Looking Into The Future; Consumer And Market Trends … · Looking Into The Future; Consumer And...

Sep 2017

Looking Into The Future; Consumer And Market Trends In The Alcoholic Drinks Industry Exploring the latest trends in beer, cider, spirits, and wine categories

Contents

1. Introduction

2. Global & APAC Alcoholic Drinks Performance 2016

3. Innovation Trends in Alcoholic Drinks

Trend 1: Moderation & Avoidance

Trend 2: Weight Management

Trend 3: Novelty Factor

4. The Future

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Global & APAC Alcoholic Drinks Performance 2016

Introduction : Global Alcoholic Drinks Market 2016 Global : Beer represents the largest segment by volume; Spirits by value

Source: GlobalData

Global: Market value and volume, key segments, 2016

Top 5 markets by total alcoholic drinks market volume (liters) 2016

Germany

Australia

Alcoholic Drinks represented $1.6 trillion in global spending in 2016

Global: growth by top three segments, volume CAGR (%), 2015-2020

Cider +9.4% Flavored cider 27.5% Apple cider 5.4% Seasonal cider -0.8%

Wine +2.9% Red wine 3.9% Cava 3.2% Other sparkling Wine 2.9%

Beer +3.0% Seasonal beer 24.6% Flavored beer 16.8% Ale 12.7%

Spirits +6.0% Other specialty spirits 10.7% Other grape brandy 7.7% Irish Whiskey 6.7%

Top 5 fastest growing markets by volume CAGR (%) 2015-2020

USA 29.5 bn liters

Brazil 16.1 bn liters

India 13.2 bn liters

Japan 11.1 bn litres

CAGR 2015-20

Country

France

Germany

Australia

Pakistan 0.03 bn litres

Honduras 0.2 bn liters

Qatar 0.02 bn liters

Nicaragua 0.2 bn liters

+13.8%

CAGR 2015-20

Country

Intro Moderation Weight Concerns Novelty The Future

26,299

194,741

32,244

13,067

331,293

617,774

662,137

0 200000 400000 600000 800000

Spirits

Value, 2016 , (US$ mn)

Volume, 2016 (mn ltrs)

China 67.7 bn liters

Introduction: Asia Pacific* Alcoholic Drinks Market 2016 Asia Pacific* : India presents the greatest opportunity, both in size and growth potential

Source: GlobalData

*Asia Pacific : China, India, Thailand, Vietnam, Malaysia, Singapore, Hong Kong, Indonesia, Philippines, Taiwan, Japan, South Korea, Australia, New Zealand

Asia Pacific*: Market Volume (mn ltrs) and Value ( US$ mn) ,

key segments, 2016

Top 5 markets in AP* by total alcoholic drinks market volume (liters) 2016

France

Germany

Australia

Alcoholic Drinks represented US$632 billion in Asia Pacific* in 2016 (38.9% of Global Market Value)

Global & Asia Pacific : Volume CAGR (%) by Segment , 2015-2020

Cider +9.4% (Global) +4.3 % (Asia Pac.)

Wine +2.9% (Global) +10.0% (Asia Pac.)

Beer +3.0% (Global) +1.0% (Asia Pac.)

Spirits +6.0% (Global) +6.0% (Asia Pac.)

Top 5 fastest growing markets in AP* by volume CAGR (%) 2015-2020

China 67.7bn liters

Japan 11.1 bn liters

Vietnam 4.3 bn liters

South Korea 4.1 bn liters

CAGR 2015-20

Country

France

Germany

Australia

Vietnam

Singapore

Philippines

CAGR 2015-20

Country

3990.7

70623.7

29845.0

110,027

191,574

329,034

Spirits

Value,2016, US$ mn

Volume, 2016, mn ltrs

Introduction : Influences of Alcoholic Drinks Consumption 2016 Globally, alcoholic drink purchases are driven by enjoyment, familiarity, and time/money constraints

Source: [1] GlobalData’s Q3 global survey, 2016

How enjoyable or unique the product is 61%

How familiar/trust-worthy/risk-free the product feels 59%

How well the product aligns with my time and money constraints 56%

How well the product is tailored to my needs and personality 55%

How the product impacts my health and wellbeing 46%

Global: Consumers who are often/always influenced by the

following when choosing alcoholic beverages, 20161

Sensory & Indulgence

Familiarity

Time& Money

Innovation implications across each global/ asia alcoholic drinks trend

Formulation

• Free-from formulations • Low/no-alcohol beverages • Added vitamins, botanicals and ingredients that are

traditionally perceived as restorative or therapeutic

• Less sugar and lower calories • Natural fruits can be used to add sweetness instead of

added sugar

• Innovative product formulations • Unique, colorful ingredients, unusual flavor

combinations • Interesting origin / heritage

Moderation &

Avoidance

Weight Management

Novelty Factor

Key Alcoholic Trends Globally/ in Asia Pacific

Formulation

• Free-from formulations • Low/no-alcohol beverages • Added vitamins, botanicals and ingredients that are

Moderation &

Avoidance

84% of global consumers are

actively trying to reduce or moderate their alcohol

consumption

While this is a threat to conventional alcoholic beverages, producers should look to expand their low and no-alcohol products to tap into this growing opportunity.

Moderation & Avoidance

Non-alcoholic/free-from products resonate with health-conscious consumer

Source: [1] GlobalData's Q4 global survey, 2016; [2] Independent, January 2016 [3] GlobalData's Q3 global survey, 2016; [4] WSJ

“Non-alcoholic beer is growing three

times faster than the overall beer market”

Cees’t Hart, Carlsberg CEO, November 2016

AB InBev expects no-alcohol or low-alcohol products to make

up 20% of its total beer volume worldwide, up from 6% at

present4.

Non-alcoholic beverages are becoming more popular

Concerns with alcohol consumption are significant across all range groups, increasing gradually with age

Non-alcoholic/free-from products resonate with health-conscious consumer

Source: [1] GlobalData's Q4 global survey, 2016; [2] Independent, January 2016 [3] GlobalData's Q3 global survey, 2016; [4] WSJ

• Least worried age group is 18-24 year olds

• Today’s youngest drinkers are drinking less than previous generations did in their youth2 and they are more likely to proactively seek products that improve their health compared to older generations who prefer a more reactive approach. Therefore, demand for low and no-alcohol beverages extends across all age groups and their appeal is growing among younger drinkers.

84% 81%

83% 84% 87% 88%

Global 18-24 25-34 35-44 45-54 55+

Global: Consumers actively trying to reduce or moderate their alcohol consumption, 20161

Examples we like: offering no-alcohol/free-from beverages to meet consumer preferences

Sweet Lips Infusions - Low Alcohol Wine Drink

A new range of Low Alcohol Wine Drink marketed under the Sweet Lips brand name is now available to consumers in Australia, United Kingdom, France, Italy, Spain and Greece. Manufactured by Warburn Estate, the product is available in the following varieties: Mango Elderflower & Passionfruit, Orange Blossom & Nutmeg, Hibiscus Pomegranate & Lime, and Mango Ginger & Lemongrass; all feature 8% ABV and are sold

in 750ml glass bottles for 6.00 AUD. Tagged as free from artificial colors and flavors, each variant is described as "low in alcohol with a light bubble and the layered flavors."

Source: [1] Pionier; [2] Innis & None; [3] GlobalData’s Product Launch Analytics; [4] Seedlip; [5] GlobalData 2015 Q4 global consumer survey

Innis & Gunn - Innis & None2

Scottish brewer Innis & Gunn have developed an alcohol-free citrus pale ale under the name, “Innis & None”.

The brew has added Vitamin C and ginseng, a natural energizing ingredient, to enhance the drinks health appeal.

Sapporo - Kireto Lemon Sour - Collagen 1000

Kireto Lemon is Pokka Sapporo Food & Beverage's functional drink targeting female consumers with high vitamin C content. In this launch, Kireto Lemon Sour is now fortified with 1000mg collagen per 350ml can. Containing functional ingredients into alcoholic drinks or mock cocktails and beer is trending Japan, to

appeal Japanese consumers. A quarter of Japanese women say that they would feel less guilty about consuming unhealthy food/drinks if they contained a healthy ingredient5

Hard Seltzer Beverage Co. LLC – Truly Spiked and Sparkling Water5

This beverage producer has created a 5% ABV carbonated water that is low in calories (100) and carbohydrates (2g and free from artificial sweeteners, with a hint of natural fruit flavors.

The product fits the recent trend in the release of spiked seltzers/carbonated waters aimed to offer consumers leading healthy lifestyles a light and refreshing alternative to fattening and unhealthy alcoholic beverages.

Formulation

• Free-from formulations • Low/no-alcohol beverages • added vitamins, botanicals and ingredients that are

added sugar

Moderation &

Avoidance

Weight Management

Novelty Factor

Weight Management Weight -conscious consumers are demanding low-calorie /low-fat alcoholic beverage options

Low-calorie, high-quality beverages are in demand, especially amongst the young The challenge for producers is to find the right balance between maintaining taste and flavor while also reducing calorie counts. Some producers are looking to take the health appeal of their products a step further by adding extra nutritional qualities, such as MuscleFood’s high-protein low calorie beers.

Global: “How appealing do you find the following food and drink claims?”, 20162

[1] Livestrong, June 2015; [2] GlobalData’s Q4 global survey, 2016; [3] GlobalData’s Q1 global survey, 2015

No added sugar Low calorie Low sugar

Global: “To what extent do you agree with: I check for nutritional information such as calorie content or ABV when choosing what alcoholic beverage to have.”, by age, 20153

32% 36% 37%

33% 30%

Global 18-24 25-34 35-44 45-54 55+

Weight Management Examples we like: reducing calorie/sugar content for a guilt-free consumption experience

Muscle Food - Barbell Brew1

This UK exclusive 3.6% ABV ‘beer’ is the first of its kind, containing 21.8 grams of protein, 92 calories and 1.65g of carbohydrates per serving.

•The brew is likely to appeal to male gym-goers and health-conscious consumers wanting an alternative alcoholic beverage that is protein-rich and low in calories. This product is likely to do well given that men are more likely to drink less alcohol to reduce weight than women

Source: [1] MuscleFood; [2] Suntory; [3] Thomson and Scott; [4] Telegraph; [5] Truly Spiked Sparkling

Suntory - Sumiwataru Umeshu2

Suntory have created a healthier umeshu, a Japanese liquor, that contains 50% less sugar compared to Suntory’s other umeshu products.

The liquor is made with 100% ume fruit grown in Japan and blended with natural spring water.

Thomson & Scott – Skinny Prosecco3

•This certified organic and vegan product contains 7 grams of sugar per liter, meaning it has about half the sugar content of regular prosecco. Each glass is said to contain around 67 calories, compared to the average glass of prosecco which contains about 80 calories4.

The product is likely to appeal to those drinkers conscious of their sugar and calorie intake.

Asahi Next Draft The Dream – Low Carbohydrates Beer

Asahi Next Draft The Dream banner contains 5% abv but with 50% less carbohydrates compared to an average beer. It uses 1.2 times more malt than average beer to create richer

and sharper taste. This product is interesting since it is difficult for beer to feature reduced carbohydrates. Asahi has previously introduced this as a private label brand (AN: 970258) but now has expanded this into their general brand lineup.

Key Alcoholic Trends Globally/ in Asia Pacific Innovation implications across each global/ asia alcoholic drinks trend

Formulation

• Free-from formulations • Low/no-alcohol beverages • added vitamins, botanicals and ingredients that are

added sugar

• Innovative product formulations • Unique, colorful ingredients, unusual flavor

combinations • Interesting origin / heritage

Moderation &

Avoidance

Weight Management

Novelty Factor

61% 61%

Global 18-24 25-34 35-44 45-54 55+

Novelty Factor Novel, unusual alcoholic beverages are becoming more popular

Older millennials and Latin American consumers are most influenced by a product’s uniqueness

In general, consumers are influenced by how enjoyable / unique the product is as afterall, alcohol is an indulgence product.

Source: [1] GlobalData’s Q3 global survey, 2016

Global: Consumers who are always/often influenced by how enjoyable or unique the product is when choosing alcoholic beverage products, by age group and region 20161

PangPang Brewery – Shower Beer1

This Pale Ale in Sweden is designed to be consumed in three gulps while standing in the shower getting ready for a night out.

Identifying an unusual niche occasion to build a beer around can prove successful, as in the case of this shower beer which have already sold out and the brewery is working on a second batch.

Novelty Factor Examples we like: Novelty alcoholic drinks

[1] GlobalData’s Product Launch Analytics database; [2] inews.com; [3] Firebox.com; [4]Stacktek.com

StackTek4

This company has created a unique packaging alternative to traditional glass wine bottles.

StackTek consists of four ‘glasses’ of wine that snap together. Rather than being made of glass, the ‘glasses’ are made from 100% BPA-free plastic, making it reusable, easy to transport and share.

This unique packaging allows the product to stand out from the crowd and it is likely to resonate with those looking for a more novel wine consumption experience.

Firebox - Unicorn Tear Gin3

Novelty is weaved throughout this unique product, with the producer stating: “This gin liqueur is made from real Unicorn tears…using our free range Unicorn herd and our closely-guarded extraction process”.

The gin is labelled as vegan and contains edible silver flakes that give it it’s “iridescent glittery appearance”.

This novel twist on gin is likely to resonate with those consumers that value brands with fun and exciting personalities.

ARK handcraft beer, Hong Kong Recently launched in Hong Kong, this wheat beer product features coriander, orange peel, and

ginger. Ginger is starting to feature more heavily in alcoholic drinks launches, and appeals to consumers for a variety of reasons. Firstly, ginger is a familiar yet bold ingredient, allowing less experimental consumers to challenge themselves with new flavor combinations. Secondly, and having made its way from ancient medicine into food and tea, the perceived benefits of ginger mean that products featuring it benefit from positive associations with comfort, warmth, and recuperation.

Innovation Implications Innovation implications across each global/ asia alcoholic drinks trend

Positioning Packaging

• Label alcoholic beverages as healthier alternatives to conventional alcoholic drinks, but avoid slandering alcoholic beverages if they within the same product portfolio

• Adapt packaging to help consumers identify the beverage as an alternative to conventional alcoholic drinks while giving the beverage a sophisticated, premium feel

• Promote the product as an alcoholic beverage that offers a pleasurable, guilt-free experience.

• Packaging and product names should align with the target audience, with words such as “skinny”, “light” or “zero”.

• Create a novel brand personality / history to align with your product image and target market

• Packaging that is unique in shape and color with interactivity can enhance a product’s novelty and appeal

Moderation &

Avoidance

Weight Management

Novelty Factor

The Future Nuggets for Thoughts : Future opportunities for Alcoholic drinks

Source: [1] Garcon Wines; [2] The Spirits Business; [3] Independent, September 2016; Images from Shutterstock

1 year 3 years 5-plus years

Alcoholic beverage subscriptions

The popularity of FMCG mail subscription services (e.g. Graze snack subscriptions in

UK and US) will extend into alcoholic drinks. Brands can take inspiration from

Garcon Wines in the UK who have developed a thin wine bottle, made from

plastic, that can fit through mail boxes and

does not break during transit.1 Weekly subscriptions allow consumers to

trial new products regularly for little cost or risk.

Hangover-free alcohol

British scientist and professor at London’s Imperial College, David Nutt, is creating

‘Alcosynth’, a non-toxic synthetic alcohol that mimics the positive effects of

alcohol without damaging your liver and heart. The non-toxicity of ‘Alcosynth’ also

means it is “hangover-free”. Nutt is so confident in his product that he had

patented around 90 compounds used to produce it and has said that it will replace

alcohol entirely by 20503. Though, Alcosynth must first overcome numerous regulatory hurdles before it can reach the

mass market.

Alcohol Ecommerce

While the food sector has established ecommerce platforms such as ‘Deliveroo’ and ‘Uber Eats’, the alcohol industry is yet to see any dominant equivalents. Though

this is set to change with alcohol multinationals set to launch their own ecommerce platforms or investing in startups. According to Nick Rellas, co-founder and CEO of ‘Drizly’, one of the first alcohol delivery platforms, online

alcohol sales will equate to $7-15 billion annually in the US over the next few

years2.

All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that GlobalData delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such, GlobalData can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect. GlobalData Plc | Registered Office: John Carpenter House, John Carpenter Street, London, EC4Y 0AN, UK Registered in England No. 03925319

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