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Booze or bust: How 2024 will reshape alcohol

Booze or bust: How 2024 will reshape alcohol
Booze or bust: How 2024 will reshape alcohol


Editor’s note: This story is part of a series on trends impacting the food and beverage industry in 2024. Previously we’ve explored how technology like AI and new product innovation are driving change.

Beverage brands, distributors, and investors agree that the alcohol industry is in a period of rapid transformation, and players will evolve or cease to exist.

As health and wellness continue to drive purchasing decisions, especially for younger consumers, many Americans are reducing their alcohol consumption.

Roughly half of the lucrative 21 to 24 age group reported drinking alcohol, while 40% limited their consumption, according to Mintel data published last year. The average consumer drinks three alcoholic beverages per week, down from four per week this same time last year, according to an NC Solutions report released this month.

Traditional producers of booze are remaking their product lineups in the hopes of meeting a new generation of drinkers who have a unique and new set of needs and preferences. There’s an increasing fluidity and fast pace in the industry stemming from consumers looking for options and embracing innovative drinks.

As more consumers turn to nonalcoholic and low-alcohol offerings, industry heavyweights and upstart brands — from Molson Coors to Constellation — are launching or investing in alternatives to booze and broadening the beverage space in ways never before seen.

Beer and wine producers are pivoting to ready-to-drink offerings in a race to get ahead of shifting consumer demands. Spirits producers are focused on premium items and collaborative products, such as Diageo’s ready-to-drink Vita Coco Spiked with Captain Morgan.

Gen Z is “playing on many different chess boards,” said Spiros Malandrakis, head alcohol industry researcher at Euromonitor International. Hence, new categories are opening that never existed on a wide scale before this decade, particularly canned RTD items — from hard tea to whiskey-infused cola to THC-infused soda.

 

Coca-Cola, zero sugar, Brown Forman, Jack Daniels

Coca-Cola and Brown Forman’s ‘Jack and Coke’ RTD product.

Courtesy of Coca-Cola

 

Household names change course

Franchise Equity Partners, a private equity firm, launched last year with the intention to invest in new and innovative beverage brands. Matt Hughes, the firm’s co-founder, previously helped lead beverage giant Coca-Cola North America’s $250 million alcohol platform — where it is now working on collaborations between beverage giants, such as Molson Coors and Brown-Forman on offerings like Jack Daniels Coca-Cola, Topo Chico Spirited and Hard Peace Tea. Hughes said consumer trends are shifting each year, and the white space available to new categories keeps expanding.

“During the pandemic, hard seltzers really became something significant from nothing and that was the first time you saw flavor become a significant reason for consumers to consume alcoholic beverages,” Hughes said. “The traditional category boundaries are blurred and broken down and that’s led the alcohol companies to want to enter the nonalcoholic space and vice versa.”

White Claw, the foremost beneficiary of the 2020 hard seltzer boom and still the bestselling offering in the category, sees the writing on the wall as seltzer has plateaued. The brand launched a nonalcoholic offering for the first time this month, White Claw 0% Alcohol, focused on “taste and complexity” aimed at consumers who still want to drink but without the effects of a hangover.


“[The nonalcoholic category] is the biggest disruptor of the alcohol industry of the last 2000 years.”

Spiros Malandrakis

Head alcohol industry researcher at Euromonitor International


Other ready-to-drink canned offerings are launching in the hopes of meeting Gen Z consumers who want to drink but are looking for something fresh.

Alcohol giant Molson Coors will launch Happy Thursday, a spiked refresher beverage line, in March in four fruity flavors. The cans contain 4.4% alcohol-by-volume and are non-carbonated after focus group data clued the company into an unmet desire for a drink that doesn’t contain bubbles in order to avoid bloating.

molson coors happy thursday

Molson Coors’ new spiked refresher brand Happy Thursday, launching in March.

Courtesy of Molson Coors

 

Beer and wine reshuffling to fend off stagnation

After several years of high growth, the beer market has dipped in recent years, largely attributed to an oversaturation of craft brews in the space — leading to the shuttering of brands like San Francisco’s 127-year-old Anchor Brewing.

Last year, the long-running leading brand in the beer category, AB InBev’s Bud Light, was dethroned as the top seller by Constellation Brands’ Modelo brand. Bud Light’s decline was fueled by a backlash to an advertising campaign featuring transgender influencer Dylan Mulvaney. Last July, AB InBev announced a $33 million investment in technology to help it develop nonalcoholic beer products.

In December, Constellation’s CFO Garth Hankinson said the beer category’s slumping revenues were caused by a growing interest in higher-end offerings.

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