Liquid Lunch: Changing Consumer Preferences Are Transforming the Beverage Industry

Consumers are becoming more educated and affluent, which is affecting what they consume, how they consume, and where they consume. These changes are altering the competitive context that beverage companies are facing today in many important ways.

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Report Summary

In this issue of Liquid Lunch, we look at some of the important changes in consumption patterns around the world and explore the various implications for beverage companies.

Among these, we include the following:

The rise of craft beer shows just how slow brewers were to respond to changing preferences. Large brewers have made numerous acquisitions of craft brewers in an attempt to react, which is an important start, but Constellation’s investment in Canopy shows how far they are now willing to go to respond to the demands of their consumers. 

Changing consumer habits, such as preloading, are creating a drag on the traditional on-premise, which creates challenges for many brewers… but also some opportunities. 

Drizly data suggests that beer underperforms wine and spirits among its users. This provides some insights as to which e-commerce channels will be most important for different alcoholic beverage segments. 

US wine consumers are eagerly seeking packaging formats that permit single-serve or allow quality to be preserved. The wine industry must find viable alternatives to the 750ml bottle that are cost-effective, while maintaining a premium image, or risk ceding share to beer and spirits over time. 

Small, premium, and craft spirits have been performing extremely well in some mature markets. How much more can premium gin grow? And will the success of craft whiskey in the US ultimately create some pricing pressure in that segment? There are some signs that these pressures are already starting. 

Soft drink sales are falling in Indonesia. This is partly explained by challenges in the economy, but may also be a reflection of deeper changes in consumer demand.

These are some of the issues and topics we have been exploring in our research, and we use this opportunity to briefly share some views and perspectives. As always, we welcome your comments and questions.