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Key Trends in Alcoholic Beverages: Powerful changes shaping the wine, beer, spirits and alcohol-free beverages industry

Key Trends in Alcoholic Beverages: Powerful changes shaping the wine, beer, spirits and alcohol-free beverages industry

Summary

The alcoholic beverage industry is undergoing some significant changes at present and whilst there are some good opportunities for growth and innovation developing, there are also some concerning signs for the industry in certain segments. The trend for premium products in the beer and spirits industries has spawned the craft industry and it has proved to be a particularly difficult nut to crack for the big beer producers.

Buying up craft beer companies sometimes has unexpected outcomes with the industry and consumers alike, punishing acquisitions severely, whilst on the other hand traditional mass produced beer volumes are declining. A similar process is happening in the spirits market, with multiple old fashioned products getting craft revival and premiumization.

A powerful trend in the industry is the revelation that people are drinking less and particularly younger consumers are choosing to consume less alcohol because of the health impacts and this is leading to newer alcohol-free products that are making good progress. The wine industry has a difficult fight on its hands as it finds its legendary production regions suffering from reduced grape yields as a result of more severe weather patterns, this is leading to new countries emerging as market players as a result.

Key Highlights

  • The most important development in the beer industry of the last decade has been the rapid rise of the craft beer industry. Almost all significant growth in the industry has come from this particular segment and the result is that big beer has become very interested in the new opportunities that have become available. Players have taken different tact when faced with the challenge of trying to capture some of this new growth, some have tried to create their own in-house brands to compete directly with smaller craft beer companies, while others have made significant acquisitions.
  • From 2015 through to 2017 there has been a significant period of acquisition with the biggest players purchasing well positioned craft beer companies. However, in some cases this is proving to not always be a fruitful strategy, because consumer behavior in the industry means that craft beer brands owned by larger brewing companies can sometimes be shunned. Another concerning specter haunting the industry is the coming cannabis craze and the big players are trying to bolster themselves against it.
  • Spirit sales have been steadily increasing, primarily driven by premiumization and craft production. As consumers are looking to moderate alcohol consumption, they tend to buy less spirits but opt for higher quality products. There has been a surge in merger and acquisition activity as well as big companies looking to capitalize on the super-premium market, as economic inequality sky-rockets and wealth is increasingly concentrated in the hands of the few. Craft beer has also impacted this market, with consumers focusing more on quality and artisanal products. Changes in the structure of UK alcohol duty have seen several smaller breweries establish themselves, primarily producing artisanal gin.
  • However, they are also distilling craft whiskey, which takes longer to produce. Spirits are having to promote premiumization and craft production as a means to drive sales, and some spirits which have fallen behind, such as rum, vodka, and tequila, have shown signs they are also beginning to engage in craft production. Finally, the rise of veganism will also reflect in the spirits market, particularly in Germany and the UK where the trend is growing strongly.
  • Traditionally, alcohol-free products have been a rather small portion of the overall alcohol market, being a niche product and serving only one specific function. This has traditionally been for those consumers that are avoiding alcohol for some specific reason on a specific date. But there is a new rejuvenated interest in the segment because it has become clear over the last decade that alcohol consumption rates are actually going down on the whole in many global regions, particularly in developed ones. Whilst many older generations, the affluent and professional classes are still drinking alcohol to high rates, many younger consumers are actually developing a different relationship with alcohol many because of health concerns.
Scope
  • Examine the major trends in the alcoholic beverages industry and what companies are doing to exploit them
  • See why big beer players are getting increasingly involved in the craft beer industry
  • Learn about the concerning new threats in the wine industry and what can be done to counter them
  • Understand the rise of alcohol-free beverages and what opportunities are available to innovative players
  • Examine the development of the craft spirit industry
Reasons to buy
  • What are the key changes happening in the alcoholic drinks industry?
  • What players are making significant new moves in the industry?
  • Are there any opportunities arising out of major industry trends?
  • What new products are starting to gain traction with consumers?
  • What threats might hit the major players over the coming years?


Executive Summary
Beer: Big players move in on craft industry but this could be misguided
Spirits: Craft and premiumization driving spirits segment
Alcohol-free: Beverages are becoming increasingly popular as fewer young consumers drink alcohol
Wine: Market faces some significant climatic challenges
Beer: big players move in on craft industry but this could be misguided
Craft beer has been a sector of huge growth, but maturity is arriving
Beer volume sales are declining but beer dollar sales are increasing
Craft beer companies are hit hard when acquired
Craft beer companies are trying to fight takeovers by seeking funding
Big beer can end up killing their expensive new brands
Big beer should search for premiumization not craft
The rise of true or mass craft labelling
Cannabis is proving to be a potential substitute for beer
Constellation Brands begins the first of a wave of big beer moves into the cannabis sector
Spirits: Craft and premiumization driving spirits segment
Consumption is polarizing globally
Value is increasing ahead of volume
Increasing wealth concentration spurring demand for super premium
Craft beer revolution has spilled over into spirits
Smaller distilleries are impacting the market
Gin has grown in popularity in the UK
Whiskey also a future trend in the UK
Premiumization further driven by limited edition
Large brewers are increasingly involved in craft M&A
Brands behind gin revival acquired by multinationals
Diageo investing in craft via Distill Ventures
Established brands are launching experimental products
Other spirits are now engaging in craft production
Diageo acquired Casamigos in 2018
Veganism trend will rise in spirits
Alcohol-free: beverages are becoming increasingly popular as fewer young consumers drink alcohol
A growing trend for less alcohol consumption with millennials
Health concerns from alcohol is a key driver for this trend
Soft drinks are not the solution in this particular case
Premiumization becoming more popular and offers a new solution for alcohol producers
Success of Fever Tree commensurate with gin’s popularity in the UK
At present alcohol replacement products are growing very well
Seedlip alcohol-free gin, hits the premium trend well
Alcohol-free craft beer is booming by adding more flavor to a traditionally poorly received segment
Big Drop Brewing offers a wide range of flavor alternative to alcoholic beer
Non-alcoholic wine options are becoming mainstream but there is room for more innovation
Other new options are developing for innovation from other forms of inhibition
Wine: Market faces some significant climatic challenges
Premium and fine wines segment is a good place to be but not forever
Canned wine is helping wine to appeal to younger consumers
Climate change concerns for the wine industry are significant
New countries are making progress in the wine market
China is heavily developing its wine market and has been highly awarded
Eastern European wine options are now much more attractive
English wine is developing due to climate and seasonal changes
Key Findings
Appendix
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List of Figures
Figure 1: Beer consumption by continent, volume million liters 1999-2022
Figure 2: Growth between small and large US breweries compared 2017 &2 018 CE’s (cases 24 12 oz bottles)
Figure 3: 2010-2017 Number of US craft beer companies acquired
Figure 4: Budweiser’s Super Bowl advert 2015
Figure 5: US Beer sales volume 2017, million BBLS
Figure 6: Brewers Association independent craft seal
Figure 7: Global spirits market value 2013-2017, $bn and yearly growth
Figure 8: Global spirits market volume 2013-2017, billion liters and yearly growth
Figure 9: US spirits revenue by product tier, 2007 and 2017
Figure 10: UK gin manufacturers’ sales and price per liter, GBPm, 2008-2017
Figure 11: Sipsmith gin products
Figure 12: Alcohol drinking habits in the UK 2005-2017
Figure 13: Heineken advertisement campaign “Moderate Drinkers Wanted”
Figure 14: Fever-Tree promotional material
Figure 15: Seedlip range of products
Figure 16: Big Drop Brewing range of craft non-alcoholic beers
Figure 17: Global wine volume liters, million, YoY growth by category 2008-2021
Figure 18: Global wine volumes by country 2007-2017 liters, million
Figure 19: Underwood wine in cans
Figure 20: Climate change effects on wine growing regions estimated 2050
Figure 21: Chinese wine production volumes 2007-2021 liters, millions
Figure 22: Top six countries by number of Grand Gold Medals awarded 2017 and 2018
Figure 23: Wineries launched in England 2016-2017
Figure 24: Chapel Down Winery Kent UK

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