Description

“Competing in the crowded alcoholic beverage industry and appealing to engaged Gen Z and Millennial drinkers will demand brands to create not only flavorful experiences but also expand the call for healthier options and functional ingredients. Yet, in an economic climate that makes discretionary spending and new product exploration a risk, perhaps the first step is a balanced mix of innovation and inspiration to help drinkers create new taste experiences themselves.”

– Mimi Bonnett – Senior Director – Food, Drink and Flavors

Key issues covered in this Report:

  • The impact of inflation on alcoholic beverage trial
  • Consumer experience and interest in flavors in alcoholic beverages
  • Consumer interest in functional and BFY ingredients and claims
  • Attitudes and behaviors towards flavor innovation with alcoholic beverage

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Definition
          • Market context
          • Executive Summary

              • Top takeaways
                • Market overview
                  • Lingering at-home “happy hours” are likely
                    • Figure 1: Market size and forecast alcoholic beverages, at current prices, 2017-27
                  • Impact of COVID-19 on alcoholic beverages
                    • Figure 2: Category outlook, 2022-27
                  • Opportunities and challenges
                    • Changes to alcoholic beverage patterns and discovery may be inevitable
                      • Figure 3: Impact of financial challenges on alcohol, 2022
                    • Millennials, Gen Z driving industry proliferation
                      • Figure 4: Alcohol consumption by generation, 2022
                    • BFY, sober curious trends will call for innovation
                      • Figure 5: Ingredients that motivate trial of new alcoholic beverages, 2022
                    • Familiar exploration
                      • Figure 6: Behaviors and attitudes towards flavored alcoholic beverage, 2022
                  • State of the Market

                    • Spirits poised to outpace growth of beer, wine
                      • Figure 7: Percent change by alcoholic beverage category, at current prices, 2018-27
                    • Beer hangs on to top seat in alcoholic beverage choice, for now
                      • Figure 8: Alcohol consumption by type, 2022
                    • Millennials, Gen Z drive proliferation of the alcoholic beverage consumption
                      • Figure 9: Alcohol consumption by generation, 2022
                    • Beer and wine brands turn to innovation to stay ahead of RTD, cocktail culture
                      • Figure 10: New product launch activity, by alcoholic beverage category, 2019-2022
                    • Operators shift gears with cocktail menus
                      • Figure 11: Beer and cocktails, by number of menu items, last five quarters (Q2-2021 to Q2-2022)
                  • Market Factors

                    • Disproportionate foodservice recovery points to lingering at home “happy hours”
                      • Figure 12: Total US sales and forecast of alcoholic beverages, on-premise versus off-premise, 2017-27
                    • Even affluent consumers feeling the pinch
                      • Figure 13: financial health, 2021-22
                    • Drinkers anticipate trading down or out to save
                      • Figure 14: Impact of financial challenges on alcohol, 2022
                    • …yet, sober curious and healthier lifestyle trends call for innovation
                      • Figure 15: Ingredients that motivate trial of new alcoholic beverages, 2022
                  • Competitive Strategies and Market Opportunities

                    • Spirit brands blur the lines with RTD co-branding and flavor innovation
                      • Flavor and nostalgia inspired by comfort foods
                        • Unexpected flavored dark spirits
                          • There’s still room to lean into BFY with natural, functional ingredients
                            • Figure 16: Interest in functional and health-related claims, by generation, 2022
                            • Figure 17: Interest in organic, free-from and select healthy ingredients, by generation, 2022
                        • Product Development – Now – What’s Trending

                          • RTDs refresh fruit flavors with specific occasions suggestions
                            • Figure 18: GNPD product launch activity, by select flavor sub-category, rolling years 2019-2022
                          • Buzzy teas
                          • Product Development – Near – What to Watch for

                            • Tapping into the coffee trend
                              • Established and emerging brands use botanicals, superfoods to convey clean
                              • Product Development – Next – What’s in the Pipeline

                                • Are flavored tequilas next?
                                  • Millennials and Gen Z seek global tastes
                                    • Figure 19: interest in flavors by alcoholic beverage type, 2022
                                • The Consumer – Fast Facts

                                  • Millennials, parents and more-affluent households are key consumers
                                    • LTOs, deals and healthy formulas drive flavor trial
                                      • Natural, low-calorie, low-sugar options top the list of sought-after health benefits
                                      • Trial Motivators of New Alcoholic Beverages

                                        • Personal connections outperform conventional marketing strategies
                                          • Figure 20: Trial motivators of new alcoholic beverage flavors, 2022
                                        • LTOs, BFY options and social sharing are calls to action for Gen Z and Millennials
                                          • Figure 21: Factors that motivate trial of new alcoholic beverage, by generation, 2022
                                        • Parents like LTOs to test the waters
                                          • Figure 22: Factors that motivate trial of new alcoholic beverage, by parental status, 2022
                                      • BFY Ingredients and Claims Driving Trial

                                        • Natural flavors top the list of BFY claims
                                          • Figure 23: Ingredient claims that motivate trial of new alcoholic beverage, by generation, 2022
                                          • Figure 24: TURF Analysis – Ingredient claims that motivate trial of new alcoholic beverage, 2022
                                        • Reduced sugar will attract consumers of all ages
                                          • Figure 25: Ingredient claims that motivate trial of new alcoholic beverage, by generation, 2022
                                      • Flavor Exploration Behaviors and Attitudes

                                        • New drinks should pair innovation with familiarity
                                          • Figure 26: Behaviors and attitudes towards flavored alcoholic beverage, 2022
                                        • Younger drinkers are looking for versatility, in person and virtually
                                          • Figure 27: Behaviors and attitudes towards flavored alcoholic beverage, 2022
                                      • Interest in Flavor by Alcoholic Beverage Type

                                        • Fruit flavors lead with high interest in tropical fruits and melons
                                          • Figure 28: Interest in trying flavors of alcoholic beverages, 2022
                                        • Wine can follow RTD innovation with more fruity flavors
                                          • Figure 29: Flavors interested in trying in wine/sparkling wine and RTD alcoholic beverages, by gender, 2022
                                        • The future of beer may be in flavors
                                          • Figure 30: Flavors interested in trying in beer, by generation, 2022
                                          • Figure 31: Flavor interest in white spirits, by generation, 2022
                                          • Figure 32: Flavor interest in dark spirits, by generation, 2022
                                      • Interest in Flavor by Beverage Type

                                        • Tea, mint and agave add complexity to classic flavors
                                          • Figure 33: Interest in flavors, by alcoholic beverage type, 2022
                                        • Millennials are the catalysts of flavorful innovation
                                          • Figure 34: Flavor interest in beer and wine, by generation, 2022
                                          • Figure 35: Flavor interest in white and dark spirits, by generation, 2022
                                      • Appendix – Data Sources and Abbreviations

                                        • Data sources
                                          • Sales data
                                            • Forecast
                                              • Consumer survey data
                                                • Abbreviations and terms
                                                  • Abbreviations
                                                  • Appendix – The Market

                                                      • Figure 36: Total consumer spending on alcoholic beverages at home, at current prices, 2017-22
                                                      • Figure 37: Total consumer spending on alcoholic beverages at home, at inflation-adjusted prices, 2017-22

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