Recent articles in Beverage Industry Magazine addressing beverage innovations caught my attention. The first article commented that the drinks industry (alcohol and non-alcohol) is becoming more innovative in developing new products (primarily with flavors and nutritional ingredients), and the second pointed out consumers are becoming more aware of drink packaging that is environmentally friendly and convenient. In reality, innovation in the drinks business is about packaging/labels and the product; the liquid itself (beer, spirits and wine).
Beverage innovations are driven by the consumers’ willingness to explore new products and pay more for premium and upscale beverages. Most of the new premium innovations are in flavored non-alcoholic drinks. The perceived values in these drinks are reinforced by ingredient labels that denote descriptors such as: natural and organic, fresh and enhanced formulations. Such innovative formulations stress new flavors, carbonation, natural sweeteners, healthy ingredients and feeling of renewed energy. This category is called “alternative beverages”. Even with a plethora of beverage options, “there is very little overlap in all the new products,” says Bob Goldin, Chairman of Technomic. So it appears there is a lot of room for innovation/creativity in non-alcohol beverage product and packaging. But, does this trend also carry over to beer, wine, and spirits?
In the arena of beer, wine, ciders, spirits there is no lack of creativity in innovations in packaging. And in product development, beer and cider seem to garner the most attention in the alcohol space.
Writing in Beverage Industry Magazine, Derric Brown says, “Savvy marketers have known for years that packaging can play an important role in communicating a product’s proposition and influencing purchasing decisions. As consumers demand high-quality… they also are becoming increasingly interested in the environmental impact of the product’s packaging.” With wine, most issues of packaging seem to have focused on closure, foil, and bottle (weight and design). Moving forward however, we are starting to see wine packaging emphasis changing–on tap, boxes/bag-in box, and pouches. Who knows the traction this will have with consumers.
More prominent in packaging decisions is a focus on consumers concerns about the environment; this is especially true with wine consumers. Early in 2016, Carton Council of North America released a study reporting that 77 percent of consumers said they consider the effect of product purchases on the environment. Further, 91 percent of consumers expect beverage brands to actively help increase package recycling. Even some wine retailers now encourage in-store bottle and cork recycling; one in particular is BevMo!
I will be more specific with wine in a moment, but first let’s look at the big moves in the beer and cider market; when you start seeing beer tasting/pairing events in restaurants you know there is a change in “sea state” where wine once ruled. The beer category has many new forces-craft, new marketing and brands coming on-line.
Some prominent examples of flavored beers:–Small Town Brewery– recently launched a root beer flavored beer, Miller launched a Hard Cola beer with 4 percent alcohol, we now have a broad offering of hard ciders, and the NFL is promoting beer packaging in cans decorated with NFL team logos. There is even a vanilla flavored beer on the market. Relative to flavored beer, “We also see a lot of interest from people (consumers) who tend to drink wine, craft beers and spirits,” says Tim Kovac, founder of Small Town Brewery. “If we are helping to drive more investment in experimentation, that’s great,” he says. Certainly craft beers, ciders, and established brands are pushing the envelope with beer flavors. I can remember when Blue Moon was served with orange slices and some said real beer drinkers would never drink flavored beers.
Even hard ciders (a relatively new category) are not standing still; they have invented new flavors for their brands such as: cherry, honey, apples, ginger, etc. A boutique distillery in Verdi, NV, Verdi Local, has produced a whiskey with wood flavors and aromas such as pine and mahogany. They added a successful label tailored for just the Bloody Mary on-premise market that has a hint of garlic that enhances the overall flavor of Bloody Marys.
Constellation Brands’ beer division is growing at approximately an 18 percent rate in 2017 and is on a mission to expand their high-end beer market. Their premium directed strategy has seen them acquire beer producers in the imported beer market, craft breweries, and domestic producers. They have announced plans for tasting rooms and also building new domestic brewing facilities in Virginia.
In the overall alcohol beverage industry, innovations seem to be coming from cider and beer; the spirits industry has introduced flavors along with innovative packaging. But, where is wine in this morass of changes/innovations? If innovation is recognized as packaging and product, there seems to be just so much to be done with the product itself, but packaging does offer more creative opportunities.
The most apparent changes in the wine industry are in what average consumers are willing to pay for more premium brands. A respected wine industry consulting firm, Gomberg, Fredrikson & Associates, has a presentation chart titled, “California Table Wine Volume by Price Category-The Wine Market Has Been Moving Upscale For Decades”. This seems to summarize the point well. “As of 2015 wines priced at $10 and over had a 52% market share and wines priced up to $10 had a share of 48%,” said Jon Moramarco, Partner at Gomberg, Fredrikson & Associates. “Specifically, wines in the $7 to $14 category have seen exponential growth in market share as compared to the other price categories.” Mr. Moramarco goes on to say, “In 2015 wines below $7 experienced a decline in sales of approximately 2% while more premium wines (priced above $7) had a growth rate of approximately 6%.” People are trading up and drinking better wines. Kiddush Fountain