The radical changes affecting the drinks industryWednesday, 22 June 2022
Our report, titled ‘Sobering Up’, underlines the extent that the industry is being disrupted by major market forces; namely the changing of traditional drinking habits, sky-rocketing global inflation, and a growing societal and government focus on brands’ ESG credentials. This is resulting in consumption of traditional alcohol falling, or stagnating in Europe and the U.S. OC&C’s analysis of NHS Health Survey Data showed that almost 30% of 16-24 year olds are abstaining from alcohol, up from 19% in 2011, while average annual beer consumption in the US, UK and Western Europe fell by 1% for 15 years up until 2021, from 76 to 66 litres per person.
As a result, many of the industry’s traditional powerhouses are risking being left behind by not accommodating these significant behavioural and macroeconomic shifts, and if they aren’t already, losing out to emerging products and brands.
The report specifically identifies 5 radical changes affecting the drinks industry:
- Drinks innovation is failing to recruit younger consumers
- Inflation is threatening margins
- Reaching consumers has become complex
- Societies and governments are getting serious about ESG
- The ‘Beyond Drink’ market is getting crowded
The above forces will impact the entire beer and spirits industry and the old way of doing business won’t cut it anymore. While each company’s unique characteristics will determine its best response, here are four bold tactics to consider while establishing yours.
- Become a social champion
- Be honest with your brand portfolio
- Revamp your commercial strategy
- Act like a platform
If you would like to discuss any of the findings covered in the report or are looking for more information, we’d be delighted to hear from you.
Dan Zubaida, Associate Partner