Direct to Consumer, Industry Matters/News, Marketing and Sales, Trends

The State of the Booze Business: What Does the Future Hold?

July 9, 2024 1 Comment

The U.S. is currently in a period of transformation, with widespread shifts in most businesses. The alcohol industry stands out as it undergoes changes that are not only fundamental but also unique, driven by changing consumer preferences, technological advancements, and shifting demographics.

Here is a close look at the key factors affecting the industry.

The “sober curious” movement

The sober curious movement is a lifestyle approach where people become more mindful about their alcohol consumption without necessarily committing to complete abstinence. It involves deciding if, when, and why to drink. Dry January is a good example.

One of the key factors driving the non-alcohol trend is the ‘sober curious’ movement.

Non-alcohol beverages growth

This shift is strongest among younger generations, with Gen Z (born 1997-2012) drinking over 20% less than other generations did at their age. The non-alcohol beverage market is expected to grow 31% by 2024, making it the third fastest-growing beverage category in the U.S. Source.

This shift is reflected in the market with beer sales stagnating, wine offering alcohol-free alternatives, and spirits brands introducing non-alcohol versions of cocktails.

Premiumization

This is not a new trend; it has grown for years, if not decades, and is accelerating.

First and probably foremost is drinking at home. Most Americans say they consume alcohol at home, and 46% of those surveyed say they are likely to treat themselves to premium options there. In addition, the longstanding idea of “drinking less but drinking better” continues to apply.

Premiumization is most notable in spirits. Overall, 33% of Americans said they had spent $50 or more on a bottle of alcohol in 2022, against just 24% in 2021. Furthermore, six in 10 online shoppers say they spend more on alcohol online than in-store. Source.

E-commerce and Direct-to-Consumer (DTC)

While some recent reports show a slowing of the DtC market, the growth, driven mainly by Covid, is dramatic. Total beverage alcohol e-commerce sales are expected to grow 66% by 2025, reaching $42 billion annually. This trend is fueled by consumer demand for convenience and the industry’s adaptation to changing purchasing habits.

“IWSR predicts a 2023-27 value compound annual growth rate (CAGR) of 7% for online alcohol sales in the U.S., compared to a total beverage alcohol (TBA) CAGR of 1% over the same period. This would result in e-commerce’s TBA share increasing from 3.2% in 2022 to 3.9% in 2027. However, the 7% growth is a drop on the 11% CAGR prediction estimated for 2022 to 2026.” Source.

Functional Benefits

There’s a growing interest in functional beverages that offer benefits beyond taste and alcohol content. The functional beverage market is projected to reach $261 billion by 2032, with a CAGR of 6.5%. These drinks often include added vitamins, minerals, or other health-promoting ingredients.

From Clarkston Consulting:

“While functional beverages themselves aren’t a new concept, the development of functional alcoholic beverages is relatively new to the industry. One of the driving brands in this market, Vizzy, offers fortified alcohol products designed to incorporate vitamins and antioxidants into the drinking experience. Other beverages released include Hard Kombucha, which is low-calorie, made with real fruit, and has an assortment of other natural benefits while still providing the desired alcohol content. FitVine has also released wines that stand out for zero sugar content without compromising flavor or ABV.”

Ready-to-drink (RTD) Cocktails and Canned Beverages

RTD cocktails and canned beverages continue to gain popularity, offering convenience and portability. This category is currently the fastest-growing product in the industry and is expected to earn an additional 8% of the market by 2025. The trend is driven by consumers seeking easy-to-consume options for various occasions.

The RTD alcoholic beverages market was estimated at $18.7 billion in 2023 and is expected to reach $28.6 billion in 2033, growing at a compound annual growth rate of 7.9%, according to this report.

Cannabis-Infused Beverages

This is a trend/prediction that is well worth considering or, perhaps, troubling.

As cannabis legalization expands, THC-infused beverages are emerging as a potential competitor to traditional alcoholic drinks. The cannabis-infused drinks market is projected to grow at a CAGR of 37.8%, reaching $8.7 billion in annual sales by 2032. Source.

According to a recent report on CNBC, for the first time, more Americans are using marijuana on a daily or near-daily basis than alcohol. In addition, from 1992 to 2022, the per capita rate of daily or near-daily cannabis use increased 15-fold.

Other areas

Sustainability and Eco-Friendly Packaging: Introducing recyclable or biodegradable packaging and reducing carbon footprints in production and distribution, to name a few.
Craft and Artisanal Products: While the craft beer boom has somewhat stabilized, there’s still strong interest in craft and artisanal products across all alcohol categories. Craft spirits are seeing growth as consumers seek unique and locally produced options. Source

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The best way I know to summarize the changing climate for the alcohol industry is to leave you with a favorite quote from Peter Drucker, the renowned management consultant.

“A time of turbulence is a dangerous time, but its greatest danger is the temptation to deny reality.”

My New Book

December 8, 2023 2 Comments

The Big Apple Bites Back: Short Stories About Life in New York City.

At long last, the release of my latest book is officially available for purchase in paperback on Amazon and select bookstores, with an eBook not far behind. Grab yourself a copy today and maybe another for last-minute holiday gifts.

It’s not about the Booze Business, but a series of stories about life in NYC — the people, neighborhoods, the workplace, dashed dreams, and life on the street. It’s a fun read.

It’s available on Amazon and some bookstores. Here is the link: https://shorturl.at/hvEFM

Happy Hour in a Stone Age Cave: A Fable

July 6, 2023 1 Comment

I’ve been off the air for too long, but I have an excused absence — I’ve been working on my new book. It’s called The Big Apple Bites Back. It’s a collection of short stories about NYC, none of which are about the booze business. The manuscript is done, and now it’s time to go back to this blog.

The story, or fable, below occurred to me when I was writing about the history of alcohol. I hope you like it.

Hagbah and Gelilah were partners. They lived in a two-story walkup cave somewhere in Asia-Pacific. Hagbah was a terrific hunter and the alpha male in the area. Gelilah was a ravishing beauty and the foremost gatherer in the valley. They did okay. Not rich but comfortable.

The start of their relationship was rocky, especially when Hagbah broke into her parent’s cave, hit her over the head, and dragged her off. Her parents, recognizing this act of endearment, were proud that the prominent Hagbah selected her. When she came to, Gelilah was pissed. With an enormous bump on her head and a splitting headache, she grabbed Hagbah by the nether region and said, “Hit me one more time, jackass, and I’ll feed what’s left of you to the T-Rex up the road.” Their relationship improved appreciably after that.

Over time, things settled down with hunting, gathering, and avoiding predators. Although, on one occasion, Gelilah was fed up with Hagbah’s idea of lovemaking and demanded he find a way other than grabbing her from behind while she picked berries. “Listen, Mr. Neanderthal, try a little kindness and gestures of love. Otherwise, go sleep with the pterodactyls.”

Hagbah was a slob among his other faults, and Gelilah had to pick up after him. He would come home from a hunt, throw the meat on the floor along with his animal skins and expect her to clean it up. But what bothered her was that he left a pile of her gatherings everywhere. We’re talking fruit, vegetables, seeds, and other stuff. Just left to rot.

Over time, she noticed a pleasant smell from the rotting debris and its liquid. She tasted it, which was awful, but a big smile crossed her face after a few minutes. Hey, she thought, this isn’t bad. She convinced Hagbah to try it that night. He had the same reaction as her. They drank, they laughed, they relaxed, had fun, and, um, uh, fantastic sex.

Revelations began to emerge. Gelilah wondered why they ate raw meat. Hagbah agreed and remembered that their neighbor Spankle had rubbed some sticks and stones together, and their cave lit up, and their food was hot.

It was decided that the downstairs and upstairs cave dwellers would get together and explore this new phenomenon every day. So, they and Spankle started a group of like-minded cave dwellers to partake of the rotting liquid.

And that’s how the Happy Hour was born.