Insight: Do Industry Headwinds Present Brands With Growth Opportunities?

We have been considering the current UK drinks industry and the gloom surrounding it.

There are reports of wholesaler consolidation, craft distilleries going to the wall, the consecutive shrinking of spirits growth in the on-trade, venues closing, and changes in consumers’ drinking habits affecting change.

It’s a pretty bleak picture to be honest.

But with challenges and market movements, there are always opportunities to be had

It really got us thinking.

Where are the places that brands could look to unlock growth opportunities?

Here are some areas of opportunity we see amongst the gloom – cocktails at home, moderation and the rise of the spritz.

The shift in trends and preferences gives brands a golden opportunity to evolve their strategy to suit the cultural movements.

1.        Cocktails At Home

This is a BIG space. It’s been in growth for some time and it will continue. There are opportunities for brands to align their products with the at home cocktail-making occasion.

Strategically it’s a great play for certain brands and tons of opportunities to align in consumers’ minds with certain cocktails.

We have seen some good work in retailers with complimentary brands partnering and educating the consumer at the point of sale on how to use their products. It’s a win as it drives the rate of sale as well as pleasing retailers with multi-product purchases they may not otherwise have got.

Other opportunities exist on pack in retail – such as cocktail recipes on the label or via hangtags to drive experimentation.

Digitally this can be underpinned with social ad campaigns and influencer marketing – home bartender influencers continue to hold great sway in helping drive at-home cocktail making culture.

2.        Moderation

On the face of it, people drinking less means less sales.

We don’t think so, it just means consumers are drinking differently.

Moderation is creating new categories (for example the mid-strength category that counts Quarter and Session Spirit as residents) as well as giving brand opportunities for innovative serve strategy.

Consumers are not wholly abstaining, they are drinking less and wanting to drink better. So brands need to fill this space and serve consumer wants and needs.

Looking to develop serve strategies that are less alcohol-forward and offer lower overall ABV is the obvious direction to take.

It’s our view that bar menus will evolve to signpost consumers better with ABVs on all drinks as standard as well as the creation of completely new menu categories (such as Midstrength/Moderating that would house mid abv wines, beers, spirits and cocktails).

Strategy should be based on data and insight and moderation is an opportunity to be grasped with brand serve strategies.

3.        The Spritz Trend

The spritz trend has been gathering steam for some years now, led from the front by the juggernaut of Aperol Spritz. A quick look at viral cocktail videos on TikTok confirms that the spritz is the big drinking trend.

Love it or hate it, the Aperol Spritz has given categories such as liqueurs the opportunity to create serves which are alternative to Aperol Spritz’s.

Consumers are moderating as we mentioned, so liqueurs can fill that need with their lower ABV, delicious drinks.

Brands such as Cointreau, St Germaine, Malibu, Chambord, Kings Ginger or Frangelico could all find lucrative opportunities to define new lower ABV cocktails that cater to consumer trends of moderation and experimentation.

The key for brands in facing the headwinds is to remain culturally aware of trends and adjust strategy to cater for what consumers need.

One thing is certain – consumers haven’t stopped drinking, they are just changing their habits.

The brands that win are the ones who can be agile to the wants and needs of their consumers.

If you want to discuss your brand strategy with our team please get in touch.