IWSR’s top 5 US beverage trends for 2020

1. Better-for-You Beverages:

US consumers will continue to demand better-for-you options in alcoholic beverages. Key attributes important to consumers are products that are free from additives, organic, low- and no- sugar, low calorie and carbohydrate, gluten-free, and low-ABV or no-alcohol options. Continued interest in ‘healthier’ drinking has spawned a plethora of new products across the beer and ready-to-drink categories.

Continued interest in wellness and alcohol-alternatives will disrupt beverage alcohol, with hard seltzer-like and kombucha crossover products set to increase considerably. As consumers seek transparency on what they put into their bodies, expect more alcoholic beverages to include nutritional labels. IWSR predicts a number of new product entrants in the low-and-no alcohol space, from cannabis beverages to products touting more functional benefits. The total US low-and-no alcohol category will have a CAGR of 18.3% between 2018-2022, signalling significant growth in this segment.

2. Technology:

The size of the online alcoholic drinks market is set to explode alongside the overall growth in ecommerce. US volume growth of online beverage alcohol is forecasted to grow by 37.1% year-over-year through 2024, according to the IWSR’s 2019 Global Ecommerce Study. Concurrently, consumers in the US are demanding convenience during the shopping experience. According to the Study, the biggest reasons for a consumer choosing a favourite online alcohol retailer are an ‘easy to use website’ followed by ‘reliability’ and ‘quality products’. Ongoing state lawsuits regarding restriction on alcohol shipping laws are poised to loosen, offering more options for consumers. Technology is also starting to be incorporated into the bottling process, as producers seek to protect their brands from counterfeit products.

3. Sustainability:

To decrease environmental footprints and to attract eco-conscious consumers, expect to see more brands adding sustainability programmes across their distillation, packaging, and shipping processes. Brands that have returnable bottle and refill programmes are poised to increase consumer loyalty. Sustainability is a considerable appeal factor for the millennial and Gen Z demographic. Brand owners are likely to tout their environmental efforts in more marketing messages, highlighting aspects such as recycled materials and reduced water usage. In addition, locally made alcohol brands will benefit from greater carbon footprint awareness among consumer who wish to purchase brands produced within a specific geographic region close to their homes.

4. Premium Spirits:

As the US economy continues to make positive strides, consumers are using their discretionary income on “affordable luxury” items such as premium spirits. Consumers are increasingly drinking less by volume, but spending more on higher-quality products: a ‘less-but-better’ premiumisation trend. If the US economy continues at current levels, the IWSR anticipates all premium+ categories (except vodka) to show the greatest volume growth rates. By the end of 2019, the IWSR sees the highest growth in the premium+ segment to come from agave-based spirits (10.6%), gin and genever (8.8%), and whisky (5.9%). Barrel select programmes, especially US whiskey, will continue to grow and help both on- and off-premise retailers provide specialty premium products to consumers.

5. Cannabis:

The cannabis reform bill, MORE Act, has passed the US House Judiciary Committee, marking a considerable step for federal legalisation of marijuana. Although cannabis legalisation has partisan support, continued momentum is unlikely until after the 2020 election due to ongoing political divides. Should federal legalisation not progress in 2020, it can be anticipated that more individual states will expand legal cannabis use through ballot initiatives and legislative repeals. States that have already passed cannabis reform can expect growth in cannabis sales and retail outlets. The likelihood of regulations allowing the mixing of psychoactive THC and alcohol in one product remains unlikely in the near-term. Non-psychoactive CBD beverages are already prevalent across the US, however recent crackdowns by the FDA highlight concerns on the safety of such products for consumption.

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