Fewer displays in beverage-alcohol, notably in premixed cocktails, beer and cider, should be considered a warning sign for suppliers, according to a new report from Circana.
The market research firm’s “State of the CPG Beverage Alcohol Industry” report explores factors driving demand and identifies key growth opportunities in the bev-alc market. This year, the data dive explores how Gen Z is driving the thirst for variety, what categories across beverage are gaining share of sip, and despite softening growth, where RTDs are finding appeal.
Bev-Alc Losing In-Store Displays
The average number of bev-alc displays per store by department dipped to 8.1 in 2023, down -0.9 in total U.S. grocery stores in the 52 weeks ending Q3 2023 compared to a year ago. Beverages counted at 20.3 average displays per store, down -0.4. Sports drinks (+0.4) and aseptic juices (+0.2) added the most displays.
The loss of displays among premixed cocktails/coolers (-0.5) and beer/ale/cider (-0.4), should encourage suppliers to boost in-store activation while also beefing up pre-shop engagement via store apps and social channels, the report said.
Those decreases echo how consumers are changing their “share of sip,” according to the report, with carbonated soft drinks, water, and sports/energy drinks gaining share in multi-outlet plus convenience channels. Sports drinks accounted for 8.9% of share in the 52 weeks ending December 31, 2023 versus 6.5% in 2020; water accounted for 12% versus 10.4% in 2020, and carbonated soft drinks 17.2% versus 14.5% in 2020.
Meanwhile, spirits, cocktails and coolers were down from 12.5% in 2020 to 11.5% in 2023, and beer and cider were down from 16.1% in 2020 to 13.5%.
RTDs Have Broad Appeal; Gen Z Driving Crossover and High ABV Demand
Despite a slight softening in sales, RTD cocktails and hard seltzers still hold broad appeal, reaching $10.3 billion in sales in 2023 (more than tripling since 2018). Suppliers should look to the preferences of Gen Z aged 21-26 for innovation inspiration, said the report.
Those preferences tend to be for products higher in ABV, that come from familiar beverage brands, and have packaging that works with a variety of occasions.
“They seek variety, and interesting and convenient packaging,” according to the report.
Variety packs stand out as the top-selling RTD format, outselling single-flavor packs. Top RTDs among ages 21-24 in order of household penetration were BuzzBallz, BeatBox, Liqs, Crown Royal Whisky & Cola, Monaco, and Jack & Coke in the latest 52 weeks ending November 5, 2023.
It should be noted that the data excludes spirits-based seltzers. The report highlighted the growth in crossover products meeting that demand for familiarity, with sales for crossover products jumping +435% versus two years ago.
In beer, Gen Z aged 21+ prefer flavored beer alternatives, Mexican imports, and economy brands. Corona Extra, Modelo Especial, Twisted Tea Smirnoff/Smirnoff Ice and Mike’s Hard leading household penetration among ages 21-25. Younger drinkers also gravitate toward premium spirits brands, “fun flavors,” and ready-to-drink convenience in the spirits category with Rancho La Gloria, Daily’s Cocktails, Master of Mixes, BuzzBallz and Crown Royal Regal Apple leading.
For further inspiration, suppliers should extend the flavor and attribute preferences in non-alcoholic drinks from Gen Z — desire for energy, sweetness, intense flavor, and “for me for now” sizes— to bev-alc, the report said.
Promote Price Stability
Overall, consumers still continued the shift from value to premium for beer and wine, while value spirits experienced a resurgence, driven primarily by premixed cocktails and seltzers. Beer value sales made up 48.5% in total U.S. multi -utlet, convenience and liquor channels in the 26 weeks ending January 14, 2024, versus 50.8% two years ago. Meanwhile spirits value sales made up 71.4% of sales, up from 68.8% two years ago.
Overall, bev-alc saw the least inflation across food and beverage departments in recent years, up +14% since 2019 compared to an average of 32.2%. Marketers should promote their relative price stability and find ways to demonstrate value, said the report, recognizing that “value” doesn’t always mean lower price.