Global Consumer Trends and Key Consumer Targets in Alcoholic Beverages Sample Pages Reference Code: CS0608IS Publication Date: January 2015 1
Reasons to buy this report Global Consumer Trends and Key Consumer Targets in Alcoholic Beverages provides a comprehensive overview of the alcoholic beverage landscape, analyzing the regulatory and consumer drivers to identify the best opportunities and strategies. Consumer attitudes to drinks The report offers a breakdown of consumers view of the health proposition of five different drinks categories carbonated drinks, fruit juice, dairy drinks, bottled water, and tea and coffee as well as highlighting which common drinks ingredients consumers are concerned about. Product innovation examples Examples are provided of innovative international and country-specific functional drinks product development within five drinks categories, with analysis of how these products effectively target the most pertinent consumer need states. Market sizing Beverage market value and volumes are given for leading countries across the globe. The report highlights which countries and categories are driving growth and where growth is stalling. Recommended actions Strategic recommendations of how to capitalize on the evolving consumer landscape are offered, allowing product and marketing strategies to be better aligned with the leading trends in the market. Identify key consumer targets Key demographic groups driving beverage consumption are identified. Canadean s unique consumer data sizes the percentage of beverage markets that are driven by specific need states, by age and gender. Future outlook The report provides insight to highlight the "so what?" implications behind the data, and analysis of how the need states of consumers within the industry will evolve in the short-to-medium term future. 2
Executive Summary: Market Context Both volume and value growth are being driven by emerging economies such as China and India Across the alcoholic beverages market there is high growth in all categories in China, which is also the largest Beer market in terms of volume. India is also a rapidly expanding market, presenting an attractive opportunity for investment, with largest for cast growth across the Beer and Spirits sectors. In Wine, the US and Europe still account for the largest market share, yet these developing markets are becoming stagnant, with some high-consumption countries such as France where the overall volume of Wine consumed is declining. Speciality Spirits are the most popular global Spirits, followed by Whiskey and Vodka. Much of the Speciality Spirits market is driven by emerging markets where local and regional alcoholic beverages remain popular. In value terms, Spirits is the most valuable market, followed by Beer and then Wine, with Spirits and Beer both forecast high levels of growth in the US and China, presenting opportunities for manufacturers to target these expanding markets. 3
Executive Summary: Consumer Demographics Older males are driving the alcoholic beverages market as women are under-consuming across all categories Men are driving the alcoholic beverage market, and overconsuming in every category, more so in Beer & Cider and Spirits. In Beer, it is older consumers who are over-consuming, specifically men, and marketers should provide products formulated specifically to encourage consumption among aging consumer who are more concerned in regards to health into later life. Across the Wine market it is again older consumers who are driving the market, and as health is more influential in the Wine category marketers must focus on promoting the beneficial aspects of consumption to reassure aging consumers, particularly in emerging economies with high growth and rapidly again populations. The gender split is more even, highlighting opportunities to target both men and women. In Spirits it is consumers aged 25-44 who are driving growth, as they seek products offering superior experiences and enjoyment, as older consumers limit consumption of stronger alcohol. It is men who over-consume Spirits, yet there are growing numbers of female consumers, particularly in emerging economies. 4
Executive Summary: Health in Alcoholic Beverages Health is becoming increasingly influential across emerging markets Focusing on providing healthier options is essential for growth in emerging markets. Consumers in China are highly influenced by health across all alcoholic beverage categories and it is vital that manufactures respond to the demand for better for you products. As Wine becomes more popular in Brazil, consumers, particularly women, are seeking Wines which promote better health. Marketers can target this burgeoning market by highlighting the beneficial aspects of consumption and the link between antioxidants in Red Wine and overall health. In more developed markets Health remains a niche motivator of consumption. However, as consumers become more health-conscious globally, manufacturers of Beer and Spirits should be prepared to innovate and provide products meeting the growing desire for healthier options. Ultimately, the Health trend will become increasingly influential in both developed and emerging markets. In these emerging markets manufactures should focus on better for you options. In more developed markets, though health is growing in importance, other concerns will always remain more vital, such as indulgence and value. 5
Executive Summary: Defending Share of Throat Recreating the on-trade experience is vital to drive at-home consumption One of the main inhibitors of on-trade consumption is price, highlighting the necessity to manufacturers of providing lower-priced offerings to encourage a greater number of consumers to drink outside of the home. The biggest challenge faced by off-trade manufacturers and retailers is to drive the number of consumers drinking in the home. By recreating the on-trade experience through improving quality, memorable positioning, and ensuring that at-home options do not compromise on the social aspect of drinking manufacturers can encourage higher levels of off-trade consumption. Many consumers are also hesitant to try new drinks out of the home due to scepticism over taste, and manufacturers' must overcome these consumer perceptions by promoting the indulgence of new flavors. Craft offerings are also increasingly popular, and marketers should ensure that any such products are marketed around the quality of ingredients and formulation and how this relates to a more enjoyable overall experience. Of consumers who rarely sample new drinks out of the home, many state that there are no new offerings they enjoyed, highlighting opportunities to encourage consumption through more diverse ranges of flavors. 6
Executive Summary: Recommended Actions Targeting new audiences and occasions Targeting new audiences and demographics is vital to sustain and promote growth across the alcoholic beverages market. Manufacturers must innovate with products that meet evolving consumer needs such as the growing desire for more indulgent offerings across the Beer & Cider market. Manufacturers can also increase consumption by targeting new occasions via food pairings. By positioning specifically formulated Beer products to compliment food occasions, marketers can encourage consumers to choose Beer over Wine for eating with a meal. Increasing the number of premium gifting occasions can also be successful in driving market growth, as can increasing the level of connection consumers fell to a brand. As the craft movement is becoming more popular, consumers want products with more careful formulation and smaller-scale production. Leveraging the connection to less mass-produced options and exclusivity of such brands will appeal to consumers seeking innovative and novel alcoholic beverage options. Fusion flavors will also become increasingly popular as consumers seek more unusual and novel tastes, sampling new and exciting experiences through alcohol. 7
Contents Introduction & Overview Market Context Market Volume Market Context Market Value Consumer Demographics Consumer Analysis Beer & Cider Consumer Analysis Wine Consumer Analysis Spirits Health in Alcoholic Beverages Defending Share of Throat Lessons for the On-Trade & Off-Trade Recommended Actions Appendix 8
Wine: Europe is still the largest market but is becoming stagnant The Wine market across Europe and the US is highly developed, thus there is slow growth but a large consumer-base. Although the market is somewhat stagnant, positioning products at lower prices or offering innovation can drive consumption. Wine market by volume (million liters) in 2013 Country USA Volume 2013 Million Liters China is a large and growing market and is one of the most attractive for manufacturers due to its huge consumer base. Focusing on premiumization and quality will encourage higher consumption levels. Italy Germany France Although France has high volume consumption, the market has shown negative growth from 2009-2013 at a rate of -12.8%, highlighting the need to look at growth not just market size. Negative consumption growth means that positioning is vitally important and for new products, France may not present the best opportunity. Spain also witnessed negative growth, at -3.5%: recessionary markets will lead to less consumption, creating opportunities for lower priced, private label and budget wines. UK China Argentina Spain Russia Romania 9
Manufacturers should target Older Young Adults and Pre-Mid-Lifers with more premium offerings Global Spirits over and under-consumption by age-group, 2013 Early Young Adults Older Young Adults Pre-Mid Lifers Mid-Lifers Older Consumers Older Young Adults are over consuming Spirits by %, and manufacturers should focus on targeting the growing desire among this demographic for Spirits which meet their individual taste preferences. As Individualism is a big concern among 25-34 year olds, marketers can leverage not only the demand for new and innovative flavors, but the desire to connect to a brand through exclusivity, and less mass-produced and generic offerings in Spirits, particularly in developed markets. Across the alcoholic beverages market, Older Consumers are an attractive target for manufacturers. Due to the large overall size of the demographic, and with life-expectancy rising globally, encouraging consumption among aging consumers into later life is increasingly important. In the Beer market, manufacturers must do more to target under-consuming younger demographics, promoting value through focusing on lower-cost options. In Wine, marketers can focus on emphasising the social aspects of drinking with friends in both on-trade and offtrade environments In Spirits, manufacturers should focus on healthier formulations to appeal to Mid-Life and Older Consumers concerned with health and quality to encourage higher consumption among a demographic with more disposable income 10
Changing Lifestages is driving the Lager market while Indulgence is most influential in Beer & Ale and Cider Lager: 1. Changing Lifestages % 2. Better Value for Money % 3. Indulgence % Beer & Ale: 1. Indulgence % 2. Personal Space & Time % 3. Better Value for Money % Cider: 1. Indulgence % 2. Personal Space & Time % 3. Experience Seeking % Lager is by far the most popular category in the Beer market, and Changing Lifestages are driving consumption across this sector, as consumers seek products which meet their lifestage needs. This includes more premium options for consumers with higher disposable income levels who desire quality products to reflect their connoisseurship. Aging consumers will seek lower calorie options due to health concerns over consumption into later life, and manufacturers should respond by altering formulation to provide better for you options. Though Beer & Ale and Cider are smaller categories overall, the craft movement and increasing variety of Ciders is driving rapid growth in these markets. Indulgence is by far the most influential motivator as consumers seek products which offer the best tastes and flavors, in two markets which have a vastly diverse range of options. Flavored Cider and innovative formulations in Beer & Ale are driving the market with novel combinations of indulgent tastes, which are becoming more popular among women and driving occasions in an under-consuming demographic. 11
Manufacturers must diversify their approaches due to differing consumer needs across the Spirits market Brandy: Changing Lifestages % Indulgence % Tequila: Fun & Enjoyment % Indulgence % Manufacturers should focus on providing a variety of indulgent products to meet the lifestage needs of consumers. Marketers should promote Indulgence to encourage consumption among a younger demographic who are less likely to opt for Brandy. As Tequila is often consumed as a shot, manufacturers can leverage the Fun & Enjoyment associated with drinking with friends. Drinking Tequila straight is becoming more popular, and marketers should promote more indulgent tastes and innovate to provide smoother, less harsh flavors to encourage consumption. Gin: Individualism % Indulgence % The popularity of Gin is increasing, particularly among a younger demographic, as manufacturers have attempted to reinvent the image of the drink. Consumers are seeking Gin which reflects their individual taste preferences and will seek the latest innovative flavors in a burgeoning category which has the potential for large growth. Rum: Indulgence % Fun & Enjoyment % Rum is most often consumed with a mixer, and consumers seek the most indulgent flavors and drinks combinations. Consumers are also concerned with Fun & Enjoyment, and marketers can promote the enjoyable and social aspect of consumption with friends, to encourage sales. 12
Health is becoming increasingly influential across the alcoholic beverages market Although the alcohol market in general will never be a category driven by the desire for health and wellness, there are many markets and many sectors where the desire for healthier options is driving growth. The following section will look at the growing influence of Health across the alcohol market as a whole, and analyze which consumers present the most attractive opportunities for marketers. By fully understanding which demographics are driven by the desire healthier options, and through identifying the countries where these products are most popular, manufacturers can develop entry strategies around more healthy options. However, many consumers will not be influenced by Health, and it is important the manufacturers identify the key areas for growth, without wasting time and investment on consumers who are unconcerned with better for you alcohol options. 13
Lessons for the off-trade: Memorable positioning and a recreation of the on-trade experience will drive off-trade sales To further drive sales in off-trade alcohol retail, manufacturers need to ensure that they stay aware of the latest developments in the on-trade market, and also innovate to encourage a higher number of occasions. By providing consumers novel products which offer both value and experience, marketers and manufacturers can encourage consumption in the home, and take share of throat away from bars. The Austin Brewery Peacemaker offers a 99 can pack of Beer. Despite its seemingly novel positioning, it actually meets many of the most essential consumer needs. Firstly, the essence of the bulk-buy offers value to consumers seeking lower-priced alcohol, and here the product is much cheaper than buying eighteen 6-packs of beer, saving consumers money Secondly, while initial transportation may be difficult, the sheer number of cans offers convenience as it means less return trips to the supermarket, and the long shelf-life means that the product is unlikely to spoil. Thirdly, it is positioned to encourage social drinking, aimed at younger consumers for parties and gatherings with friends, while the product itself is memorable due its positioning, and this recall and exposure increases brand loyalty. 14
Focusing on new flavors and craft offerings will drive out-of-home consumption Off-trade marketers looking to increase out-of-home consumption should focus on providing new and exciting flavors to consumers. Craft offerings are also becoming increasingly popular, and focusing on smaller-scale production and connection to a brand will encourage consumers to try more new offerings out of the home and lead to brand loyalty. On-trade manufacturers seeking to gain share of throat from on-trade offerings should focus on recreating the on-trade experience while offering better value. Many consumers feel that drinking ontrade is too expensive but do not want to sacrifice the social aspects of drinking with friends. Thus marketers should promote their products as offering value without compromising on experience. 15
Action Points: New ways to target female drinkers Traditionally, the alcoholic beverage market has looked to target females through feminine packaging usually pink - and sweeter, less harsh flavours. Whilst women are not always adverse to these colourings and flavors, a growing number think that such positioning is outdated and stereotypical. This does not necessarily mean that women are opposed to buying brands offering more feminine products, however it does indicate that more subtle approaches are needed in order to find maximum success. As such, manufacturers need to adopt a more sophisticated approach to targeting females by combining female-friendly product aspects such as sweet and fruit-based flavours with more empowering traits such as promoting strength and independency. Positioning around social drinking will also help encourage consumption for example, moving away from traditional advertising of women drinking wine at home and cocktails in bars as well as showing a greater number of women drinking beer. Red Stripe Burst is a Rasberry Beer from Diageo is positioned towards younger consumers from both genders. However, the sweet flavor means it is positioned primarily towards younger females to encourage consumption and acquaint them with the malt flavor found in classic Red Stripe creating brand loyalty and a predilection for the malt taste of the manufacturer s flagship beer. Vallure Vodka is positioned as a premium, luxury product, without employing traditional gender tropes. The strong prestige image and use of premium cosmetics influenced gold packaging targets women in subtler way than using stereotypical feminine colours and design, offering females a more gender neutral alcohol option. 16
Sources and methodology This report is built on three types of data ALCOHOLIC BEVERAGES MARKET DATA Method: industry partnerships across the value chain enable a brick-by-brick research methodology, w ith research built from brand data upw ards. Coverage: On-premise and Off-premise consumption Years covered in this report: 2013-2018 Four categories: Beer & Cider Wines Spirits Flavored Alcoholic Beverages (FABs) CONSUMER DATA Method: extensive consumption surveys and consumer group tracking w hich is fully aligned to know n market sizing. Consumption motivations are not mutually exclusive. Fourteen categories: Lager Beer & Ale Cider Still Wine Sparkling Wine Fortified Wine Brandy Gin Liqueurs Rum Speciality Spirits Tequila Vodka Whiskey SURVEY PANEL DATA Method: in-depth survey of the attitudes and consumption habits of 2000 consumers. The survey w as conducted via our Rew arded Opinions panel w hich has a reach of w ell over 100,000 respondents. The studies w ere conducted betw een August and October 2014. Coverage: UK only Years covered in this report: 2014 17
Method Overview: Country Coverage Country coverage differs between Market Data and Consumer Data. The Market Data presents a global view of market dynamics, whilst the Consumer Data analyzes in detail the consumer trends in 10 key countries, but with global implications for how marketers should update their product strategies. The Market Data used refers to a global market size of 50 countries. Consumer Data used throughout the report is for 10 countries only, but the consumer behaviors tracked reveal global opportunities. Survey Panel Data used throughout is for the UK only. MARKET DATA: 50 COUNTRIES COVERED TO ANALYZE MARKET DYNAMICS Argentina Australia Austria Belgium Brazil Bulgaria Canada Chile China Colombia Czech Republic Denmark Egypt Finland France Germany Greece Hong Kong Hungary India Indonesia Israel (Hot Drinks only) Italy Japan Malaysia Mexico Netherlands New Zealand Norway Peru Philippines Poland Portugal Republic of Ireland Romania Russia Saudi Arabia Singapore Slovak Republic South Africa South Korea Spain Sweden Thailand Turkey Ukraine United Arab Emirates UK US Venezuela CONSUMER DATA: 10 KEY COUNTRIES COVERED IN DETAIL TO IDENTIFY GLOBAL CONSUMER BEHAVIORS Brazil China France Germany India Italy Russia Spain UK US Analyzed through: 33 Consumer Groups 20 Consumer Motivations 18
Related reports The Future of Functional Food & Drinks - successful product positioning and claims This report segments the functional food and drinks market by health claim and consumer age groups, and studies the future of four key trends in the market: probiotics, glucose control, performance muscle and prevention muscle, and cognitive performance in adults. Key ingredients are identified in each of these areas. Finally, the future of the functional food and drinks market is considered. Identifying new opportunities in the Soft and Hot Drink markets and responding to evolving consumer need states Consumer behavior is evolving rapidly and this will open up new opportunities in both Soft Drinks and Hot Drinks markets. This includes a more holistic understanding of health and the role drinks can play in meeting these needs, the continuing influence consumers busy lives have in changing consumption habits, the ongoing key role taste will play in consumer choices, and the changing consumer perceptions towards sugar and artificial sweeteners. What next for Health in Food? Consumer Lifestyles, Nutrition, Food Labelling & Product Choice Disease-related, demographic, and desire-led drivers are making health of growing importance to food marketers. However, barriers such as cost, habits, and confusion over how to eat healthily are limiting consumer s ability to act on these drivers. After exploring these drivers and barriers, this report focuses on the health solutions available to consumers, the best practice case studies and the actions food marketers need to take to make the most of the increased focus on health. 19