets, where gin will boom in countries such as Japan, Nigeria, Mexico, Brazil, South Africa and Russia.
Premiumisation & the Evolution of Rum
The long-running premiumisation trend in most global markets will continue. However, the industry should watch out for the premiumisation of local national spirits, both in large markets such as China and India, as well as in smaller markets, like the Balkans. These products will pose competition for Western premium spirits already in those countries.
There is room in the rum category for premiumisation and product innovation as well. Premium rum will re-position the spirit as a sipping drink, moving away from a consumer perception of a low-quality party drink. Tequila will undergo a similar transformation, increasing its footprint outside of North America as a premium product.
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