The State of the Beverage Industry 2017 – Trends et al
I recently watched a webinar about the State of the Beverage Industry in 2017. Here are a few takeaways I found to be interesting.
Carbonated Soft Drinks and Fruit Beverages are declining in popularity. This is not exactly surprising. People are looking for unique beverage choices (just like they are looking for unique food choices, living conditions, vacation spots, work situations, etc.) Coca-Cola has tried with their “Freestyle” machine to make their beverage choices more unique, or at least more customizable, but that isn’t sustainable in every situation. Fruit beverages are high in calories and those who are conscious of that are cutting down on how many they drink.
Energy Drinks, RTD Tea, and Sports Drinks are experiencing low growth. At roughly +3.5%, all three of these subcategories are experiencing either a slow down in growth or a very slight increase. For both energy drinks and sports drinks, the growth of water (which we will look at in a few moments) is cutting into this category. As for RTD teas, there has been quite an influx into the market of different brands. But RTD tea drinks have been around since the late ’80s/early ’90s, so it makes sense that the growth might be slower.
RTD Coffee, Value-Added Water, and Bottled Water are growing at double the rate of energy drinks, RTD teas, and sports drinks. At least! Value-added water and bottled water are surprisingly all the rage right now. The premiumization of water by either adding nutrients or flavors to it or by extracting it from a unique location is making water a hot commodity. And the RTD coffees, which are growing at +10.5%, are making great strides in pushing forward this category that was once a morning only and occasional after dinner beverage into mainstream, any-time-of-day consumption.
What this all means for your venue… Start thinking outside the box of typical sodas, waters, teas, and coffees. Your guests want unique in all aspects of their experience. Does this mean you go crazy and get rid of all your traditional beverage choices? Absolutely not. What it means is come up with a way to embellish your soft drinks (more than just cherry or vanilla). Begin an enhanced water by using a pretty dispenser with water and fresh fruits and vegetables in it. Or offer an enhanced water pitcher for the table. Take advantage of the RTD teas and coffees and offer tea and coffee drinks beyond the typical hot cups of mediocre coffee and tea. And remember your caffeine-free consumers as they want the experience, too.
Moderating trends include flavored spirits, new spirit launches, and craft. Does this mean that any of this is going away? I wouldn’t bet on it. What it does mean is that you will see fewer of these being introduced or marketed. There will still be flavored spirits and beers, but they will be more trend forward and will make more sense. If the spirits companies are wise, they will start introducing flavors that are mixable, not just “shot” worthy.
Strengthening trends show us more premiumization,on-premise driving off-premise sales, and the growth in online retail sales disruptors. We will cover each of these separately as there is a lot to talk about.
First, premiumization. There are many who look at high-end spirits as being “cool.” Whether this is due to the “keeping up with the Jones'” phenomenon or to the “it’s more expensive so it must be good” phenomenon, I’m not sure. Either way, we are seeing a push for these more expensive spirits. But price is not the only driver. Health conscious consumers view spirits that are perceived as healthier to be more premium and will pay more for them. Also, unique ways of finishing spirits falls into premiumization, for example, finishing a spirit in a wine cask or a beer cask to bring unique flavors to the spirit is quite popular.
Next, on-premise trends – because there is more to on-premise than just driving off-premise sales. But we will start with that. Consumers who are learning about and trying new spirits at a bar or restaurant are then turning around and buying those same spirits to take home at a rate of two-thirds. Consider providing your guests with the recipes for your cocktails so they can recreate them at home. Whether it is through your website or maybe a postcard they can take as a memento, take advantage of this trend.
The drink menu is the common theme in the rest of the on-premise trend subject. There is a lot happening with drink menus now. If you don’t have a drink menu, you must develop one immediately. Touching back on premium spirits for a moment, these are starting to take up real estate on drink menus. If you aren’t already doing this, you should be. You should also promote the spirits you use in your signature drinks or LTOs. Please be sure to mention the spirits in these drinks (and find out about how mentioning spirits on your menus can help with printing costs!)
When you develop your drink menu, be sure to describe the flavor of your drinks. People choose what they want to drink by the flavor. Simply mentioning the ingredients is not enough. Also, consider suggesting pairing your cocktails with a food item (if you are a restaurant). Even though you are including the brands in these descriptions (see above) that brand name is not what draws your customer to choose the drink.
Are you providing your guest with flight experiences? If not, why not? Think beyond beer or wine flights. Tequila, whiskey, even gin are all flight-worthy choices. Speak with your distributor about having a special event to introduce your flights. Then develop a piece to assist your staff in recreating the experience on a day to day basis. Maybe an augmented reality piece could work in this situation to teach the guest about what they are tasting.
Which brings us to the final on-premise trend which is education and storytelling. Teach your guests about what they are drinking. Tell them the story of developing the drinks or why the drinks made it onto the menu. The story is the main draw for guests recounting to others who may come visit for their own experience. This is the ideal in word-of-mouth advertising… tell your guests the story you want them to recount. And for goodness’ sake, don’t forget to train your staff. Your bartenders are the gatekeepers to your beverage experience. Bring in your distributor for a training session and teach your staff how to present your beverage program to your guests.
As the year is winding down, there will be your typical, “What’s on the horizon,” trend posts coming at you fast and furiously. Prepare yourself with what is in this information first so you can be prepared for the upcoming cold-brew coffee cocktails and Irish whiskies you should will be told you must have. I’ll help you navigate those trends when they come along. I’ll see you then!