The beer market faces some serious structural challenges: the younger consumer is drinking less than previous generations and hard seltzers and RTDs increasingly gaining traction.
But this does come with an upside. It’s driving brewers to innovate like never before: and those that are willing to rise to the challenge will shape the next generation of beer.
Exploring new categories such as low and no alcohol will be key. But it’s also going to be increasingly about thinking beyond the beer itself. Brands need to think more about how they fit into people’s lifestyles, values and aspirations.
It’s going to be an interesting evolution. Beer brands need to navigate changing tastes. They should also look to lifestyle brands outside the category for inspiration. But it’s also going to be about building on what craft has already done best: building up a movement based on quality, authenticity and connection.
“The rise of craft breweries has shaped beer over the past decade, influencing tastes, innovation and brand strategies,” observes Fredrik Svalstedt, a partner at Swedish design agency, Pond Design.
“But with rising costs and slowing sales of craft beers, many brand owners are sliding back to low-cost lagers, signalling a return to traditional, easy-to-drink refreshment.
“But beyond this craft-versus-traditional divide lies another route: a bold new frontier for beer.”
Enter Beer 3.0.
“Some pioneers are pushing beer’s boundaries, driven by the same creative approach that made the craft sector so successful,” said Svalstedt.
“It’s beer 3.0, if you will, where brands borrow from lifestyle, wellness and adjacent categories to stay relevant and stand out: and are set to change the category once more.”
Here are some ways in which new brands can lead the way, and what mass market brands can learn from their approach...
Embrace the hybrid
Category blurring is being seen across the beverage industry with increasingly creative results.
“In the desire to offer unique flavors and healthier options for new audiences, some brands are blurring categories by offering hybrid products,” explains Svalstedt. “The concept of blending ingredients from beer with those of wine or cider production isn’t new. But recently this phenomenon has become increasingly popular.
“For example, Italian brewers started seriously blending beer and wine, leading to the official recognition of Italian Grape Ale in 2015 – a trend that has since exploded globally. There has also been a resurgence of beer-cider hybrids.
“The popularity of such hybrids shows the appetite for discovery and excitement, and how brands can make their offerings more appealing to different audiences. They also play into the strong human drive to experience new tastes and new sensations. Brands should constantly strive to satisfy that need – to look for the unexpected, the new flavor experiences that go beyond the latest trends.”
Change the story
Being in touch with today’s consumers (including what they stand for, what they value and what they aspire to) will be crucial moving forward.
Brands such as yoga clothes brand lululemon and energy drink brand Celsius have shown the increased importance of lifestyle branding.
“Brands need to be aware of changing consumer priorities,” said Svalstedt. “Younger consumers are the most sober curious and ‘alcohol-free’ generation ever, consuming about one-third less beer and wine than previous cohorts. This is driven by increasing awareness of wellness, more understanding around mental health, but also lifestyle changes, like more entertaining at home and less ‘going out’.
“Some new brands are catering to these shifts, launching innovative products that fit better with the younger consumer’s changing needs. Meli Quinoa Beer, for example, taps into wellness and lifestyle trends with minimalist design and natural aesthetics, appealing to the sober-curious generation.”
Look beyond your sector
Part of understanding the consumer is about looking at what they want: not just from within the beer category but from further afield.
“You also need to recognize that competition doesn’t just come from within beer, but also from adjacent categories,” said Svalstedt.
“Consumers are increasingly interested in functional drinks, for example. So brands like Collider are producing ‘adaptogenic’ beers that use functional mushrooms and mood-boosting botanicals instead of grains. These very low or non-alcoholic options are designed to promote relaxation and mental clarity without the negative effects of alcohol.
“The key here is to understand people’s motivations on both a macro and a micro level, so that brands can identify those subtle shifts in consumer drivers. Only by being aware of those, can brands create sharp, relevant offerings with the right design and story.”
Rethink the occasion
Brands also need to consider the beer drinking occasion. The moments in which we consume is constantly changing. Take food, for example, where people are moving away from the three-course meal toward snacking on smaller plates. Similarly, beer drinking doesn’t have to be confined to a meal or a night out. Brands should constantly be looking to discover different contexts for a beer – as a post-workout treat, maybe, or the ‘on-the-go’ refreshment?
“Brands like Lagunitas’ Daytime IPA are starting to redefine these occasions with lighter profiles and designs that align with active, on-the-go lifestyles,” notes Svalstedt.
At the end of the day, brewers will have to be prepared to go outside of their comfort zone.
“What marks out this new frontier in beer is exciting evolution and the bravery to explore new possibilities and meet ever-changing consumer expectations,” said Svalstedt.
“Beer 3.0 is full of opportunity. The future of the category belongs to those bold enough to reimagine it.”
