The Spirits Industry

The Spirits Industry, globally, has seen a few significant changes over the last few
months. Corporate, Customers & Consumers have all re-written their scripts. At “Spirits
& Rituals”, we studied the areas that impacted the industry, discussed with opinion
leaders & even connected with consumers to understand what`s next for our favourite
Spirits !
E commerce & Technology – China remains by far the biggest online market for alcoholic
drinks, with a turnover of over three times the size of the next largest markets, France
and the US, as shown by the IWSR’s study of ten key ecommerce markets in the IWSR
Global Ecommerce Strategic Study.2020 will likely see brand owners continue to
integrate the online channel into their route to market strategies. Amazon’s launch of its
own-label Tovess gin in the latter half of 2019 signals the marketplace’s ambitions in the
premium spirits space, and brand owners will need to be conscious of the implications
this brings. E- commerce will be business critical and state governments will need to
allow large players who offer alcohol delivery as well. This will reduce the dependency
on retail purchase, encourage social distancing and will also ensure safe and
transparent delivery of alcoholic beverages directly to consumers. Markets like the US
have showcased how E-commerce went up by as much as 55% in just a three month
period.

Packaging Innovation – Within eco-packaging, innovation will come from drinks
producers exploring ways of reduced packaging, paper formats, recyclable materials, or
even forgoing packaging altogether. Premium packaging poses a key need for
innovation, as much of this packaging contains gold and metals that are non-recyclable.
Packaging trends will also be shaped by consumer demand for convenience, primarily
driven by millennials. Products such as canned wines have already gained popularity in
markets such as North America. However, this format is likely to gain bigger footholds in
markets around the world too, as quality concerns become increasingly quashed. Non-
glass packaging allows products to cater to a wider variety of drinking occasions, such
as the beach, outdoor events, sporting events and hiking. Further innovation from brand
producers could come in the shape of draft cocktails, bags and boxes, to name a few.
Direct to Consumer offerings – Just as cans offer convenience, so too do companies that
deliver alcohol in sixty minutes or less. Dirty Lemon, a direct to consumer line of
functional beverages, takes orders only via text messages. And with the emergence of
subscription boxes for coffee, beer, wine and spirits, as well as online liquor stores,
consumers are increasingly turning to the internet for their beverage needs. These
businesses are disrupting the traditional retail model while giving brands access to
consumers in a new way.

Sustainability – Environmental concerns around excess packaging and single-use plastic
are influencing consumers’ decision making. Beverage companies are responding to
these concerns and becoming more eco-friendly. Single-use plastic water bottles are an
ongoing concern, especially given the increased popularity of bottled water. Companies
are starting to change their packaging to more eco-friendly options, including aluminum
cans and paper boxes. Alcohol producers are also using alternative sources of energy to
run their distilleries, reducing waste from their plants and eliminating plastic packaging.
By reducing their environmental impact they can leverage their sustainability efforts as a
brand differentiator in advertising campaigns.

Growth of Low / No Alcohol – Tapping into the health & wellness trend, the low- and no-
alcohol category is likely to see some of the most innovation and evolution across the
whole industry, offering consumers more variety, better tasting and higher quality
products. The biggest challenge will come to wine producers, who will need to invest in
R&D to create an alcohol-alternative that appeals in terms of both quality and taste.
Other innovation within the health & wellness movement will come from an increasing
consumer demand for gluten-free, low and no sugar, low calorie and low carbohydrate
products; beverages that are light and fresh to drink will also likely see increased uptake,
as will products that offer functional wellness.
Rise of the RTD – The need for consistent cocktails and the convenience of enjoying a
cocktail will lead to tanning the cocktail. Pre – mixed cocktails in a very sophisticated and
eco friendly packaging will be preferred by consumers. The can will don a new look and
even bottles will be increasingly used. With more at home drinking, people will want to
experiment with new flavors and also show off their cocktail making skills.

A Trail of Transparency – Consumers are looking at complete transparency in their
purchases, from information on the labels to the freshness of the ingredients, the age of
the spirits and even factors including animal welfare and fair trade practices of the brand.
Over 70% of consumers have confirmed that they will not buy from brands that will not
be transparent in their product information. Consumers will also go more for spirits with a
story. They need to connect and relate to the stories, almost like a personality match.
Mainstream brands are also becoming open and accessible about their views on public
issues. Product design innovation and the communication also reflects on the “spirit” of
the brand and how true it is to its word. Sustainability is being taken seriously.