The analysis, released at the Beverage Forum Europe in London this week, shows that 71% of consumers are buying, stocking or consuming less alcohol. And nearly a quarter of 25-35 year olds have stopped buying alcohol entirely.
This, according to Circana, represents a ‘structural shift’ towards moderation and under-consumption which will reshape the category over the next 20 years.
More and more consumers are turning to alcohol-free versions of their favorite beer, wine and spirits. But while the conversation was once around comparing these to their flagship counterpart – or developing new techniques to assure quality - today’s alcohol-free brands need to take a different mindset to set themselves up for a winning place in the alcohol-free industry.
This will be about focusing on the branding, marketing and how brands fit into alcohol-free lifestyles.
“The growth in the category is where brands are exciting and aspirational. And they happen to be zero percent alcohol,” said Ananda Roy, senior vice president and industry advisor, Circana, presenting the data and analysis at the Beverage Forum.
“This is how you should approach demand moving forward: it’s much more about being able to create the aspirational brands of the future.”
Meanwhile, consumers are also are turning to other alternatives to alcohol that don’t fit inside this alcohol-free category.
That includes functional drinks, protein-based beverages, kombucha or kefir: all drinks that offer different functionalities or taste profiles for consumers.
They also offer something new for drinkers to discover outside their core repertoire: which is increasingly valued by younger generations.
And consumers are also increasingly interested in mood-enhancing options that promise either the same buzz or relaxation as alcohol.
Opportunities for the alcohol industry remain
The alcoholic beverage industry in Europe has slipped down 1.8% in value sales, now coming in at €68bn ($79bn).
But a decline doesn’t mean it’s game over for the alcohol industry: it remains a large and important industry for Europe.
What is critical is for this industry to tap into key consumer trends: acknowledging and responding to health and wellness and moderation.
“There is a role for the alcohol industry to continue to make itself cool again in an appropriate and responsible way,” said Roy.
“We’ve seen certain players in the space do that very successfully: there’s a role for premiumization, for sustainability, for experimentation – this is really critical for the younger demographics who are looking at alcoholic beverages and are looking for new reasons to partake in that category.”
This opportunity for premiumization, for example, is one that luxury giant LVMH is ready to play into: turning moderation into an opportunity rather than a threat.
“People care today about what they’re putting into their bodies: much more than before,” said Jonas Tahlin, president of spirit brands, at LVMH, also speaking at the Beverage Forum. “They want to look good, feel good, live well, and live for a long time – they don’t want to be hungover. And that is driving a large degree of moderation.
“For a company like LVMH, which is really focused on that higher end... if people are drinking less but better, we’re in a pretty good place to tackle that as a trend.”
But like Roy of Circana, he emphasizes that brands need to provide something more than a drink for consumers: something that holds true across both alcohol alternatives and alcohol.
“People are gravitating to brands that have an incredible story,” he said. “Brands that tell a story about their founders, craftsmanship, stories you can retell. Those are establishing a connection with people that mass brands are struggling to create. Brands who do storytelling well have a bright future.”
