BeerCraft

Three Major Trends Shaping the Alcohol Industry

Today’s modern drinkers are changing. Although beer continues to remain the beverage of choice for most consumers, wine and spirits have remained popular as well. But gaining popularity are craft products in all three categories: wine, beer, and spirits. Polling and consumer purchase numbers are showing three major trends shaping the industry right now. All of them focus on growth markets and marketing.

The Rise of the Craft

Major growth in the industry is being seen in recent years with “craft” products especially in the beer (up 14.1 percent 2015-2016) and whiskey (up 4.6 percent) segments. These gains are just in the craft sectors of those markets, says the Beverage Information Group. Polls are also showing that with these increased sales, store owners and outlets are increasing shelf space to match demand. According to the Brewers Association, in 1976, the US had 103 breweries; in 2016, it had 5,301 -you can see this growth everywhere you turn.

The rise of the craft industry is not a brand new trend, but a continuing one. A trend that has been happening for several years, coinciding with the marketing aimed towards the largest buying demographic, millennials. So much so that the Tennessean summed it up by saying that “millennials love booze.” According to recent polls, craft items, have become a rising trend among Generations X and Y.

Craft beers, however, may be leveling off. They owned about 11 percent of the overall beer sales volume in 2014 and have continued growing since. The category is relatively broad and could reach as high as 20 percent of the overall beer market. That might be an ambitious number, though, and most industry experts seem to be expecting craft beers to level off in the 15 percent market share range. Most craft beers are made and sold regionally (about 78 percent of them), but most buyers are diverse purchasers without a lot of brand loyalty, jumping from one brand to the next. The U.S. alcoholic beverage market has $211.6 billion in annual sales. Millennials of legal age, though only representing one-fourth of adults over 21, account for 35 percent of U.S. beer consumption and 32 percent of spirit consumption according to Nielson.

The Cliché For Wine Holds Truth

The latest wine cliché, that it’s the purview of young moms looking for escape, is turning out to be true. Twitter is full of “wine-drinking moms” and their crafty posts and trending childcare advice. Many of which include some wine humor or wine sipping included as part of the fun.

The industry is showing that millennials drink the most wine of the generations measured (a glass more per occasion versus Gen Xers and two glasses more than Baby Boomers). Millennials account for about 36 percent of the overall wine market in the United States and a large portion of those buyers are also female. That’s according to the 11th Annual Wine Market Council Conference’s reporting.

What’s changing is that wine drinkers are now moving towards more premium makes and brands. Most growth in the industry is with brands that have a more premium appeal and (often) a higher cost.

Experimenting Is Key

The new trend in all sectors of the alcohol industry is with experimentation. The most prolific buyers of beverages are consumers who are willing to try new things. These experimenters are becoming the market which most producers and advertisers are hoping to grab.

Wine drinkers are often willing to explore multiple brands from many vineyards, building an understanding of various tastes and occasions. Surveys show that 19 percent of wine buyers have purchased more than 10 brands in the past year. Similarly, about 15 percent of beer drinkers are also experimenters who purchase more than 10 brands per year as they hunt for the perfect brew for each occasion.

Compared to those, however, spirit drinkers are less likely to experiment, but more likely to become very brand loyal. Yet among them, the enticement isn’t just about taste or “persona.” It’s about the story behind the distillery or the drink. These consumers like to know about the crafting process, the history, and the people who preserve it.

All three of these trends are what are shaping our current alcohol industry going forward.

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The Author

Robert Lewis

Robert Lewis

Robert F. Lewis focuses his practice on the laws governing alcohol industry members at all three tiers as well as tobacco, and other regulated products. Rob has accumulated over 25 years of experience in the alcohol industry including previously serving in law enforcement and as a special agent with the State of Florida Division of Alcoholic Beverages and Tobacco. Rob’s experience includes working with foreign and domestic alcohol industry clients in a wide variety of issues including alcohol licensing and structuring of alcohol service operations, alcohol trade practice analysis and consulting, defending regulatory enforcement actions as well as state and federal investigations of alcohol industry members, administrative litigation, land use and zoning analysis and approval processes, and state and local government lobbying efforts. Rob has also served as an expert witness on matters relating to alcohol beverage law and administrative code provisions in Florida.

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