Description

“Alcoholic beverages provide excitement, experience and relaxation for consumers and each of these drivers have become particularly salient because of COVID-19 and the subsequent recession. The category as a whole has seen a sales boost; yet to maintain momentum, brands must innovate for long-term growth. Consumers are interested in new and emerging flavors, but are a bit habitual in consumption behavior indicating that consumers need a nudge to continue flavor and product exploration.”

– Alyssa Hangartner, Flavor and Ingredient Trends Analyst

This report will look at the following areas:

  • The impact of COVID-19 on consumer behavior and the alcoholic beverages market
  • Flavor innovation opportunities
  • Attitudes and behaviors regarding alcoholic beverage flavors
  • Current and future flavor trends within the category

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Definitions
          • COVID-19: market context
          • Executive Summary

              • Top takeaways
                • Market overview
                  • Figure 1: Total US sales of alcoholic beverages, by location of consumption, at current prices, 2014-19
                • Impact of COVID-19 on alcoholic beverages
                  • Figure 2: Short-, medium- and long-term impact of COVID-19 on alcoholic beverages, August 2020
                • Challenges and opportunities
                  • Reemergence
                    • Figure 3: Alcoholic beverage attitudes and behaviors, May 2020
                    • Figure 4: Experience or interest in tier 2 flavors, May 2020
                  • Recovery
                    • Innovate for the next generation of drinkers
                      • Figure 5: Better for you alcoholic beverage innovation, by age, May 2020
                    • Shifting channel changes will accelerate
                    • Market Landscape – What You Need to Know

                      • Small segment of young consumers drives RTD growth
                        • COVID-19 has significantly altered alcoholic beverage behaviors
                          • Consumers are looking for healthier improvements in the category
                          • State of the Market

                            • Growth steady across the category, wine falling behind spirits in sales
                              • Figure 6: Total US sales and forecast of alcoholic beverages, by type of alcoholic beverage, at current prices, 2014-19
                              • Figure 7: Share of US sales of alcoholic beverages, by location of consumption, at current prices, 2014-19 (est)
                            • Wine-based RTDs fall behind, but foodservice trends point to resurrection
                              • Figure 8: Percentage change in US sales volume, 2015-19
                              • Figure 9: Percentage change in alcoholic beverage type on US menus, Q4 2015-19
                            • Soaring innovation in flavored alcoholic beverages increases risk for oversaturation
                              • Figure 10: Percentage change in new alcoholic beverage launches, 2015-19
                            • Flavor innovation concentrated in tropical fruit flavors
                              • Figure 11: Percentage change in new alcoholic beverage products, by flavor, 2017-19
                            • Impact of COVID-19 on alcoholic beverages
                              • Figure 12: Short-, medium- and long-term impact of COVID-19 on alcoholic beverages, July 2020
                            • Lockdown
                              • Reemergence
                                • Recovery
                                  • COVID-19: US context
                                    • Learnings from the last recession
                                      • Figure 13: Total US alcoholic beverage sales, 2004-14
                                      • Figure 14: Unemployment, recession versus pandemic, Dec 2007-May 2009 and Dec 2018-May 2020
                                  • Market Factors

                                    • On-premise alcohol faces greatest recovery challenge
                                      • Figure 15: Comfort level related to foodservice establishment activities, July 28-Aug 4, 2020
                                    • A third of consumers are loyal to a few varieties
                                      • Figure 16: Repertoire of alcohol varieties consumed, May 2020
                                    • RTD consumption limited to highly engaged consumers
                                      • Figure 17: Alcohol varieties consumed, by repertoire of alcohol varieties consumed, May 2020
                                    • A sober outlook for future generations
                                      • Figure 18: Interest in alcoholic beverage innovation, by generation, May 2020
                                  • Market Opportunities

                                    • Prior to the pandemic, foodservice brought cocktails back to their roots
                                      • Figure 19: Alcoholic beverage attitudes and behaviors, by generation, May 2020
                                      • Figure 20: Percentage change of classic cocktails on US menus, Q4 2015-19
                                    • BFY innovation will engage the next generation of drinkers
                                      • Figure 21: Better for you alcoholic beverage innovation, by age, May 2020
                                    • Shifting channel changes will accelerate
                                      • Figure 22: Behaviors due to COVID-19, August 12-21, 2020
                                  • Companies and Brands – Key Takeaways

                                    • Recent flavor innovation falls within tropical fruit families
                                      • Flavor innovation introduces certain varieties to new occasions
                                        • Cutting-edge fruit flavors fare well due to their familiar foundation
                                        • Product Development – Now – Current Flavor Trends

                                          • RTD cocktails offer convenient flavor exploration
                                            • Figure 23: Alcoholic beverage varieties, by age, May 2020
                                          • Tropical flavors thrive among seasonal beverages
                                            • Figure 24: Interest and experience with tropical alcoholic beverage flavors, May 2020
                                        • Product Development – Near – What to Watch For

                                          • Seltzer after dark
                                            • Coffee with a kick
                                              • Figure 25: Interest and experience with coffee as an alcoholic beverage flavor, by age and gender, May 2020
                                            • Floral flavors pique interest among Gen Z and bloom in foodservice
                                              • Figure 26: Future interest in floral alcoholic beverage flavors, by generation, May 2020
                                              • Figure 27: Percentage change in floral alcoholic beverage flavors on US menus, Q4 2015-19
                                          • Product Development – Next – What’s in the Pipeline

                                            • Push the boundaries of familiar fruit flavors
                                              • Figure 28: Interest and experience with emerging fruit flavors, May 2020
                                            • Under 35s driving demand for healthier innovation
                                              • Figure 29: Alcoholic beverage innovation interest, by age, May 2020
                                            • Savory flavors layer in added complexity, tone down sweetness
                                              • Figure 30: Interest and experience with savory alcoholic beverage flavors, May 2020
                                          • The Consumer – Key Takeaways

                                            • Occasion has a strong impact on beverage selection
                                              • Flavor innovation paired with convenience will hold greatest appeal
                                                • Next generation consumers drive demand for better-for-you options
                                                • Flavor Exploration in Alcoholic Beverages

                                                  • New flavor trial is based on convenient exposure
                                                    • Figure 31: Willingness to try new flavors in alcoholic beverages, May 2020
                                                  • Interest in flavor exploration increases with income, declines with age
                                                    • Figure 32: Interest in new flavors, by age and income, May 2020
                                                  • Residential area impacts flavor exploration
                                                    • Figure 33: Interest in trying new flavors, by area, May 2020
                                                • Alcoholic Beverages Consumed

                                                  • Top alcoholic beverage varieties reflect variety and convenience
                                                    • Figure 34: Go-to alcoholic beverage varieties, May 2020
                                                  • Flavor innovation can help varieties overcome gender divide
                                                    • Figure 35: Percentage share of alcoholic beverage variety consumption, by gender, May 2020
                                                  • Niche varieties rely on a young consumer base
                                                    • Figure 36: Percentage share of alcoholic beverage variety consumption, by age, May 2020
                                                  • Engagement in the category declines with age
                                                    • Figure 37: Repertoire of alcohol varieties, by generation, May 2020
                                                • Alcoholic Beverage Attitudes and Behaviors

                                                  • Consumers look for simplicity for at-home alcohol
                                                    • Figure 38: Alcohol attitudes and behaviors, May 2020
                                                  • Adventurous consumers are appreciating the classics
                                                    • Figure 39: Alcohol attitudes and behaviors, by new flavor trial, May 2020
                                                  • Alcoholic beverage selection is often spontaneous
                                                    • Figure 40: Alcoholic beverage attitudes – Net – Any agree, July 2019
                                                  • Daypart has greatest impact on RTD beverages
                                                    • Figure 41: Alcoholic beverage attitudes, by variety consumed, May 2020
                                                • Now – Primary Alcoholic Beverage Flavors

                                                  • Consumers enjoy variety when it comes to current flavors
                                                    • Figure 42: Go-to alcoholic beverage flavors, May 2020
                                                  • Ground your flavor portfolio in fruit flavors
                                                    • Figure 43: TURF analysis – Go-to flavors, May 2020
                                                  • Gen Zs dabble in the broadest array of go-to flavors
                                                    • Figure 44: Go-to flavors, by generation, May 2020
                                                • Near – Interest and Experience in Alcoholic Beverage Flavors

                                                  • Trial of Tier 2 flavors is budding, and interest is strong
                                                    • Figure 45: Interest and experience with emerging alcoholic beverage flavors, May 2020
                                                  • Interest in flavors is also influenced by gender
                                                    • Figure 46: Interest and experience with emerging flavors, by gender, May 2020
                                                  • Increase engagement of over 55s through sophisticated offerings
                                                    • Figure 47: Interest in emerging alcoholic beverage flavors by age, May 2020
                                                • Next – Interest and Experience in Alcoholic Beverage Flavors

                                                  • Interest in emerging flavors points to openness to explore
                                                    • Figure 48: Interest and experience with emerging flavors, May 2020
                                                  • Gen Zs, Millennials lead future flavor interest, but don’t discount the rest
                                                    • Figure 49: Interest and experience with emerging alcoholic beverage flavors, by generation, May 2020
                                                  • Interest in emerging flavors is amplified among spirit and RTD consumers
                                                    • Figure 50: Interest in emerging alcoholic beverage flavors, by variety consumed, May 2020
                                                • Interest in Alcoholic Beverage Innovation

                                                  • Seasonal flavors are a fan favorite, sugar is still a top concern
                                                    • Figure 51: Interest in alcoholic beverage innovation, May 2020
                                                  • Improvements on current alcohol ingredients capture widest reach
                                                    • Figure 52: TURF analysis – Alcoholic drink attributes, May 2020
                                                  • Sugar and alcohol reduction interest varies by generation
                                                    • Figure 53: Alcoholic beverage innovation interest by generation, May 2020
                                                  • RTD consumers display strongest interest in overall future innovation
                                                    • Figure 54: Alcoholic beverage innovation, by variety, May 2020
                                                • Appendix – Data Sources and Abbreviations

                                                  • Data sources
                                                    • Sales data
                                                      • Consumer survey data
                                                        • Abbreviations and terms
                                                          • Abbreviations
                                                            • Terms

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