I am lucky enough to have a micro-brewery in my area already. It is located in an industrial park and on summer days the parking lot was taken over with patrons sitting on wooden benches and, when those ran out, on upturned beer kegs.
Then last year, a new one opened next door. Oh, the horror. How does one choose which one to visit? The tried and tested? Or support the new guy? Well, luckily it seems the area has a taste for craft beer as neither is ever empty so more often than not the decision comes down to where there’s space.
This new brewery is just one of over 300 that opened in the UK last year, taking the number of breweries to over 2000 for the first time since the 1930’s, according to a report by accountancy firm UHY Hacker Young. It’s not just craft beer that’s booming – small scale producers with low barriers to entry are flooding the market, especially led by the gin revolution. With Scotland set to be the first country in the world to charge a minimum price per unit for alcohol, it’s an industry that’s undergoing big change.
Putting aside political considerations for a minute, much of the change is actually coming from the consumers themselves, and what they’re demanding from brands. We decided to take a look at some of these trends and what it means for the alcohol industry.
A teetotalling generation
For those in the industry this will not come as a surprise. For the first time in decades there are record numbers of teetotalers, proportionately more with millennials, however this is an increasing trend across the population. Those that aren’t going teetotal, on the other hand, are increasingly buying less for more, and choosing premium experiences , such as spirits, cocktails, craft beer and prosecco (over wine). As a result, alcohol brands are facing potential decreases in volume sales, while the ones that are showing growth are those that are bringing premium products to market, often including non-alcoholic and low alcohol brands in their portfolios.
But where has this change come from? It’s being driven by three wider consumer trends.
Monetary reasons Specifically if we consider millennials, this ‘recession-generation’ has known nothing other than recessionary conditions, increased uni fees and hard-to-find job environments to name a few of the conditions affecting their disposable income. As they consider their life goals and aspirations realistically, many are beginning to question the consumerist lifestyle and opting for a simpler, less indulgent way of life.
Mindfulness Consumers are looking for more meaningful experiences, and seeking out smaller producer brands and different sorts of social activities to accompany this. Brands tapping into this include Daybreaker (a morning sober rave party) or activities like the fitness craze ‘beer yoga’ aimed at making people stress-free, happy and relaxed, whilst still enjoying a beer.
Clean living As the war on sugar wages, consumers are increasingly aware of what they’re putting in. It’s not just sugar that consumers are interested in, though. We are seeing more and more people adopting vegan lifestyles, while, according to the Nielsen Global Health and Ingredient-Sentiment survey, 64% of consumers are on some or other exclusion diet. As a result, they’re demanding that brands come to the party. ABInBev has recently started putting calorie info on bottles, while Skinny Lager and Skinny Prosecco are seeing record success with their significantly lower sugar count. Skinny Lager comes with additional credentials in that it’s both gluten free and vegan-friendly while promising to still taste like lager as you know it.
Demanding consumers with high expectations
We’ve seen the rise of craft but consumers are now looking beyond that – small scale production is no longer compelling enough (45 gin distilleries opened their doors for the first time last year3 ). Consumers are interested in provenance, ingredients, sustainability, the story, the mission, supporting local… all of which needs to align with their values. As Sam Salameh, Smirnoff’s Head of Europe says: “It’s very easy to tell a compelling story and provide lip service to extremely important matters. But if you don’t back that up with some significant action, it becomes a little meaningless.”
What are the trends behind these changing consumer expectations?
A new type of aspiration The underlying trend is that consumers desire a premium experience. However, delivering on premium is not only about pitching the product at connoisseurs or the wealthy through traditional luxury cues such as black, silver and gold, coat-of-arms logos, being suited and booted and centuries old heritages. Today’s consumer aspires to a holistic experience, to being ‘in the know’, to discovery and experimentation. In the alcohol space, this means that traditional expertise or geographical associations are no longer the only indicators of a quality, premium drink. Take Nikka Coffey, a gin from Japan, a country not traditionally associated with gin, but a gin that has been awarded 4.5 stars on Difford’s Guide and is firmly priced at the premium end of the spectrum. Today’s consumers are willing to pay more for a product that they believe in and more likely to return to brands that have similar values to their own.
Buying into brands whose values align As consumers become more informed as well as more exposed to alternatives, they are demanding more from brands. It is no longer enough to tell them that it’s a quality product distilled using age-old techniques. Consumers want to know that the company stands for the same things they stand for. They are discerning with what they put into their bodies, therefore they want to know where ingredients have been sourced from. They are carving their own destinies, therefore they want to know what your history is. They want two way dialogues, responding best to those companies who open the doors and give them a glimpse into what life at that company is really like. But they will see straight through you (or find out, in any event) if anything is untrue.
Consumers expect sustainable behaviour As CO2 emissions reach record highs, consumers are increasingly aware of their footprint on this planet. Brands tapping into this are gaining traction and making noise in the industry, forcing consumers to reappraise their choices. Take Toast Ale who make pale ale from waste bread or Saltwater Brewery who is defining circular economy packaging with their edible six pack ring. These guys don’t even have to look for a brand story – their existence and their ethos is so embedded in the brand that all they have to do is tell that.
Start-ups and craft companies have the ability to be agile, the bravery and determination to try new things and the lack of history forcing them to tell new stories, and in the process, disrupt the market. With more start-ups and craft alcohol shops on the high street than ever before as well as low barriers to entry through online, it’s a trend that’s not going away and for all alcohol brands, craft and otherwise, it’s getting consumers to reappraise the category, shifting expectations of brands.
How do we engage these notoriously time-starved consumers?
Much has been said and written about how hard to engage and reach these consumers are, so what can we learn about cut-through from the trends that influencing our consumers?
What’s in it for me? Today’s consumers gather experiences and they expect brands to deliver this. Every experience and interaction is endured only as long as they get something out of it. In a world where attention spans have reportedly dropped to less than a minute, this is one of the only ways for a brand to continually build the network of associations that are necessary for brand recall and thus engagement and purchase.
Furthermore, delivering experiences has a twofold impact. Not only does it build their own associations, strengthening the brand image they hold, but it’s also a talking point. Telling the story of their experience embeds the experience further whilst engaging new prospects. Prospects hearing a story are far more likely to recall it, thus building their own network of associations and making them more likely to seek out this brand experience for themselves.
This does not only have to be a physical experience – we are not saying that every alcohol brand must put up a pop up bar. In fact, those who get creative are the ones who’ll be rewarded. Guinness for example is trialing VR taste experiences where you can see the flavours, effectively enhancing the taste by ‘tasting with the eyes’. SippCLUB is using augmented reality to enhance the wine experience by providing wine notes, serving temperature, tasting guides and food pairing by simply interacting digitally with the wine label. Social media and digital are naturally good spaces for story-telling so brands need to make sure that the story is compelling and ensuring consumers stay with them through to the end and don’t swipe away before the key brand moment is delivered.
With a lot of money getting invested in digital, do you know how to measure the success of your digital spend, especially when some of the new platforms provide very limited data?
Online facilitates convenience We all know (and have most likely experienced) how online can make our lives much easier: a click of the button and something is ordered, no heading out into the cold, no carrying heavy bottles in bags that cut into our fingers. But online also makes it easier for consumers to locate those hard-to-find brands and to discover new ones. In this multi-channel world, brands need to consider how they’re showing their brands online and put the same amount of effort into creating stand-out on the virtual shelf as they do in creating stand-out on the physical shelf.
Amazon, in particular, is shifting our retail space forever, changing how consumers experience customer service and how they make decisions online. Brands need to be considering what cues alcohol shoppers are using on Amazon to make their decision – price, reviews, ratings, seller ratings, description, images, etc – and how this is impacting how they shop for alcohol online, but also offline.
Not only do brands and other retailers need to be aware of how Amazon’s presence is changing expectations, but brands should also be planning their own Amazon strategy, both from a distribution perspective (i.e. making sure you’re on the Amazon e-shelf) but also from a brand presence perspective (how do you cut through the plethora of options available). Brands need to make sure that they’re not diluting their brand essence online and Amazon, for example, is open to working with brands to create a branded page, which feels like an outlet for that brand (take a look at Vans shoes).
So, with this is mind, what’s your online strategy and, specifically, your Amazon strategy?
In the face of this shifting landscape, we work with small brands and established alcohol houses alike to understand what it means for their brands, who the new consumer is, the occasions that are influencing their needs, what stories need to be told to futureproof sales and what articulation of brand values can be.
If you’ve been wondering the same things, please get in touch.