As 2023 comes to a close, the teams at market research firms NIQ and CGA hosted a webinar Tuesday to give predictions for 2024 bev-alc trends, including shifting consumer behavior, changing demographics, and continued premiumization and flavor-forward trends.
The webinar included NIQ director of BevAl thought leadership Kaleigh Theriault, NIQ VP of BevAl thought leadership Jon Berg, CGA client solutions director Drew Hummel and CGA regional director, North America, Matthew Crompton.
For context before diving into future trends, the team shared the latest bev-alc data for the on- and off-premise channels. In the last 52 weeks (ending October 7), on-premise dollar sales for total bev-alc have increased +1.9% year-over-year (YoY). Similarly, in the last 52 weeks ending December 2, off-premise dollar sales have increased +1.5% YoY.
Shifting Shopping Behavior
The convenience channel was the strongest growth driver for bev-alc this year, and consumers’ priority of “convenient” off-premise shopping is expected to continue in 2024, according to Theriault.
“One of the reasons for that is the need for shoppers to want a friction-free retail experience,” Theriault said. “We’re all time-starved consumers – we don’t have a lot of time to go in and go on our spirits safari – and so what we’re seeing that consumers are saying, or shoppers are saying, is that almost half of them are valuing a convenient location, and that’s really important when choosing where they’re going to purchase their alcohol.”
In a recent NIQ survey, 42% of consumers said a convenient location is an important factor when choosing a brick-and-mortar to buy bev-alc. More than a third (36%) cited low prices as important, followed by the ability to get in and out of the store quickly (35%).
Theriault added that consumers are looking for quicker purchasing ability “likely because consumption is occurring in really close proximity to the time of purchasing.”
In the on-premise, the desire for convenience is showing up in dining channel preferences, with quicker service restaurants recording a +7% YoY increase in dollar sales, through October – more than twice the growth of the next largest growth channel, casual dining.
Consumers are also expected to prioritize “wellness” in 2024, which encapsulates both “better-for-you” trends and social responsibility-related buying habits.
NIQ analyzed off-premise dollar sales growth for packaging that calls out wellness-related attributes, and noted that many have outpaced overall growth for bev-alc, including “free from high fructose corn syrup” (+212% in the last 52 weeks, ending December 2), no sugar added (+49%), eco-friendly certified (+32%) and vegan (+17%).
The trend also connected to moderation and non-alcoholic (NA) beverage consumption, Theriault noted. She added that 94% of NA consumers surveyed by NIQ also purchase alcoholic beverages, demonstrating a consumer shift to cross-purchasing, rather than a separate consumer from bev-alc consumers.
“It’s not a different consumer that we’re talking to, but it’s really the consumer that’s seeking out moderation and changes in some of their drinking habits,” Theriault said.
“Consumers aren’t necessarily giving up something completely and switching over to non-alcohol, but they’re really adding it to their broader repertoire as a choice for when they want to consume other products but still feel like they’re a part of the party,” she continued.
In the on-premise, one-in-seven consumers (14%) surveyed by CGA said they consume NA beer, wine, or spirits when visiting bars and restaurants. That percentage increases to 24% when including only consumers aged 21-34.
In another CGA survey conducted last week, nearly half of on-premise consumers (44%) said they are very likely or likely to take part in Dry January in 2024, an increase from the 29% who said they participated in 2023. However, Hummel noted that “Dry January can mean different things to different consumers,” with some consumers who participated in 2023 noting they did not drink at home, but still drank at bars and restaurants.
Dynamic Demographics
As more Gen Z consumers reach legal drinking age, the on-premise will become increasingly more important, according to Hummel.
In a CGA survey of consumers conducted this spring, 45% of respondents aged 21-34 said they spend more on alcohol in bars and restaurants than in stores. Consumers 35-54 were more evenly distributed across channels – 39% said they spent more in stores, 38% said they spent more in bars and restaurants. Consumers 55+ were more likely to spend more in the off-premise (43% said they spend more in stores), versus more in the on-premise (30%).
“This is an incredibly powerful view of how consumers cut by age groups view both off- and on-premise bev-alc channels,” Hummel said. “Typically suppliers, we know that off-premise retail drives volume, but consumers don’t see it that way. They look at their monthly credit card statement as a quick check on where their dollars are going.”
Still, Gen Z still only makes up 6% of bev-alc buying households, according to NIQ. Boomers make up the majority of consumers (36%), followed by millennials (32%) and Generation X (27%).
Theriault and 3 Tier Beverages consultant Stephanie Roatis dived deeper into generational habits and changing demographics during their presentation at Brewbound Live this month. Insiders can rewatch the full presentation here.
NIQ and CGA also pointed to increased consumer diversity moving into 2024, as younger generations are more ethnically diverse. Hispanics are the fastest-growing population, now accounting for 19% of the U.S. population, quadrupling over the past four decades.
“It’s not so much about the size and the scope of the Hispanic community, it’s really about the buying power that this group has,” Berg said, noting that Hispanic consumers spent $7.8 billion on bev-alc in the 52-week period ending July 15.
“The Hispanic community is not one size fits all and there’s a lot of local application that needs to go into the approach here,” Berg added. “A lot of regional differences of course as well.”
Continued Premiumization
Premiumization is expected to continue in 2024, but will exist alongside other cost-cutting habits, with consumers using a “split-brain-budget” mentality, Berg said.
“What some people opt to do is take maybe some of the everyday essentials and make some compromises,” Berg said. “Maybe you buy a less expensive kind of peanut butter or less expensive kind of paper towel, but with that money that you’re saving or putting away, you’re going to splurge. That whole save and splurge mentality is very real and we see it coming to the surface.”
In an NIQ study, 69% of respondents said they have cut more “in-between” costs this year, followed by 63% who said they are “not going to deprive myself” of luxuries.
In the on-premise, consumers are also prioritizing premium purchases, Crompton said. In a CGA survey this year, consumers were asked to choose between quality and quantity for their beverage buying. The majority (39%) said they would choose two high quality or premium drinks, followed by 31% who said they would choose one luxury or super premium drink. One-fifth said they would choose three medium quality drinks, followed by four standard/lower quality drinks (5%) and five value/entry level drinks (5%).
The speakers also dove into premiumization trends across bev-alc categories.
In the beer category, imports are driving premiumization. In the 52-week period ending November 18, import dollar sales in NIQ-tracked off-premise channels have increased +9.2% YoY, while volume has increased +4.8% YoY. Meanwhile, domestic super premium products (dollar sales -0.8%, volume -4.1%), craft (dollar sales -0.1%, volume -4.1%); and domestic premium (dollar sales -1.6%, volume -6.1%) are all in the red.
For spirits, premiumization is expected to get more complicated, as trends with ready-to-drink canned cocktails (RTDs) continued, Berg said.
“Premium+” spirits accounted for 69% of total spirits dollar sales and 48% of spirits volume in the 52-week period ending November 18. However, when excluding RTDs, “premium+” products account for 65% of total dollars (-2% versus 2021), and 38% of spirits volume (-4% versus 2021).
“I’m a pretty firm believer that, talking to so many of the retailers that we work with, we’re going to have to maybe change a little bit of the way we think about measurement [of spirits premiumization,” Berg said.
Flavor-Forward Purchasing
Flavor will continue to be important for consumers in 2024, driven by innovation in RTDs and other beyond beer products, according to Theriault.
Flavor trends in beer are also expected to continue, with flavor-forward styles recording gains through the last month of the year, including craft hazy imperial/double/triple IPA (dollar sales +110% YoY in the last 52 weeks), chelada (+38%) and hop water (+143%).
Theriault listed three flavor trends to look out for in 2024:
- “Sweet heat,” including mango habanero, chili lime and spicy margaritas;
- “Indulgent flavors,” including “rich and comforting flavors” such as chocolate, caramel and toasted coconut;
- And “Hispanic influenced” flavors, such as smoky mezcal, sweet falernum, tamarind and tropical fruits.
For the on-premise, Crompton analyzed cocktail flavor trends. Consumers were asked to identify which cocktail flavors they typically drink when out.
For the summer, the most popular flavors were berry (65%), fruity and sweet (64%), wine cocktails (51%), citrus (48%) and sparkling wine cocktails (45%). For the winter, the most popular flavors were coffee (48%), “hot” (45%), creamy (41%), cider cocktails (35%), and “boozy” (34%).