Industry analysts including IWSR, Nielsen and Wine Intelligence have given their verdicts on the top drinks trends, hurdles and innovations that will dominate the next 12 months.
Alcohol has been one of the most crisis-proof consumer goods categories during a time of significant global disruption, but it faces numerous challenges in 2022. However, there are many opportunities for growth in the year ahead.
According to drinks market analyst IWSR, while government schemes and grants have kept spending buoyant in some markets, economies have been set back by disruptions to key industries. Shipment costs and delays, container shortages, higher packaging costs and rising energy costs continue to challenge the market.
“Meanwhile, soaring inflation and a changing political landscape have contributed to recruitment challenges in the hospitality sector,” IWSR said. “In the US, for example, inflation hit its highest level in 40 years in November 2021, up 6.8%, while the UK’s supply chain and recruitment struggles continue to be impacted by the fall-out from Brexit.”
There are fears the supply chain crisis could last for many more months and even up to two years. The cost of transporting goods by sea has also skyrocketed. For example, the Drewry world container index measuring the cost of moving a 40ft container is 170% higher than it was a year ago.
This has led to spiralling costs that analysts say will need to be passed on to consumers.
Here are the top drinks trends – and challenges – to watch.
The rise and rise of eCommerce
Ecommerce is expected to continue to play an increasingly crucial role in the future of the drinks industry.
“Ecommerce has developed into a sophisticated and nuanced channel, and digital engagement has become a crucial part of the customer journey,” IWSR said. “As ecommerce and the on-premise grow in strength, structural long-term changes to the off-trade B&M will present a very different beverage alcohol market landscape in the years to come.
“The value of ecommerce increased by almost +43% in 2020 across 16 key markets, up from +12% in 2019. IWSR data shows that by 2025, in these markets ecommerce is projected to represent about 6% of all off-trade beverage alcohol volumes, compared to less than 2% in 2018.”
As ecommerce alcoholic-drinks sales develop, the number of retailers is increasing and the range of business models they employ is becoming more diverse and nuanced. Distinctions between different ecommerce channels, and even between online vs offline purchasing, are becoming increasingly irrelevant to consumers.
This is leading to a blurring of lines between online sales channels – for example, omnichannel retailers are establishing logistics partnerships with on-demand services in order to offer faster delivery; on-demand platforms are using ‘dark stores’ to improve delivery times and so become more like marketplaces; and marketplaces are establishing networks of physical stores.
The no- and low-alcohol boom
Another of the key drinks trends driving the alcohol market landscape is the no- and low-alcohol sector, which IWSR said is becoming more approachable for consumers as they are increasingly accepted as a lifestyle and societal norm. Channels solely dedicated to selling alcohol-free drinks for adult occasions are also on the rise, with dedicated ecommerce sites, retailers and bars coming to market.
Non-alcoholic beverage sales increased 33% to $US331 ($AU446) million over the last 52 weeks in the US, according to data from Nielsen. The products have done especially well in e-commerce, as Nielsen found a 315% increase in online non-alcoholic and low-alcoholic beverage dollar sales in the same time.
Nielsen senior vice president Kim Cox said survey data suggests most non-alcoholic beverage consumers aren’t completely sober, but rather want to have a healthier lifestyle or are losing interest in alcohol.
“Consumers want to be really focused on what they’re putting in their bodies,” Cox said in an interview with Business Insider. “In general, there’s been such a huge trend over the last several years towards lower sugar, lower carb, lower calorie in the beverages space.”
The shift from the on-premise
IWSR said changes in living location, work commutes and hybrid working policies mean that consumers are spending more time at-home and in local on-premise venues, which is shaping drinks trends.
“As such, IWSR findings indicate that premium consumption may potentially shift, to some extent, from the on-trade to the home-premise,” IWSR said.
“As consumers return to the on-trade, their experiences will be shaped by the last two years of premium at-home experiences, such as at-home cocktail-making and subscription services. Consumers will therefore be more conscious of higher prices and more easily deterred by poorer quality products or experiences in bars, pubs and restaurants.”
“IWSR expects brand owners to be more selective in where they support their brands in the on-premise, likely increasing focus on the top-end and most active on-trade accounts,” it said.
Premiumisation in the RTD & wine category
Wine Intelligence notes: “One of the most notable silver linings of the pandemic for the wine industry has been consumers’ willingness to transfer the budgets they would have spent in going out and travel into higher quality food and beverages for the home. After an initial blip during the first period of lockdown, the premium and super-premium price categories of wine.
“Three factors will fuel the wine premiumisation train in 2022: the reluctance of some consumers – particularly the Boomer cohort –to re-engage with the on-premise and travel, which will reserve more of their budgets for at-home entertaining; the increasing influence of Millennials within most wine markets, who have been the biggest drivers of the drink-less-but-better movement; and a nasty inflationary crunch in the supply chain, combining the disastrous northern hemisphere wine harvest of 2021, which the OIV estimates reduced wine volumes by an estimated 18%, and rising energy, dry goods and transport costs.”
Canned wine is also expected to finally have its moment as one of the hottest drinks trends in 2022.
“Canned wine made huge strides in 2021, both from a technical and a sales point of view, and this will continue in 2022,” Wine Intelligence said.
“However, the big innovation will come from industry building new product sub-categories in wine that hit both of the growing trends of the 2020s: wine in a portable, single serve format, with a low-alcohol formulation that turns it from wine to a wine-based sparkling drink.”
IWSR adds that new RTD launches coming to market have a higher representation of premium-and-above products than volumes consumed in 2020, suggesting a trend towards premiumisation in the RTD category too.
“The move towards premiumisation will appeal to spirits and wine brand owners, as most of the value growth within the broader spirits and wine categories over the past decade has come from the premium-and-above segment,” IWSR said.
Wine Intelligence agreed: “Eventually, we think, the same logic of successful RTD innovation – marquee brands, better flavours – will be applied to premium wine products. We expect the first movers here will be the sparkling wine producers, especially Champagne houses with an eye on extending their reach into the low alcohol / single serve space.”
The categories leading trial
People are switching with increasing frequency between beverage options or trialling completely new beverages. IWSR research shows a wide repertoire of product trial, with consumers showing strong interest in trying craft beer, hard seltzers, wine and Japanese whisky.
“Companies are no longer selling products to groups of consumers, but are selling products that fit particular consumption occasions,” IWSR said. “Having a wider portfolio allows them to be more exhaustive in their approach, better understand the adjacent and competing categories, and use small-scale investments to learn more about new products and occasions.”