Innovating with alcohol: Beverage companies experimenting with booze

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Posted Nov 10, 2022
Jessica Glace

The U.S. is the world’s leading producer and consumer of alcoholic beverages. Of the entire CPG industry, alcoholic beverages represent one of the fastest growing and most dynamic sectors. The U.S. consumes around 202 billion liters of fluids, and alcohol makes up about 16.5% of that volume

The pandemic brought change to nearly every aspect of our world, and the alcoholic beverage industry was no exception. Demand for alcoholic beverages has increased across the board, but consumers are also increasingly looking for variety in their drinks. Novelty and health are two major driving forces for consumers in this space. More people have started experimenting with spirits and cocktails, and brands are racing to develop new ways to attract consumers. Even many non-alcoholic beverage companies have begun to break into this sector with innovative new product releases. 

Here, we explore four significant trends in the alcoholic beverage industry and then cover the best way to stay ahead of the curve in this ever-changing environment.

Shaken, not stirred: The rise of RTD cocktails

RTD Cocktails are ready-to-drink cocktails that have been pre-mixed and are often available in a can or bottle. The design of these beverages focuses on convenience and simplicity. 

The market for RTD cocktails experienced triple-digit growth in 2021, and there are strong indications that it will continue to grow over the next several years. As with so many trends, the pandemic largely drove this increase in demand for RTD cocktails. As more people had to spend time at home and bars were closed, many consumers turned to these innovative drinks that require no effort to enjoy. From then on, their popularity has only continued to grow. As everyday life has steadily returned, the convenience of RTD cocktails has appealed to many consumers. These drinks are easier to buy, handle, and distribute at parties and social gatherings. 

Several brands have sought to take advantage of the opportunities of RTD cocktails. In June, Coca-Cola announced the release of an RTD cocktail that combines their signature zero-sugar cola with Jack Daniel’s Tennessee Whiskey, a combination that has been a favorite in bars for years.  

Flavored spirits make a splash

Flavored spirits fall into the novelty category of alcoholic beverage trends. These drinks consist of whisky, rum, tequila, gin, and other beverages that have been flavored artificially or naturally. These flavors are often exotic and provide something new and exciting for consumers to try and enjoy. These range from orange peel infusions and peanut butter whiskey, to cotton candy vodka. 

Consumers have demonstrated a willingness to try new things and experiment with their beverages, which is why many companies have released new products to meet these trends. According to market research, the flavored spirits market is currently growing at a value of 16.03 billion and is expected to grow to a whopping 50.77 billion by 2029. Although flavored spirits have been around for some time, it has only recently been in demand by a significant segment of consumers. Much of this growth is being driven by a younger market that has not found the traditional tastes of alcohol much to their liking. Many of these beverages are focused on a millennial market that wants to truly enjoy the drinks’ flavors. 

Recently, vodka brand Black Infusions released a line of vodka naturally infused with fruit. These flavors include Dark Cherry, Blag Fig, and Gold Apricot. A short time later, Captain Morgan released a Cherry Vanilla Rum designed to combine creativity with nostalgic flavors. 

Hold My Alt-Beer: Non-alcoholic beverages

As some consumers began drinking more alcohol during the pandemic, others turned to no-alcohol and low-alcohol beverages. Market research shows that Gen Z-ers are drinking around 20% less per capita than millennials of the same age. This has driven many companies to provide non-alcoholic beverages that still maintain the flavors of drinks consumers enjoy. For example, the Athletic Brewing Company provides non-alcoholic beer. This “alt-beer” company was placed on Time Magazine’s 100 Most Influential Companies of 2022

Part of this greater demand for non-alcoholic beverages has been driven by a trend known as “sober curious.” Sober curious is a movement of individuals pursuing wellness by experimenting with reduced levels of alcohol consumption. These individuals do not abandon drinking completely but may significantly moderate it. 

Overall, it is safe to say that much of this movement is being driven by a renewed focus on health, another contributing factor arising from the pandemic. As with other sectors and innovations we have looked at, the non-alcoholic beverage market is a strong one and is projected to grow over the next several years. Manufacturers of alcoholic beverages will need to provide innovative new products to meet this growing demand. 

What is “natural wine?"

The alcoholic beverage industry is being transformed in so many ways. One of the significant ways that companies are innovating regarding alcohol is with a phenomenon known as “natural wine.” Natural wine is not a standardized term, so its definition varies. However, the general meaning is that the wine has been produced using all-natural, traditional methods. In other words, the grape farmers did not use pesticides or herbicides. For this reason, many of these wines are also referred to as “organic” wines. These wines are also produced without the additives frequently used to preserve the wine’s taste, flavor, or appearance. 

The movement toward natural wine first began in rural France and has rapidly spread all over the world. The overall market value of organic wines is currently estimated to be around $8.9 billion and is expected to show strong growth into 2030. 

The best way to keep up with fast-moving markets

The alcoholic beverage market is one of the best examples of a rapidly-changing, dynamic industry. It is also highly competitive, with many startups fighting for a place at the table with some of the biggest brands in the country. In a space like this, it is vital that you can keep up with these trends to keep releasing products that excite and inspire your customers. However, this can be challenging to achieve. Your window of opportunity has already closed when a trend becomes evident to all. 

This is why the best way to keep up with a dynamic industry is to stay one step ahead of it with agile market research. Traditional research methodologies are too slow to deliver relevant results and uncover consumer insights. You need to get closer than ever before to your target market. You need detailed surveys with rapid turnaround times that enable you to identify the next big thing before it hits the headlines. 

Fortunately, that’s precisely what you’ll get from aytm. We provide the tools and services you need to succeed in your market research endeavors. From our comprehensive and feature-rich platform to our market research experts, we come alongside you as a partner, understanding your unique needs and enabling you to reach your goals.

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