Circana Unpacked
#154 - Beverage Alcohol Consumption Reveals a Generational Divide
· Summarized
Key takeaways
- Younger consumers are increasingly choosing ready-to-drink (RTD) beverages over traditional beers and wines.
- Despite a general reduction in consumption, there is growth in premium alcoholic beverages.
- Innovative packaging and marketing strategies are vital for engaging younger audiences.
- RTD products see significant sales spikes during holidays and social gatherings.
- Beverage alcohol remains stable amidst inflation, offering perceived value compared to other consumer products.
- The future of the beverage alcohol industry appears promising, particularly in spirits and RTDs.
Summary
The Evolving Landscape of Beverage Alcohol Consumption
Joan Drakes and Scott Scanlon discuss the dramatic changes in beverage alcohol consumption, notably due to the pandemic. Younger consumers aged 21 and older are increasingly favoring ready-to-drink (RTD) beverages over traditional options like beer and wine. The conversation highlights a generational divide in preferences, emphasizing the trend toward RTD products, particularly spirits-based varieties.
Premiumization Amidst Softening Consumption
Despite a general reduction in alcohol consumption across generations, there is a notable trend toward premium products. Consumers are opting for higher-quality alcoholic beverages, particularly as inflation affects prices across all consumer goods. Scott notes that while overall consumption has softened, the desire for premium experiences remains strong.
Innovative Marketing and Packaging Trends
Scott highlights how beverage alcohol brands are adapting their marketing strategies to appeal to younger consumers. There's a rise in unique packaging formats aimed at attracting attention, such as slim cans and ball forms. The focus on convenient and on-the-go options reflects a shift in consumer behavior, aligning with modern lifestyles.
The Role of RTD Products and Seasonal Trends
The podcast delves into the explosive growth of RTD products, especially around holidays and social events. Scott notes that during these occasions, there is a significant spike in RTD consumption, surpassing traditional beer sales. The introduction of innovative flavors and collaborations with non-alcohol brands, such as tea-based options, is reshaping the beverage alcohol market.
Impact of Inflation on Beverage Choices
Inflation has been a pressing issue, yet beverage alcohol has faced relatively low inflation rates compared to non-alcoholic beverages. Scott explains how this has positioned alcohol as a perceived value in consumers' shopping carts, allowing for the growth of premium products even during tough economic times.
The Future Outlook for Beverage Alcohol
Looking forward, Scott expresses an optimistic outlook for certain categories within beverage alcohol, particularly for spirits, RTDs, and Mexican imports. Although the wine category is facing challenges, there is potential for innovation and re-engagement with consumers through new forms of packaging and product offerings.
Sponsors
- Sarcada · Scott recently published a report on the state of the beverage alcohol industry, which can be found at sarcada.com under insights and then reports.
Show notes
Beverage alcohol consumption has changed dramatically in recent years. The pandemic impacted the way people consumed adult beverages, and younger consumers aged 21 and older are driving consumption of ready-to-drink (RTD) beverage alcohol products. Scott Scanlon, executive vice president of Circana’s Beverage Alcohol practice, provides insight into these changes and the outlook for 2024 and beyond.
Highlights:
- Typically, as adults aged 21 and older begin drinking, their first choices are beer or wine. More recently, young adults aged 21 and older are starting with RTD beverages, particularly spirits-based options.
- Despite the vast array of beverage choices, beverage alcohol consumption is softening across generations. However, premium beverages are still showing growth.
- Much of the allure of RTD beverage alcohol among younger consumers is with packaging, including on-the-go options like ball form, slim cans, and aseptic packaging.
- Whiskey, tequila, spirits-based RTDs, and imported beer from Mexico continue to fuel the beverage alcohol market.
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