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A Six Pack of Beverage Marketing Trends

By Ken McVeagh & Josh Coon

To quote one the most important intellectuals of our generation,

With any great moment of satire, the hidden truth is what makes it so insightful. The brewing and beverage industries have been in a period of rapid change for over a decade and have not shown any signs of slowing. Systemic change has caused problems for some, while creating opportunities for others.

Whether it’s new styles of beer that may or may not become the next big thing, startup breweries sprouting up in every community across the country, or the proliferation of other adult-beverage options, it’s all a lot to try to stay ahead of.

Predicting market trends is often a difficult task for anyone — and even more so in a market evolving as fast as the current beverage market. But we’ve had a couple beers already, so we’ll go ahead and try.

1. What business are you in, really?
It’s a strange question to ask a brewer, but it’s becoming increasingly relevant for both small and big brands around the country. As neighborhood breweries crop up, all making the next trendy beer, there is an impact on how long a brewery can keep a consumer’s attention. In 2010, there were 1,500 craft breweries in America. Now there are over 7,000, and the number grows weekly.

This has led some resourceful brewers to expand into other beverages — some fermented like kombucha, which has a similar brewing process to beer, or other alcoholic-beverage options like hard seltzer, which has been growing with abandon across the alcohol industry.

Jim Koch, co-founder and chairman of Boston Beer Company (producer of Sam Adams), recently said on CNBC that “Hard seltzer is the most disruptive thing to happen to the brewing industry since light beer.” The company’s brand TRULY is growing faster than its traditional beer portfolio.

Brewers big and small are looking to jump in and diversify their product offerings to get new thirsty consumers at the shelf or bring them through their doors. Brands like PBR have launched hard coffee, while independent craft brewers like Boston-based Night Shift are experimenting with hard seltzer.

A question to think about as you look across your product offerings is, “What else could you make in your existing setup that would not hurt your brand and may remove barriers to new consumers?”

2. It’s in what now?
More than ever consumers are driven by experiences, they want to be out in the world living their best lives and not be constrained. The form factor of the products they buy should enhance not hinder their experiences. Whether it’s sneaking a can of Rose into a movie or a tall boy of great craft beer at a ball game people’s desire for and acceptance of new packaging is accelerating.

The aluminum can is at the core of the ready-to-drink packaging boom. Sure, beer has been canned since the 30s, but craft beer was once driven by glass bottles with aluminum cans more closely associated with value brands. The rise of micro-breweries and innovations in canning coupled with the convenience for consumers have rapidly changed the consumers acceptance of cans which are now recognized as the premium packaging of choice for craft beer. Label designs from breweries like Collective Arts have driven the perception of quality with beautiful designs filled with interesting custom art generated by an open call to artist via their social and digital channels. For smaller breweries canning lines are more affordable than bottling lines and with mobile canning operations micro-breweries can have the canning line come to them making distribution even more accessible.

Cans are a hit with the wine crowd, too. Brands like Cupcake, Underwood and House Wine are amongst the many making it easier to enjoy a chardonnay at the beach or some merlot at a concert. Top brands like Barefoot and the more niche Bandit have released their wines in easily transportable tetra packs, resized for personal consumption and promoted as eco-friendly and ultra-convenient — addressing two top concerns in this environmentally conscious now-culture. Bandit in particular is leaning into the sustainability and portability of its packaging, positioning itself as the go-to wine for lovers of the great outdoors.

Hard liquors are getting in on the packaging resurgence too, with more traditional go-to cocktails appearing in cans at the grocery store. Whether you like a vodka soda, a rum and coke or even a Moscow mule, big companies like Anheuser-Busch InBev and MillerCoors are off ering quick ways to consume without visiting the bar or mixing yourself.

One very recent case of re-packaging comes from Glenlivet. The scotch distillery announced a limited run “capsule collection” — pun intended, of course — with what appears to be a goal of eliminating every obstacle between the consumer and the consumption of their whiskey, including a glass. These shots of whiskey are contained within a transparent edible capsule designed to be “simply swallowed”. This shift in experience may be taking it too far away from what the core consumers expect and want by completely changing the storied and well-loved tradition of sipping a fine scotch on a relaxing evening. Time will tell if this proves to be more than a marketing stunt and takes root with drinkers.

The move away from traditional packaging allows consumers to engage with beverage brands in new ways and on their terms. From a day outdoors with family, to a day in the stadium with friends brands are discovering that more packaging options are providing more opportunities to connect with their consumers.

Ask yourself how are you thinking about your packaging? Is it for your convenience or your consumers because the brands that are putting their experiences first are the ones standing out.

3. The Cannabis is coming! The Cannabis is coming!
Alcohol has enjoyed a long unchallenged reign as the undisputed legal recreational drug. Since the origins of man it has been a staple in every human civilization from around the globe. In the US it has been the only legal recreational drug on the market for consumers for generations but that is all changing with the legalization and social acceptance of cannabis. This promises to be the largest disruption since prohibition, so buckle up and prepare your brand for the ride.

This disruption has been a long-time coming. Cannabis use can be dated back to 500 BCE. It was once federally mandated to be grown by farmers in the United States. That changed in the 1930s when it became illegal at the federal level. Many states began decriminalizing cannabis during the 70s, but it’s recently gone from long shot legislation to something constituents are demanding from politicians with more states decriminalizing every year. At the writing of this article 11 states had legalized recreational use with over 30 states having legalization of some form. It’s predicted that the cannabis legalization boom will continue at this pace with the market expected to surpass $34 billion in revenue in legal sales by the end of 2025.

And thanks to the relatively slow burn of legalization, some alcoholic beverage companies have seen the disruption coming and they’re betting that people would take to sipping their weed rather than smoking it. They’re not wrong. Millennials consume less alcohol than the Baby Boomers or any generation before them. Some studies reveal that this is a trend that’s here to stay as Millennials are turning to marijuana to wind down at the end of the day instead of a glass of wine or a couple of beers. Not to say there are no downsides, but the avoidance of extra calories and bad hangovers are a solid selling point.

Meeting these changing times head-on appears to be a common strategy for limiting the amount of disruption caused by the cannabis boom. Alcohol brands are taking initial steps to incorporating weed into their products — or creating new products infused with CBD or THC. Beers with hemp extract are already on shelves in certain states, and Constellation Brands has invested $200 million into a Canadian company to produce cannabis-infused beverages. Commenting on this investment, the beverage company’s CEO, Bill Newlands told CNBC, “We’ve got a very strong team in beer and we got a very strong team in wine. We think we’re pretty good position to win on all three of those fronts.” Many more are following suit, with MolsonCoors teaming up with another Canadian company, HEXO to produce non-alcoholic cannabis-infused beverages and others planning on the sidelines until more federal regulations have been established.

We don’t always see disruptors coming as brands like Blockbuster can attest to. As legalization becomes more prevalent and those regulations are developed more brands will move into this rapidly growing adjacent market to take advantage of what could be considered a threat to the entire industry.

Ask yourself, how can I future proof my brand? Are there any emerging adjacent markets or new products that are perceived threats to your brand or category that could become a strategic advantage? Perhaps there’s a way to nip it in the bud with similar treatment and incorporate it into your offering or product set.

4. Sober Curious
There is a generational shift happening that has potential ramifications for the adult beverage industry.

Younger consumers are drinking less. This isn’t news to many, there has been lot’s of articles popping up about this shift in behavior. Younger consumers are a bit more health conscious and they hate the effects of drinking. The hangover, weight gain, the cost and a new legal competitor in Cannabis are all changing their behavior leading to a generation that has become Sober Curious. These things are starting to crystalize into societal moments like Sober October and Dryuary.

So how can brewers respond? Some have decided to meet them half way with a variety of Low Cal and Low Alcohol beers that are still big on flavor but lower in everything else. Dog Fish Head Craft Brewers have created the top selling Sea Quench and the Slighty Mighty while Alagash has reintroduced the Table Beer an older style that is very sessioable due to its lower ABV.

Others have gone completely alcohol free by reinventing the Non-Alcoholic beer from a syrupy, sweet beer like substance to a delicious on style brew that can hold its own against its boozy cousins. Craft breweries like MIlkeller, Lagunitas and others have jumped in while new breweries like Athletic Brewing have started up specializing in NA brews.

John Walker the founder of Athletic Brewing Company told Fortune Magazine recently. “It’s shockingly young, particularly millennials, who are thinking of drinking less. It’s parents who are out with their kids. It’s people who want to have fun and be social and not pay for it the next day with a hangover.”

There have also been some new companies competing with bottled NA craft cocktails. Curious Elixirs from Brooklyn promises to leave consumers “Shaken not Slurred” by their organic bottled elixirs.

Alcohol is not going anywhere but there is a future where we see less consumers imbibing than the past. Ask yourself, do you have any products in your portfolio that are ready to fill the glasses of the Sober Curious? If not it might be time to get started.

5. Goliath vs David
Time is a wheel and what’s old is new again. It’s true for lifestyle culture, including brew culture. Before prohibition small neighborhood breweries were the norm. Beer was a hyperlocal experience that varied widely across a city, county and state to state.

After prohibition brewing became a big commercial endeavor that was focused on scale and mass appeal vs style and craft. Beer was purposely designed to be as palatable to as many people as it could be. Avoiding hops, bold flavors and expensive ingredients. That was the standard quo for decades as a few big brands dominated store shelves and tap handles.

Over the last twenty years that has all changed and the local brewery has come charging back alongside the small wineries, the growing micro-distillery movement and the drive toward local, artisanal experiences.

Consumers are flocking to all the new micro and nano options with over 66% of drinkers preferring to buy local. Indie Breweries are marketing to this movement with the Independent Craft Beer symbol appearing on cans and bottles that verifies the brewery as independently owned. All this is leading to a challenge for the larger brands. With over 7000 competitors in the market today and the small brewery offering a new place to meet up with friends it has become more challenging than ever to stay differentiated.

It’s easy to panic as a big brand and rush to chase the latest trend, consolidate or disrupt small competitors. There are examples of larger craft breweries that continue to be true to their ethos and stay customer focused. Bells Brewery from Kalamazoo continues to grew 3% last year in a declining market with innovative new series of beers like the Walt Whitman series or a Double version of their beloved Two Hearted IPA. They are focused on their drinkers, delivering what they want and growing in a methodical way. Other brands like Sierra Nevada and Founders continue to buck the trend to keep growing by keeping their customers in mind and not sacrificing the quality of their products.

With so many new competitors it’s more important ever to stay focused on staying true to your brand. Ask yourself are you being customer focused and remaining dedicated to meeting their needs?

6. Ya gotta have friends
Beer has become a part of culinary culture in the same way that wine has been for decades. It’s no longer relegated to pizza and wings or backyard barbeques. There are so many beers out there that you could find one specifically formulated to pair with anything you can think of including other brands.

Brand partnerships in general are nothing new for other consumer products but this recent surge of brands partnering with breweries to produce their own beer is something to take note of. Last year, Droga5 helped Ihop partner with Keegan Ales to release its own limited-edition craft brew Pumpkin Pancake Stout, just in time for the flood of pumpkin spice that washes over everything from coffee to cereal and of course beer.

The partnerships don’t end with restaurants. Coffee has long been a favored ingredient in beers with Breakfast Stouts and Coffee infused porters seasonal favorties. But now some major coffee roasters are dabbling in creating their own alcoholic beverages. From Dunkin partnering with fellow Boston company Harpoon to release Coffee Porters, IPAs and Pale Ales to the more high-end roaster, La Columbe premiering a line of ready-to-drink spiked coffee in conjunction with MIllerCoors there are many examples of coffee brands finding partners in the beer world to reach a new potential audience.

Cross-pollination of flavor has also been a trend back and forth between liquor and beer brands with some aging in each other’s barrels. New Belgium’s Oakspire, a limited-edition collaboration with Knob Creek, which is aged bourbon barrels or Ballast Point and Distillery High West have teamed to create a barrel-aged version of Ballast Point’s award-winning Imperial Porter. On the other side Jameson has launched a series of whiskey called Cask Mates aging in IPA and Stout barrels with many other distilleries experimenting with brewery partners to capture new flavors and hopefully new audiences.

It’s not just food and alcohol brands brewing up partnerships. Harley Davidson knows that when it’s fans aren’t rolling down the highway on their bikes, they’re sitting back with a nice cold beer. That’s why, for its 115th anniversary, the motorcycle manufacturer teamed up with three breweries in it’s hometown (and beer haven) Milwaukee, WI. The result was a limited-edition commemorative lager made with ingredients sourced from the local area.

Perhaps one of the most unexpected partnerships comes in the form of Lululemon and Stanley Park Brewing. Over the past couple of years, the athleisure company known for healthy lifestyle tapped fellow Canadian Stanley Park Brewing to produce light, a lemon-infused larger and blonde ale. These limited runs were released around literal runs with the beers bringing life to the celebrations after Lululemon’s annual SeaWheeze half marathon.

These creative collaborations are broadening the reach of brands into adjacent markets based on lifestyle and interests rather than just a consumer’s propensity for enjoying a drink.

Ask yourself if there are creative partnerships you could be exploring inside your immediate industry or without? These partnerships can elevate a brand, capture the imagination of consumers and most importantly get your product in new hands to hopefully grow your audience.

This is only a taste of the many changes happening in the beverage industry right now. There is so much evolution, innovation and disruption happening across the market it can seem overwhelming. But now is the time to grow with the changes and make them work for you, after all making is why we got into this in the first place.

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