The Diageo Drinks Report, published recently, takes a UK look at the future of alcoholic beverages and consumer trends. It combines expertise and insight from Diageo GB’s 14-strong Category Development team whose remit is to stay on top of the latest consumer trends and provide insight to retailers.
The Report outlines the growth opportunity for alcoholic beverages in Great Britain and identifies four key growth pillars – ‘Balanced Choices’, ‘Make the Moment’, ‘Exploration’ and ‘Celebration’ – which offer insight and guidance to retailers to fuel excitement and value in the alcoholic beverages category.
“Consumer repertoires” are at an all-time high demonstrating increased demand for different drinks to suit different occasions, tastes and lifestyle choices, states the report, “For example, 40% of consumers in Great Britain now offer cocktails pre or post dinner in the home.”
The report also kicks-off a new category initiative – Transforming Drinks Experiences – which aims to help UK retailers decipher the latest consumer trends and unlock the £41.5 billion alcoholic beverages market for what Diageo believes to be the 12% or £5.2 billion growth opportunity to see the alcoholic beverages category reach £46.7 billion by 2022.
Unlocking the opportunity
With the focus on key consumer occasions the frequency of on-trade visit in the UK in the last 10 years has dropped by 10.5%, however overall spend in trade has increased by 26.2%.
“Spirits have grown to almost one in three serves in total beverage alcohol, whilst beer and wine have both reduced their share of sales,” notes the report.
Premiumisation leads the way
The category mix is beginning to significantly change, believes the report, further fuelled by the rise of cocktails, cider, RTDs and sparkling wine.
“We have even seen a blurring of lines between what has historically been clearly defined categories” the report points out, “for example ‘speers’ (spirit flavoured beer), ‘spiders’ (spirit flavoured cider), and lower ABV flavoured gin liqueurs.”
Diageo GB’s Senior Customer Category Manager Madeline Bedford comments that, “Consumer drinking habits are changing, with an increased focus on premiumisation and heritage. As consumers grow more confident and their repertoires become broader, it’s no longer appropriate to look at drink categories in isolation. To unlock true value we must identify where and how consumers want to enjoy drinks and ensure there’s always a relevant offer for them.
“Our Transforming Drinks Experiences initiative identifies ways retailers can take advantage of shifts in consumer behaviour and maximise profits from the total alcoholic drinks category.”
Around the world consumers are increasingly placing more emphasis on the value they derive from experience in what has come to be termed ‘the experience economy’ according to the report.
Mindful consumption is on the rise, with No and Low beer offerings growing by double-digits in the on- and off-trade in the UK.
Drink choices have expanded out to fit with all lifestyles as ‘Mindful Consumption’ opens up opportunities for consumers to try new things.
Ranges in grocery are adapting but the challenge remains to increase availability in on-trade and convenience.
“Convenience is now a mindset, not just a format,” states the report, “It is something our consumers demand.”
For example 90% of all premix purchases in convenience are consumed within two hours.
“Collins Dictionary declared that 2018’s word of the year was ‘single-use’, as packaging awareness became a mainstream news item,” states the report, “The majority of consumers tell us it is important that the eating and drinking out businesses that they visit are ‘environmentally ethical’. We are increasingly looking to the retailers we visit to reflect the ethical standards we set for ourselves. Plastic straw removal, packaging alternatives to the six pack ring and zero waste or sustainable drinks have emerged”.
Diageo believes that there’s a drinks choice to suit all lifestyles as the UK experiences a 59% rise in adults not drinking alcohol year-on-year.
Drinks choices to suit everyone – spotlight: No & Low alcohol
The report states, “Most top-ranking bars will stock one type of non-alcohol spirit with many including these spirits in their cocktail menu. No-alcohol options are particularly popular among younger adults with 46% of people under the age of 35 likely to order a mocktail versus just 16% of over-35s. In January we saw many London bars promoting low ABV cocktails with liqueurs and ports stepping to the forefront”.
Sales of alcohol-free beer in Western Europe surged 13% in the six months to June 2017, states Diageo, with this growth showing no signs of slowing.
“In the on-trade, the Non-Alcoholic and Low-Alcoholic Beer category is growing +27% vs YA, with packaged leading this growth.”
Make the Moment – We increasingly live in an ‘experience’ economy, with consumers looking for products that elevate their experiences in and out of the home. For example, “easy and impressive meals for company” is one of the fastest-growing Google search terms for dinner parties.
As consumers become increasingly spontaneous in their choices and look to be inspired, it’s crucial that retailers are mindful of the occasions consumers partake in to tap into current trends and remain relevant.
For example, there has been a 48% increase in UK fans looking for a pub showing the Six Nations this year while 50% of suppliers in the on-trade have festivals and other events as a ‘Top 3’ marketing target for the year.
Exploration – Whether it’s whiskey, gin or beer, consumers are increasingly open to discovering new alcoholic beverages – and the rise of digital has given them new tools with which to do so.
Be it instagrammable visual appeal, mobile-friendly booking opportunities, online shopping apps or searches for information and reviews, there are now more opportunities than ever to engage digitally with consumers.
“Engagement drives sales both pre and post purchase,” states the report.
For example, seven in 10 adults have discovered a new beverage on social media and considered buying it while 71% of consumers who’ve a good experience with a brand are likely to recommend it to others on social media.
“Repetition is key” the report emphasises, “with consumers needing to see a product on average 2-4 times on social media before committing to a purchase. So showcasing your offer – the experience, the range, the serves – online is key to driving footfall into outlet.”
The report points out that there are now exciting ways to discover and enjoy drinks – through food, for example, where 60% of cocktail consumers are likely to order a cocktail featured on a food menu.
Perfect drinks to celebrate special times
Celebration – Celebrations represent a huge opportunity for increased consumer spend through supplying the perfect drink to celebrate special times. Stocking premium ranges combined with effective merchandising will encourage consumers to trade-up when shopping for special occasions.
Celebratory occasions are key moment in time, usually pre-planned, which more often than not, feature a treat, premium choices and increased spend.
These are important because Diageo has discovered that consumers who pre-book occasions in the on-trade spend 18% more in trade per month.