Shifting consumer behaviour is driving change in the Alcoholic Drinks industry, and companies need to make smart decisions to ensure they thrive in this environment.
Though there’s a lot happening, it’s an exciting time. Read on to discover some of the top opportunities currently seen in the industry.
1 – Premium Ranges Appealing to Consumers
Overall, when consumers are looking for an alcoholic beverage to purchase, the main factor we’ve seen them prioritise is value for money. Consumers are switching to what gives them the most value, which doesn’t always mean the cheapest option – it means the quality.
For this reason, interest in premium products that deliver higher quality experiences has seen growth despite the current economic climate.
Research has revealed this trend in past economic crises, showing that in the drinks industry consumers don’t immediately switch to value products like in other areas of food and drink. It also suggests that consumers might splurge on premium alcohol as it is a smaller luxury compared to other experiences like holidays – and we found similar insights.
To find out more, we asked consumers why they choose these products and they answered:
- Good for gifting & special occasions
- Taste better and smoother (primarily spirits)
- Less ‘nasty’ ingredients in them
- Tend to be more authentic / ethically sourced
So, what does this mean for companies?
At this time, most consumers are prioritising price and value, so companies will need to get their strategies right and ensure they’re listing with the optimal price consumers are willing to pay for premium products.
Though consumers want more quality experiences, this doesn’t mean they have an unlimited budget to do so – they need to feel they are getting the value they’re paying for. Companies that can offer premium experiences at reasonable prices for what they’re offering will see real success here.
On the other hand, many consumers are completely switching their preferences to low/no alcohol drinks.
2 – Alcohol-free Consumption Growing
Along with consumers becoming more value-conscious, they’re also being more health-conscious, following a similar trend in the Food industry.
There has been an increase in ‘NoLo’ drink consumption, a term used to describe the range of alcohol-free offerings or those with very small amounts of alcohol in them, that tend to replicate the look and flavours of their alcoholic counterparts.
This growth is evidenced by the increased number now taking part in challenges like Dry January. Currently, around 56% of Alcohol drinkers in our sample say they buy alcohol-free versions of alcoholic drinks.
Why are people buying Alcohol-free?
We found out that, perhaps predictably, health (both physical and mental) is a priority for consumers buying these drinks.
However more interestingly, they are also buying these products for their taste, meaning companies will need to strike the right balance between their formula and branding.
So, what does this mean for companies?
As the demand for NoLo continues to rise, it is worth brands investing in developing alcohol-free options to ranges, to ensure they don’t miss out on this large proportion of health-conscious consumers.
There are also other ways to appeal to these consumers, such as through more R&D-style Innovation of unique blends. For example, we’ve found many consumers currently enjoying / willing to try ideas like Alcoholic Kombucha, popular for boosting gut-health.
Most of these existing innovations are packaged ready-to-drink (RTD) and we’ve seen a big interest in RTD for Alcoholic drinks too – which we’ll explore below.
3 – Demand for Convenience Growing
Ready-to-drink products are becoming more popular for their convenient and portable nature, and this is also the case in the Alcoholic Drinks industry.
Many consumers in our nationally representative sample (61%) are currently buying ready-to-drink alcoholic beverages like Alcopops and canned cocktails.
What are consumers looking for in these products?
In our research, we saw that consumers primarily look for quality products with good alcohol content and great taste. Many mentioned they want to avoid artificial ingredients. They also search for creative new flavours and combinations that they can’t easily make themselves.
What are they currently drinking?
Cocktails / long drinks are currently the most popular ready-to-drink option at 55% of consumers consuming these, with flavoured beverages like Alcopops next (38%).
When we asked others if there’s anything that would interest them to try, we mainly received responses around more flavour combinations, better taste, and better prices / offers. We also found an interesting comment on sustainability:
“Only if consuming in an out of home environment as this is both expensive and wasteful in terms of the amount of packaging.”
So, what does this mean for companies?
Companies can make the most of this growing need for convenience with well-curated ranges, but need to conduct research beforehand as it can reveal pitfalls to avoid, such as sustainability concerns.
Research can also be helpful to understand where target consumers plan to drink these products, to optimise marketing messaging. For example, we found many consumers thought these products were a great idea specifically when hosting events / parties.
Interestingly, as we’ve seen here, consumers are beginning to care more about sustainability in general.
4 – Sustainable Brands Perceived Differently
Ethics and responsible sourcing are becoming a much larger deal for consumers of products in all industries, as they become more interested in the background of brands.
We found that 29% would pay a lot more for products that are proven to be eco-friendly. Consumers are also beginning to perceive sustainable brands as better-quality brands. Therefore, there is an opportunity for investment into more sustainable product development processes, which can set brands apart from others.
Improving eco-friendliness can also mean using as little packaging as possible, as consumers have expressed more interest in this. Interestingly, more are also becoming aware of the need for overall sustainability, from supply chains, to production, to shelves.
So, what does this mean for companies?
As consumer budgets are currently being squeezed, most are prioritising value for money, however, it would be a dangerous mistake for companies to ignore the angle of sustainability.
Even at this time of economic crisis, 44% are trying to choose sustainable products, and an additional 11% are actively doing this.
Therefore, this time should be framed as an opportunity, if possible, for companies to invest more in making their supply chains as sustainable as possible. However, it’s important to note that consumers don’t want to see inflated prices due to it, and want quality retained.
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In conclusion, shifting consumer behaviours are creating a variety of opportunities in the food industry, such as the 4 areas in this article.
Want to find out more? Discover further opportunities and get more exclusive consumer intelligence by downloading our full Food & Drink Industry Report here.
