Innovation in Alcoholic Drinks in 2024

Alcoholic drinks have always straddled the line between traditionalism and novelty, with heritage providing timeless gravitas, while innovation recruits younger consumers or allows for fresh occasions or need states to emerge. The pandemic years derailed new product launch pipelines as the focus shifted back towards streamlining operations, but as Gen Z is coming of age, brand and category promiscuousness replace blind loyalty, and new rituals emerge, what does the future hold for innovation?

 Key Findings:

Flavour sophistication and premiumisation retain their status as pillars of innovation, but macro volatility and subtle shifts in popular flavour profiles require flexibility

While premiumisation is taking a hit on the back of geopolitical challenges and still lingering inflationary pressures, the industry’s mantra of premiumisation will remain relevant and bounce back in the short-to-medium term. On the other hand, flavour sophistication will continue evolving, with a shift to more natural ingredients, lower sugar content and authentic, measured offerings.

Mindful drinking comes of age, and pivots into proxies, new occasions and functionality cues

The no/low trend is now firmly reaching the mainstream, embracing RTDs, cider and wine, while reaching escape velocity in spirits and further cementing its position in beer. Sidestepping dealcoholisation through proxy variants and an increased focus on functionality will shape the next stages of the category’s evolution.

Cross-industry collaborations, social media engagement, and embracing indulgence and nostalgia are essential for securing share of mind

Before securing share of throat and wallet, establishing brand equity and cementing share of mind is essential. Refocusing on inclusive, democratised and indulgent offerings, building authentic engagement in social media and venturing outside comfort zones to collaborate with other iconic brands are all key to breaking through marketing noise.

The future is here, from reprioritizing sustainability initiatives to experimenting with tech solutions and testing new horizons with RTDs, innovation experimentation is back

Technology, sustainability and RTD experimentation all provide new avenues for growth, fresh positioning and branding opportunities, and an answer to many of the existential questions facing the industry – from maturity and saturation to environmental disruption and beyond

Innovation remains one of the key driving forces within the alcoholic drinks industry. New launch pipelines are accelerating again, following the pandemic induced slowdown that enforced a shift towards streamlining production, logistics and home delivery, rather than research and development, and experimentation – a reprioritisation that was driven by both manufacturers and drinkers.

Innovation does not just follow trends – in many cases, it creates them. From the launch of Seedlip giving birth to the booming non-alcoholic spirits category all the way to White Claw single-handedly pioneering the hard seltzer phenomenon, deciphering the themes and dynamics behind key launches can provide an understanding of underlying market dynamics.

Flavour sophistication, premiumisation, democratisation, and establishing new rituals and occasions have been the central pillars of innovation within alcoholic drinks, and retain their relevance. Going beyond them will, however, ultimately decide the industry’s future strategic direction.

While innovation pipelines significantly slowed down during the years of unprecedented disruption that hit the alcohol industry during the pandemic years, new product launches and a focus on innovation are gradually gaining traction once more.

Historically, the on-trade has been the pedestal from which key launches can begin the long journey of securing brand equity and a core following – particularly in the case of more premium offerings. While the on-trade retains its unique status, when it comes to brand building exercises, a longer term shift towards the off-trade and the rise of digital storefronts, communities and hubs means that it is already slowly losing its once near total domination of the spotlight.

Having a snapshot of some of the key launches for each key country and category is becoming increasingly important – not just in order to be able to identify white spaces and key competitors but, perhaps most importantly, to uncover key trends and strategic directions, even before they reach escape velocity, or learn key lessons when they enter the stage of terminal decline.

In the examples above – a unique Hard Honey brand and positioning have been identified in the US, at the same time that the once buoyant hard seltzer RTD category is losing steam. On the other hand, fresh launches can, and should be followed to the natural conclusion of their life cycle. It is in that context that Cacti – by Travis Scott – can be seen massively expanding distribution before disappearing, following a tragic incident at one of his concerts. Both the rise and fall of such brands can be the key to deconstructing the cocktail of innovation.

Historically, the on-trade has been the industry’s favoured pedestal for showcasing the latest and greatest innovations, that would later find their way into retailers and eventually, drinkers’ homes.

However, as the shift towards home consumption continues gathering pace, against the backdrop of an all-encompassing social media landscape and ubiquitous celebrity culture, the digital realms are fast taking the mantle of leading trend setters.

While the clout of Facebook is fading and Instagram Reels retain some appeal – and a degree of return of investment – it is in TikTok that younger millennials and Gen Z are getting #drinkspo, discover new brands and trends and embrace #drinkfluencers. The need for authenticity, democratised language, visual impact and stories that go beyond the dry listing of ingredients or production techniques will continue to be key.

 As the negroni sbagliato and espresso martini take the world by storm, developments move at a breakneck speed in the world of social media too.

Although some of the most popular social media platforms in the world have stumbled somewhat of late, TikTok – as well as its Chinese analogue, Douyin – have surged in popularity and are expected to continue to expand their reach in 2024. Their focus on short-form video content has demonstrated tremendous appeal, especially among younger consumers. Alcohol branding does, however, face significant limitations when it comes to TikTok, primarily because of the numbers of young users on the app.

However, even if alcohol cannot strictly be promoted, embracing non-traditional marketing – eg mixologist partnerships, influencer support, organically driven user generated content and a focus on a brand’s lifestyle associations and values, rather than the products themselves – will continue making TikTok one of the most important engagement tools for the industry, especially when it comes to Gen Z.

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