Friday, April 7, is National Beer Day in the United States, and 2023 reveals some changing tastes.
The US Distilled Spirits Council issued this year Annual Economic Briefing, which contains a wealth of data on the state of the country’s distilled spirits industry. One of the more interesting data points was the fact that the market share enjoyed by distilled spirits (42.1%) surpassed that of beer (41.9%) for the first time.
Climbing to the top of the alcohol sales mountain has been a long ordeal for distilled spirits producers. In 2000, the distilled spirits market share was 28.7%. Bear’s lead, at 55.7%, must have looked indomitable. so what happened? Why did sales of spirits exceed sales of beer?
The shift from beer to spirits didn’t happen overnight. It was slow and incremental, suggesting that the 20+ year time period over which these changes occurred represented a generational shift in tastes and preferences.
Which generation was responsible for these transformations? Credited with being responsible for the craft beer revolution, millennials have also played a starring role in the growing popularity of spirits.
The first two decades of the twenty-first century can be described as the era of the millennium. Millennials are people born between 1981 and 1996.
In 2002, they were the first millennials to reach the age of 21, that magical milestone where they can legally purchase alcohol. More recently, these first millennials are entering their 40s, while the youngest members of the group have reached their mid-20s. Today, there are an estimated 79 million millennials.
Fortunately, there has been a plethora of market research that provides insights into the values and tastes of millennials. When it comes to food and drink, millennials value convenience, variety, freshness, and health. They also value quality over quantity. So how do these preferences influence alcohol purchasing decisions?
As with craft beer, spirits offer consumers a wide variety. When combined with other spirits and/or with other ingredients such as bitters and fruit juices, the consumer has an amazing array of choices. Take ready-to-drink cocktails (RTDs), for example. In 2021, Drizly, North America’s largest online alcohol retailer, offered customers more than 450 brands of RTDs, up 170% from 2019.
While the most creative among us may take satisfaction from mixing our own cocktails at home, the incredible growth of RTDs provides the ultimate in relief. No need to mix ingredients – just open the can and it’s ready to drink. Millennials seem to have embraced them. In 2022, sales of RTDs will grow by 35.8%. Between 2017 and 2022, morale enjoyed its fastest growth in decades. RTDs have been the primary driver of this growth.
However, it’s more than just convenience and versatility that appeals to millennial drinkers. Once a reputation for being overly sweet and made with cheap ingredients, the makers of RTD have stepped up their game in recent years, using higher-quality spirits and other ingredients that are often organic and gluten-free. In other words, they have undergone a process known as premiumization. On top of that, millennials, more than any other demographic, are buying these premium quality devices. According to Drizly, 62% of RTD buyers are millennials.
While beer is traditionally a male beverage, RTDs have a broader appeal. Sixty percent of Drizly RTD clients are female. Attracting both males and females undoubtedly gives access to beer an advantage over beer.
In addition to RTDs, millennials are also driving sales of tequila/mescal and American whiskey, which are the second and third fastest growing segments in 2022, respectively. Franchise also appears in both segments, as consumers trade in higher-priced products, some of which are made by more than 2,000 craft distillers in the United States.
How can millennials afford to trade up to higher morale prices? Quite simply, they trade off quality for quantity. They consume less alcohol, but the quality of their consumption is higher. The same trade-offs are being made by millennials choosing more expensive craft over cheaper, mass-produced beer.
While spirits have slowly eroded beer market share, it should be noted that the craft beer sector is still doing quite well. In 2021, while overall beer sales grew just 1%, craft beer sales increased 7.9%. For many millennials, it’s not about the spirits or the beer. Many consume both, but those who consume RTDs and premium spirits also drink craft beer.
the quote: Millennials Drive Spirits Sales to Overtake Beer for the First Time (2023, April 10) Retrieved April 10, 2023 from https://phys.org/news/2023-04-millennials-sales-distilled-spirits-surpass.html
This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no part may be reproduced without written permission. The content is provided for informational purposes only.