2016 was a surprising year for many reasons and subsequently 2017 will be the year where we see what those big political decisions actually start to mean
Neil Anderson Kingsland Drinks
For those of us in the drinks industry we are presented with some challenges, but overall we see more positives for the year ahead.
The big thing we can’t ignore is obviously Brexit, and year ahead is inevitably going to be one of uncertainty from an economic point of view as the negotiations start in earnest. With instability in inflation and interest rates, it is safe to say that unpredictability will be a theme of the year, so likely to see very slight economic growth.
Aside from politics, there are population changes that will impact us. As an industry we are highly affected by nuances in behaviour and lifestyle trends. This is particularly evident in the over 55’s who, as the largest and fastest growing consumer cohort, have considerable power. At the other end of the age range the younger millennial consumers are drinking less alcohol, perhaps, due to more emphasis being placed on a balanced diet and healthier lifestyle.
Both of these groups still enjoy drinking, we know this from our WinePRO research and the category data, but the reasons why they will choose one drink over another are less predictable than they were and can range from the look of the label, how the label and story engages with them, to whether the marketing campaign actually connects on an emotional or physical level. We know that the consumer is now looking at lower alcohol content, lower calorie levels and altogether ‘lighter’ drinks to moderate their alcohol intake. Drinks of a lower proof such as fusion lines like our Mr Gladstone's Curious Emporium range are going to be more prevalent than ever. In fact a spike this year in fruit fusion wines and confectionery-inspired drinks, suggests that the sweeter taste palettes are not merely a flash in the pan, but are here to stay. We can expect to see more innovative surprises in fusion in 2017.
The digital impact
The impact of the digital age is also continuing to take effect on the drinks trade, with more and more consumers purchasing wine via digital devices (mobile/websites). Even a morphing of store and website (click & collect which is fast growing). When you have social, political and economic uncertainty, consumers will usually stick with products that they have tried and/or they are increasingly choosing propositions that emotionally connect with them. This is still a big opportunity for the drinks industry; looking at what we can learn from other product categories and really focusing on how our wonderful products present themselves and resonate with consumers.
We also need to recognise that digital media is bigger than TV. Social conversations start with digital devices so using social media to bring our products and propositions to life is going to be critical for success.
We can also foresee a distinct blurring of category boundaries, with more fusion-based drinks and blends between different classic categories. 20 years ago a drinker’s repertoire was smaller and therefore easier to understand, but the innovation in that time has increased not only choice, but also made people more adventurous. WinePRO addresses this by seeking to understand more about the role of the wine and the drinking occasion and mapping those against the demographic profiles. People used to think very conventionally about wine, beer, cider and spirits as being very separate, whereas today’s consumer will choose different products due to their needs on any particular occasion. This is complicated further by the fusion of traditional drink categories in ready to drink formats.
Off-trade ‘convenience’ growth
We can expect to see a continuation of growth of “convenience formats” in the off-trade. Retailers are getting smarter at understanding shopper “convenience” missions and I expect to see more occasion based marketing/promo activity in 2017.
Craft beer or fine fizz
Wine including Prosecco will remain the largest drinks category in 2017, although the latter has begun to slow in its rapidly increasing growth. This slowing down is caused in part by the entry of more sparkling wines rather than any move away from bubbles. Consumers love fizz. Innovation in carbonation will be a major area of growth for 2017.
Beer may see further challenges in the coming year, but the rise of craft beers and ale will aid this struggle. Similarly, the craft element of the spirits category will continue to thrive in 2017.
Home vs going out
It is reasonable to expect also that on trade will continue to grow – consumers still hold the experience of going out to eat and drink in high importance, even through turbulent times. We know that the segment we call ‘Generation Treaters’ make up 38% of the on-trade spend, so there’s huge scope for broadening the wine offer here. The standards in on-trades have increased significantly in the last year and will continue to do so.
Neil Anderson is the Marketing Director at Kingsland Drinks Ltd one of the UK’s largest importers, bottlers, distributors and makers of wine.
23 January 2017
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