Blurring Lines in Alcoholic and Non-Alcoholic Drinks

September 2019

There is a growing overlap between alcoholic, soft and hot drinks as consumer priorities shift. A sense of “experience”, achieved through settings or stories, is increasingly prioritised over rigid adherence to categories. Declining alcohol consumption across much of the world is opening up new opportunities in the dynamic premium adult beverage space. At the same time, traditional drinking rules are being eroded, allowing producers to target previously unviable consumption occasions.

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Key Findings

Premiumisation continues to define drinks

Drinking habits are changing - alcohol consumption in volume terms has been falling for many years in key mature markets. At the same time, quality of ingredients, brand province and flavour are becoming increasingly central in consumer demand across drinks categories.

Category erosion accelerates

The blurring of product lines has been occurring in alcoholic drinks and soft drinks for some time. However, the pace of change is accelerating. Taking the trend a step further are hybrid products best described as alcoholic versions of traditionally non-alcoholic drinks - tea and kombucha lead the way.

Healthy living trend opens new ground

Health awareness is influencing consumer decisions across categories. Artificial sugar concerns in soft drinks and efforts to limit alcohol intake are boosting the emerging middle ground between alcoholic and non-alcoholic drinks. Companies on both sides are exploring options for attracting consumers in this competitive premium non-alcoholic adult beverage space.

Craft cues remain relevant as tastes shift upmarket

“Craft” was pioneered by small players in the beer industry, but elements of the trend now feature across drinks categories. Authenticity, heritage and artisanal credentials remain relevant. Many soft drinks players - large and small - are looking to draw on these ideas, for example, using cane sugar to enhance the sense of tradition.

A desire for experience shapes drinking trends

The experiential aspects of consumption are gaining significance, particularly in the on-trade; bars and coffee shops are increasingly expected to offer something above and beyond a simple drinking location. As a result, traditional rules of drinking behaviour are becoming less rigid, and evening socialising may well involve a coffee rather than a pint. 

Introduction

Scope
Key findings

Context

Consumption falls in leading categories
Growing necessity of a focus on value
Broad consumer drivers
Expansion through new occasions: a drink for all seasons?
Blurring boundaries: key consumer trends

Key Consumer Trends: Healthy Living

Healthy Living is one of our eight focus megatrends
Healthy Living: key features
Changing behaviour brings alcohol-free opportunities
Sugar-reduction continues to shape soft drinks consumption
Rising demand for low sugar, high flavour options
Kombucha: functional but fun?
Kombucha: starting small
Non-alcoholic beer presents an attractive alternative to soft drinks
Non-alcoholic beer and spirits: promoting the positive
Cannabis: intoxication for a health-conscious age?

Key Consumer Trends: Authenticity

Craft: definitions remain debatable…
…nevertheless, there are some defining craft characteristics
Notions of authenticity appeal across categories
Time for tea: novel product types attract attention
Non-alcoholic adult beverages focus on indulgence and image

Key Consumer Trends: The Desire For Experience

Experiential consumption highlights the importance of the on-trade
Coffee shop spending is more important than ever
Starbucks Reserve Roastery: immersive - from bean to cup
Brewpubs tap into the on-trade opportunity
BrewDog: two sides to on-trade offer
Nitro coffee: putting RTD coffee on tap
Expecting more from the not drinking experience

Diversification For Growth

The Coca-Cola Co: creating a “total beverage company”
Leading coffee and tea players look to diversify
Beer and soft drinks: natural companions?
Spirited growth for microbrewers
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