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Drinks predictions

What 2017 has in store for the drinks category

By Nikkie Sutton , 03-Jan-2017
Last updated on 05-Jan-2017 at 12:16 GMT2017-01-05T12:16:03Z

Popular: Cocktail drinkers visit the on-trade and spend more than other consumers (Photo: Dirty Martini)
Popular: Cocktail drinkers visit the on-trade and spend more than other consumers (Photo: Dirty Martini)

Last year was a mixed bag for the pub trade, from the shockwaves following the ‘Leave’ vote of the EU referendum, to the heavily delayed pubs code and the anguish at the appointment of the US president-elect Donald Trump.

But it hasn’t all been bad news. The number of pubs closing per week has fallen from 27 to 21, popular London pub the Carlton Tavern has won its  battle to be rebuilt and, after being touted for time, the pubs code finally came into force. 

Sticking with the positive, the drinks market continues to boom, with the rise and rise of gin and craft beer persisting unabated, alongside the revitalisation of up-and-coming stars such as rum and Tequila, and not forgetting the ongoing demand for cocktails and soft drinks.

One particular theme which remains popular across the industry is premiumisation , but in particular within the spirits category.

THE FUTURE ACCORDING TO MINTEL

Global market research and insight provider Mintel reveals its predictions for the drinks category for the coming year.

■ Authenticity and heritage will continue to be prominent, with consumer’s interest in a product’s narrative continuing unabated.

■ Healthier and cleaner lifestyles are motivating consumers to prioritise vegetables, fruits, nuts, seeds, botanicals and grains, reinforcing growing interest in vegetarian and vegan products.

■ Affordability for consumers who want to have a healthy lifestyle but who may not have the funds to support that choice will be a pattern in 2017 and is something operators need to take into account.

■ Plant-based innovations provide new directions for existing products or categories, as in the case of botanical-based, non-alcoholic distilled spirit Seedlip.

■ Consumer awareness encompasses narratives about wastage thanks to the efforts of operators to reduce or donate food or drink that is past its sell-by date, blemished or damaged.

■ In 2017, the stigma associated with imperfect produce will begin to fade and positive publicity about ugly products could also help prevent wastage.

■ In the fast-paced world of the 21st century, time is of the essence, propelling a need for shortcut solutions that are still fresh, nutritious and customisable.

■ For drinks, the priority will be to use time-saving initiatives and schemes such as an alcohol delivery service which fits with consumer demand.

■ When it comes to settling down for the evening, night-focused innovations can leverage the reputation of the tea category and operators should use chamomile, lavender and others herbs as a way to achieve a sense of calm before bedtime. 

Influence of premium

Premium rum has infiltrated the UK across the pond from the US where it is more established, says CGA Strategy client director Phil Montgomery.

He adds: “We are seeing a 20% rise in volume for premium Tequila as it is tapping into that trend where consumers want more from an experience. They are willing to pay more to have that special experience which feeds into the wider, macro scale we are also seeing around cocktails, which are up by 14%.

“We will continue to see the influence of premium across all categories because of that overarching trend we have from a consumer perspective.”

But it isn’t just premium tipples operators should keep their eyes on, but the tier above it – ‘super-premium’ spirits are becoming more influential, with the category in volume growth of 14% year-on-year, says Montgomery.

He adds: “With consumers willing to spend 24% more when they rate a drink’s quality as good versus those who don’t, super premium spirits give on-trade consumers yet another option to trade up to make a great on-trade experience.”

Cocktails are another way in which operators can premiumise their drinks offer and the good news is, the category’s growth has persisted unabated and will continue to do so in the future.

Montgomery says: “Cocktails are stocked in one in four on-trade outlets, with availability growing 37% v two years ago and with volume returns having grown 11% v last year.

“Cocktail consumers will continue to be key to success, as they visit the on-trade and spend more than non-cocktail consumers. Engaging this group with a suitable provision can bring revenue benefits to the average outlet.”

Cocktails are a major plank of business at New World Trading Company (NWTC), where head of bars Nick Whitby sees an interesting year ahead.

HOW THEY SEE IT AT DIAGEO

Diageo head of category and commercial insight Faith Holland says the global cocktail industry is leading the way in experimenting with new ingredients and technologies, playing with the senses and satisfying a growing consumer demand for fresh and premium tastes.
Moving into 2017, Diageo forecasts that the boundaries between restaurants and bars will blur and that spirits will present a huge growth opportunity when it comes to casual-eating occasions.

DIAGEO COCKTAIL TRENDS FOR 2017:

■ PROVOCATIVE – grabbing and maintaining the attention of patrons, creating environments and drinks to provoke a strong customer reaction.

■ NEW-GEN COCKTAIL BARS – aiming to be the local neighbourhood haunt that consumers can frequent on any occasion.

■ NEXT GENERATION MENU – innovative bartenders are unleashing their creativity on the menu to grab the attention and break habits, such as removing names and replacing them with a symbol or colour code.

■ EMOTIONAL COCKTAILS – using sight and smell to direct cocktail drinkers’ emotions and organising the menu in accordance with the emotional response that a cocktail elicits, alongside tapping into consumers’ emotions to make recommendations.

He added: “We saw a huge increase in warm mulled wine and spiced apple cider towards the end of this year, selling 10,500 of them, and this will continue into next year as more sites get involved.

“There has also been a rise in mature flavours in adult cordials such as lemongrass and rhubarb, which backs up the trends leading into consumers’ health focus.”

Whitby advises operators that the best way to find out what is moving and shaking in the category is by listening to staff. “If they are getting told or being asked for the same thing over and over again [that you don’t stock], there is something in demand you aren’t offering and need to tap into. Ensure you know what is happening on the front line and visit competitors to see what they are doing and what is working for them.”

Spoken bar in Exmouth has a huge gin offering, but owner George Nightingale predicts the next big trend will be whisky .

He says: “People are becoming a lot more open-minded towards different and unusual brands. However, we are getting more and more young men drinking gin & tonic and gin & bitter lemon – the demographics of who is drinking what are changing.”

Gin will continue to rise

Simon Stenning, executive director at MCA, sister publication to The Morning Advertiser, maintains gin will continue its rise as mainstream consumers latch onto the trend, but concludes this will provide the opportunity for other distilled spirits to emerge as trendsetters.

He also predicts the move towards healthier drinking will continue but insists the products need to have a ‘wow factor’ with operators providing a better, broader range of premium adult soft drinks to meet evolving demands for occasions when alcohol is not wanted.

“More adventurous spirits will concentrate on delivering experiences for consumers, but operators need to be well prepared and build focus on delivering a quick, efficient service as consumer expectations increase.

Beer trends from across the pond

According to fanatics from the Great American Beer Festival (GABF), there are six key craft beer styles serious operators should look out for in 2017:

1. IPAs
The most dominant style continues to be IPA which attracted the highest number of competition entries (312) at the GABF. More than 200 of those were Imperial IPAs, along with 169 American-style strong pale ales.

2. LAGERS AND PILSNERS
German-style Kölsch and altbiers, and American cream ales were the talk of the festival.

3. SOUR BEERS
Serious beer drinkers looking for unique tastes are pulled towards fruit-infused, barrel-aged and dry-hopped sour beers.

4. SPONTANEOUS BEERS
Exposed to natural yeast and bacteria in the air, spontaneous beers continue to flourish after packaging, creating quirky flavours.

5. COFFEE-FLAVOURED BEERS
A new coffee category was created at the GABF, which had more than 168 entries.

6. WOOD AND BARREL-AGED BEERS
More brewers are beginning to experiment with barrels that formally held Bourbon, Tequila, wines and other spirits.

He added: “The rise in importance of craft and artisan beers will continue, but there are limits to the number of smaller craft breweries that can effectively compete and differentiate themselves.”

Stenning predicts consumers’ purse strings will be tighter in 2017 and urges operators to think about costs. “Value is going to be increasingly important as inflation creeps up and the potential occurs for real disposable income to decrease, leaving consumers with less money in their pocket than now, so pricing of drinks is going to be critical.

“Any drinks range requires great value entry-level pricing, with comparable average/typical prices, and then higher premiumised products/experiences to encourage incremental spend.”

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