Competitor Strategies in Alcoholic Drinks

October 2022

An enthusiastic return to the on-trade supported recovery for alcoholic drinks players following the decimation caused by pandemic restrictions. However, the industry is now facing a host of challenges - macroeconomic and geopolitical upheaval, supply chain disruption, and ingredient and material shortages. The no/low alcohol sector and the digital space remain dynamic. This report examines the competitive strategies of major brand owners as they navigate the evolving environment.

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Key Findings

Recovery faces significant setbacks

Most leading international players saw volumes rebound in 2021 as the on-trade re-opened in the second half of the year in much of the world. Top players that are more reliant on one or two key markets in Asia Pacific were exposed to extended restrictions and case rate increases, negatively affecting growth. Although industry resilience remains evident, severe macroeconomic pressures could impede short- to mid-term performance.

Flexibility is more important than ever

Companies are branching out beyond their traditional core focus areas in terms of products, alcohol content, price points and distribution and marketing channels as they seek to engage with new consumers across a wider range of occasions. Expansive portfolios covering economy to premium and above brands boost leading producers’ capacity to adapt, an important advantage in the current unsettled environment.

Category lines continue to blur

The boundary between alcoholic and soft drinks is becoming increasing less distinct - for both consumers and producers. Alcoholic drinks players’ growing involvement with the no/low alcohol sector is seeing them cross into soft drinks territory, while in the other direction, leading brand owners such as Coca-Cola and PepsiCo are launching alcoholic offers. Partnerships, joint ventures and acquisitions offer opportunities as diversification gains ever-greater strategic importance.

Digital developments accelerate

The industry is embracing digital advances. Companies are exploring the range of possibilities in this space now that online channels have cemented their importance to sales and communication. Digital native brands are a growing focus for acquisitions and product launches, and engagement approaches are moving into the metaverse. Consistency and quality of experience will be key to successfully integrating the physical and digital worlds.

Scope
Key findings
Companies at a glance
M&A still has an important role to play
Leading companies maintain share amid unprecedented disruption
Top brewers’ extensive brand portfolios are led by strong flagship offers
Expansion approaches vary by category
Severe macroeconomy pressures present a risk to recovery
Value-focused opportunities in developed markets?
Limited private label potential despite financial concerns
Carlsberg is most exposed to departure from Russia
Digital developments gain strategic significance
Sustainability is under increasing scrutiny
Support initiatives for the on-trade, but major setbacks expected
Only a temporary reprieve for craft as difficulties escalate once again
No/low alcohol expansion is a cross-category priority
Soft and “hard” drinks collide: The “Great Convergence”
Collaborations in cannabis
Budweiser: Broad geographic reach, but challenges persist in core markets
Heineken Silver brings the metaverse to life
Top brewers seek to benefit from beer’s impressive performance in Brazil
Looking beyond beer
Broad price range coverage is increasingly important
Tequila leads the way in premiumisation
Scotch whisky: The delicate balance between innovation and tradition
Whiskies in India: Diageo and Pernod Ricard target premium potential
Brewers have historically looked to cider for diversification
Spirited growth for RTDs
Wine: Relative weakness of branding limits top company shares
Not improving with age? Modernisation is essential for wine

Alcoholic Drinks

Alcoholic drinks is the aggregation of beer, wine, spirits, cider/perry and RTDs.

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