Today’s Reality – What is now normal, is new, how does the industry react?

beer-wine-spirits

The alcoholic beverage world is not the same as it used to be.  It isn’t just the fact that breweries, cideries, distillers, meaderies, and wineries are popping up at record paces.  It isn’t just the fact that there are more stock keeping units, or more commonly referred to on the non-consumer side of things as SKU’s (skyew’s is how it sounds when spoken), than retailers can possibly keep up with.  It isn’t just the fact that technology has advanced where there is now a system that allows people to automate brewing a batch of beer in a small volume at home named Picobrew, much like a Keurig system, and it isn’t just the fact that social media has allowed what was once an obscure local brand to be thrust into the national spotlight based on the quality of their product, such as New Glarus and their Spotted Cow.  It is the fact that the consumer, for the most part, can’t, and won’t make up their mind on what they prefer.

Man and woman toasting drinks, close-up

Social stigmas are gone.  Beer and bourbon isn’t “just for men” anymore, and that is who they’ve been primarily marketing to for decades.  In one evening a consumer at an on-premises location is more likely to purchase a draft beer, a cocktail, have a draft or packaged cider, and a glass of wine of, all in one night, especially of there is food offerings, than there is a chance of any consumer in the same establishment sticking with the same drink the entire night. Brand loyalty is a thing of the past.  In the beer segment there was primary the Bud crowd and the Miller crowd.  Now it is the what is new, what is seasonal, “What haven’t I had yet?” crowd.  This is the new normal of the industry, and while the past few years the market segment has shifted in the beer category to reflect this trend, with macro beer companies losing market share to the smaller more diverse in brands and styles craft breweries.  We’ve seen this shift with the resurgence of bourbon, and the boom of hard sodas, like the alcoholic “hard” root beer boom. Everything has changed, and it isn’t going back any time soon.

More and more producers have spread their wings and produce within more than one category, sometimes 3 or more.  There are some companies that are breweries, wineries and distilleries that also make ciders via their breweries and wineries.  Retailers have begun to catch on and at the on premises level, if they have an option of a case of four 6-packs, or two 12-packs, they are going with the smaller package size.  Why?  Not because of the sales margins, but because of the length of the time spent on the shelf.  Consumers do not want to be committed to a package size as large as a 12-pack anymore, unless it is something that is in limited supply, they need a large quantity for a gathering, or it is simply their favorite.  The casual consumer wants to try it all, they do not want to be locked down by a 12-pack, or even a 6-pack if they can.  That is why in states where by the bottle sales are legal, the mix-a-six, mix and match 6-packs are one of the consistently highest selling SKU’s in the entire beer category.  The same goes for the wine and spirits categories.  The larger the package the slower the sales, unless there is a deep discount creating it to be a value brand, or there is another factor.  The consumer seems to be more worried about missing out on trying something than they are on finding something that they like and sticking with it.  Brand loyalty is dead, and that is trouble for everyone in the industry regardless of size.

If the primary driving factor in the market besides quality, is the brands “newness”, and that even trumps the price on most occasions, then that is a battle that is expensive for the producers.  Rebranding, reinventing, and developing new marketing strategies constantly is not easy nor cheap.  What used to be a staple of the industry, the core brands of a producer, are usually the first to suffer.  They suffer because they are always there.  It is like living in New York City and always planning on visiting the Statue of Liberty, but always telling yourself you’ll do it next month, because there is something that you can’t miss each weekend this month.  Then you move away 6 years later and you never visited, because it was always right there.

party

The consumer base is a driving force that has created this new normal, and the industry has been slow in many areas to react to it.  There are still perceived lines between the categories, where someone is a beer guy, or a wine girl, or a spirits expert, and there is little to no industry cross over, save the companies that are diversifying themselves into multiple categories.  Majority of the conferences and tradeshows are segmented as well, with educational tracks that actually apply across the board, but only one category base taking advantage of them.  This hybridization of the pallet of the consumer needs to drive a hybridization of the way that the industry educates and re-educates itself.  That is the new normal that the industry needs to catch up to, the consumers are driving the pace at the moment, and that is new for an industry that used to utilize its marketing power to steer the consumers in the directions that they wanted them to go.  7 pcaren26 ARISTIDEThe new normal is scary for some, but that is okay, because it is hard to tell what to expect, and not knowing if you’re doing the correct thing with your company, and for your employees and their families is scary, it would be not normal to not feel uneasy.  The positive to it all is that the consumer base is massive and it is growing, the volumes are up and there is opportunity for everyone to stake their claim in this pie of the new normal.  Breweries can benefit from learning from distillers, distillers from winemakers, and vice versa.  The more the industry adapts to the changing climate throughout all segments, and cooperates as an alcoholic beverage industry, the rising tide will raise all ships.  It is time to stop segmenting ourselves and drawing the lines between the categories, styles, sizes, locations, and goals, and realize, we’re all in it together, and the consumer, they are drinking a lot and a little of everything, we just do not know yet how this new normal will show up in our metrics and analytics once we figure out how to determine the pattern to the randomness.

In the meantime, go out, have a shot or a cocktail, a glass of wine, and a beer during the course of a meal and experiment for yourself.

 

Close Menu