Are you a drinks retailer? Here’s who you are selling to, what and where they want to buy
We’re back analysing the future of retail. Consumers are demanding instant availability of goods, whether it’s meals, groceries or…drinks. Retailers still don’t get what is changing in the beverages market. What is driving the change and how to prepare for it?
Fasten your drinks: the beverage market is trembling
“Sugary sodas are under fire. (Orange) juice sales are slipping. In other words, it’s a dramatic time to be in the world of beverages.”
Yes, beverages is a significantly changing market, traditionally split in two key segments: non-alcoholic and alcoholic.
- Carbonated soft drinks (e.g. Cola) still dominate UK non-alcohol segment, with +50% of total consumption. Yes, people still drink more Coke than water “because they contain […] sugar and caffeine. [..] Consumption of excess sugar releases […] dopamine, which induces pleasure in the brain”. Rise in obesity and related health issues led to massive “sugar demonisation” campaigns, which produced the “sugar free” and “low calories” drinks generation. Today, these account for +48% of all soft drinks of an industry worth more than £15bn.
Millennials, known to be extremely health conscious, product aware and individualist, are moving away from sugary drinks. “Healthy beverages will take center stage, especially drinks that emphasise positive health benefits, instead of cutting calories, sugar, or sodium”.
- Today, every millennial is also of legal drinking age. Cheers to that! Alcohol producers and retailers “have a new and powerful customer that they must get to know”, as they have greatest influence on a industry worth over £30bn. Not only these guys are health conscious also when it comes to booze, but they also shop it differently.
“The way we purchase alcohol has changed dramatically. Pubs have declined as more and more folks drink at home rather than go out. […]. We have also seen smaller wholesalers, retailers and distilleries making the move online, and in the last few years we have witnessed more and more innovative online beverage start-ups flooding the market.”
Yes, we dive deeper in each segment. Scroll down a bit.
Soft drinks: sugar out, organic in
Health consciousness is posing a great challenge to secular soft drinks brands and their flagship products.
For example, Coca Cola had to change their relationship with sugar, reworking recipes, formats and acquiring brands to reconquer customers attention. They were better off developing their Minute Maid juices because marketing gimmicks like Coca Cola Life proved ineffective and confusing.
When it comes to drinks, people seek natural, hand-crafted products, which origins are easy to understand and which packaging allow convenient consumption.
- And no…we’re not referring to smoothies; smoothies (i.e. Innocent, a Coca Cola Company) are slowly going down, because they still carry loads of sugar.
- On the other hand, organic juices (cold pressed, high pressured pressed) have been the best response “in an anti-sugar environment”. Unique blends of fruits and vegetables allow for complete customisation and variety: there is one for everyone, for every occasion. Bold flavours with natural nutrients prompt concentration or energy, depending on the situation. A convenient format fits millennials’ need for portability and their “clock-less eating”, allowing more consumption. This new versatile drink has the potential to go far beyond “orange juice at breakfast”, joining consumers from the workplace to the gym.
The market saw the proliferation of many startups producers in the UK, who are growing the category and pushing consumption by making their products accessible online, by stocking gyms and supermarkets, or offering subscription offers, or being featured on online platforms. Raw Press, Shot, Portobello Juice, Plenish, CPRESS Juice are just examples of small businesses that are shaping the future of soft drinks, developing products people want and marketing them through channels people use.
Booze: millennials are thirsty for “craft deals”
“There is one glaring exception to the […] outbreak of health consciousness. Millennials love their booze”.
“Much like their desires to purchase organic and healthy, [they] are interested in trying new things and experimenting, and this appetite factors into the alcoholic beverages they choose.” These guys are early adopters, which makes them fairly adventurous, whilst still keeping an eye on value. Even if they are “deal seekers”, they’re willing to pay a premium for great quality and taste.
So, if you are a millennial in a craft beer shop with 100+ great bottles, it’s a great time to be alive. How can you make sure you find the best deal among such a crowded market of producers and retailers? You search online!
“[Retailers] that take advantage of technology to innovate and provide a faster and more efficient service to their customers will be the ones that survive”.
Retailers and re-sellers need to provide an online shopping service “with easy ways to discover and navigate the drinks […], which allows a blending of the specialised and the mainstream. You can pick up your day-to-day favourites, while also browsing brands you may not have come across before”. David Elghanayan, co-founder of UK online booze reseller 31 Dover, “is clear where he stands on the delivery debate — next day is the “minimum a national company should be providing in the online world we’re now living in”.
To recap, two main things drinks retailers should note down:
- People have a grounded health-conscious culture when it comes to drinks: whether it’s a soft drink or a beer, it better be healthy or craft. Keep few space in the shelves for classic Cokes, but make sure you invest in stocking a good variety of organic juices, wines and craft beers.
- Millennials are not only asking for better quality drinks, but they are asking them to be accessible online. As the first digital native generation, they seek the convenience only online can give them! A fast delivery service will be essential for retailers to be different from others.
If you got “tipsy” reading this post, hold tight. Next time, we’ll talk about a huge one: fashion.
Matteo, Marketing Executive
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