Article written by Antonia Tolich, Consultant at IRI.
Health continues to adopt a more holistic meaning in 2022, as consumers look to moderate their consumption across categories as well as change their purchasing habits to become more environmentally conscious.
Brands are tapping into this opportunity with sustainable, ‘better for you’ and ‘better for the planet’ offerings and increasing no and low alcohol (NOLO) new product development. Within NOLO, zero alcohol continues to grow penetration, reaching 14 per cent in 2021, but is no way close to full penetration.
Consumers are not only looking to moderate their consumption of alcohol, but also looking to moderate their impact on the environment. There is strong intent to buy eco friendly items across cohorts with nearly 55 per cent of shoppers looking to buy environmentally friendly products. A key focus in this moment is on packaging themes as a core standout cue, alongside organic and socially responsible product characteristics.
Brands that have adopted environmentally responsible processes continue to see strong results in liquor. Within beer, we have seen local independent craft continue to outperform total beer, seeing strong value growth of +16 per cent, outperforming the category (+1.9 per cent). Leading beer brand 4 Pines is leveraging strong sustainability credentials, including B Corp certification, shrinking water usage and investments in renewable energy, leading to strong results +6.5 per cent value growth vs YA.
Meanwhile in wine, organic wine continues to be a key value growth driver at eight per cent, seeing strong results from brands tapping into ‘better for you’ claims. For example, this includes Hero of Zero leveraging strong vegan friendly wine messaging, with full flavour without the addition of preservatives driving an incremental $3.5M for wine.
Within spirits and RTD, there have been several category standouts that have tapped into sustainability messaging to drive growth for the category. Manly Spirits Co. has been a strong performer now valued at $8.9M, with all botanicals for the range sustainably sourced from First Nation growers and local farmers around Australia. Part Time Rangers has seen success through its low-sugar RTD range, founded in New Zealand and recently launching in Australia. The brand is already valued at $4.9M despite the recent nature of its launch, with portions of the proceeds going towards animal conservation initiatives such as Sustainable Coastlines, Big Life Foundation and a handful of others.
Brands need to continue to adapt ranging to build NOLO strategies as the market continues to see phenomenal growth +72 per cent (dollar growth), nearly 26 times higher than total retail liquor propelling annual sales to $152M as shoppers continue to seek out variety and reduce their alcohol intake.
Nearly 15 per cent of Australian drinkers have either stopped buying alcoholic beverages or reduced consumption in the last six months. With increasing consumer preferences, there has been a sizeable increase in ranging in grocery and liquor, with expanded centre store presence with active products nearly doubling for the non-alcoholic category in grocery in the last year.
Moving forward, we expect to see a blurring of boundaries between categories and functional drinks, with brands like Corona launching its first non-alcoholic beer with Vitamin D. Brands will continue adapting to changing consumer preferences including with botanically brewed beers and also unconventional natural flavours and vitamin infused benefits. Wine has seen similar themes off the back of innovation from Fourth Wave Wines, with the Plus & Minus wine portfolio using naturally occurring antioxidant benefits. We’ll continue to see crossover into functional drinks across other non-alcoholic segments too, with brands like Blurred Vines also using ethically sourced plant-based functional ingredients with botanical extracts and fruits to create unique flavour and extend functional benefits.
Sources:
- IRI Shopper Panel Psychographics Surveys, 2021 n=5044
- IRI Market Edge, Liquor Weighted, MAT to 31/07/22
- IRI Market Edge, Liquor Weighted & Grocery Scan Combined,
- MAT 05/06/22
This article originally appeared in the October issue of National Liquor News.