The rise of consumer centricity in the alcohol industry

Isabel Blasco
As with many other industries, alcohol is becoming consumer-centric, and therefore brands that better serve consumer needs and capture momentum from market trends are the strongest and most valued.

Alcohol has been present in our society since ancient times and is one of the substances most consumed in the world. It is a part of human culture and part of our lives.

Some say that wine is the only artwork that can be drunk. This can also be applied to spirits and other alcoholic beverages. It includes rejoicing of the senses (the blend of aromas, unique colors, the sipping of textures and flavors), heritage (the history that ensures quality and prestige), storytelling (the many things that can be said about a beverage’s life and feats), memoirs (the experiences and emotions where a brand has accompanied its drinkers), handcraft (the time, processes and caring artisans involved in forming a drink), and more — the aura and experiences that have evolved within the “elixir of ancient goods” is endless and timeless. How brands invent, express, and — especially — innovate these elements is key to their success and longevity.

This year, alcohol again has been one of the sectors most engaged in the pursuit of growth. The global alcoholic beverages market is expected to record a CAGR of 3.1% during the forecast period (2018–2023) and a $1,594 billion market by 2022.

New product launches and innovations in alcoholic drinks are favoring the industry’s growth. Companies are launching innovative products that reflect an increase in consumers’ health concerns, including a variety of low-calorie premixed cocktails.

Opportunities and challenges constantly mark this fascinating sector. As with many other industries, alcohol is becoming consumer-centric, and therefore those brands that “better serve” consumer needs and market trends are the strongest and most valued ones.

Consumers’ quest for authenticity sparking a return to traditions and craft

Heritage — “LVMH owns two excellent examples. Moët & Chandon, with its origins in 1743, and Hennessy, founded in 1765, remain faithful to their roots and histories of excellence and distinction but stay innovative and cutting edge, while keeping up with new times and targets. The consistency of these brands over the years has given extraordinary support to their history and authenticity, strengthening them to perfectly justify their reputations for premium quality and sophistication.

Storytelling — As the largest whiskey brand in the world, Jack Daniels is a magnificent example of how to engage consumers with the art of telling stories through a brand’s origins, authenticity, and tradition. In this case, the story informs people of all ages about Jack Daniels’ legacy as one of the most authentic American brands. Johnnie Walker is also a good example: its Striding Man is one of the best iconic representations of the Scottish drink. This engagement with the brand not only supports consumer loyalty but also makes each consumer a perfect brand ambassador, attracting more and new consumers and followers. This also increases the brand’s presence and differentiation above that of its competitors.

Authentic production techniques with traditional ingredients — Top brands focus on their heritage and savoir faire, thereby becoming activists for what is best in a good alcohol beverage. To this end, traditional and “coming from nature” ingredients play an important role, as indicated for instance in Hennessy’s “Master blenders in authentic French oak barrels.” Brands that commit to keeping their production processes authentic and engaged with Mother Nature end up advocating for product quality as well as environmental and health awareness, while still innovating the best products for their consumers — which ultimately appeals to a broad consumer range, benefiting the brands.

Evolving in digital and social media

Innovation is helping brands reach their target audiences. It is based in targeting, which allows brands to communicate their messages directly to legal-drinking-age consumers, without heavy investments in distribution channels.

Heineken found that in launching its brand of tequila-flavored beer, Desperados, TV ads didn’t result in much consumer awareness among millennials. However, in locations where only digital media was used, awareness was about 23%. With Johnnie Walker, Diego launched “Keep Walking Mexico,” a vibrant campaign aimed at recruiting a new generation of millennial consumers. Brands like Patron and Pernod Ricard have increased digital market budgets by double-digit percentages since 2014.

This not only directly reaches specific targets but saves the dollars that would be spent in other, much more expensive media. Digital and social media allow the biggest engagement with target audiences, since they allow brands to speak in a more relevant and differentiated way, with language and messages audiences want to hear — opening doors to join communities and activities that are related to the brands.

Drinking goes mindful: consumers are drinking more thoughtfully

Being close to consumer’s needs and market trends makes brands more relevant, while increasing engagement. Recent examples in the alcohol sector include smaller pack sizes and serving options and production advances that allow for more sophisticated and balanced products.

Corporate responsibility is also taking center stage: Moët & Chandon wants to be at the forefront of sustainability in the wine industry. It is striving to demonstrate its accountability by spending to improve production techniques with increasingly sustainable innovations, and, together with LVMH’s wines and spirits brands, they have achieved 100% sustainable viticulture certifications. These brands commitment to the environment is not only a trend but also a way to be consistent to its core of authenticity and production techniques, related to handcrafted and natural ingredients.

Sparkling

With its premium connotations ripe to become a greater area of exploration for the alcohol category, “natural sparkling drinks” — from champagne, cava, or prosecco to sparkling gins to cocktails with carbonation added by bartenders — will become a greater area of exploration. Diageo’s Smirnoff Seltzer illustrates very well this fizzy trend.

Brands’ commitment to innovation is key not only for growth but also to gain relevance and differentiation for consumers.

Managing Director, Mexico City
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