What does 2016 have in store for the alcohol industry?

What does 2016 have in store for the alcohol industry?

Here, Spiros Malandrakis, alcoholic drinks analyst at Euromonitor International, shares his forecasts of the trends that will shape the alcohol industry in the year ahead.

  • Hacking Alcohol; A Cocktail of Disruption

Disruptive or 'accommodative' technologies will reshape product offerings, challenge drinking rituals, accelerate and pedestrianise or add layers of complexity to brewing and maturation techniques, revolutionise promotional campaigns, expand distribution and accessibility options and reassess reviewing methods in 2016. Niche, exploratory experimentation will cross into the mainstream.

Apps embracing increasing levels of personalisation and crowd-funded or ever-more sophisticated algorithmic recommendations, oak-infusion contraptions, customisable, automated home-brewing appliances structured around social network features, virtual reality-based, video game-focused and social media-activated advertising and promotional campaigns, or even direct-to-consumer deliveries via drones will provide technologically-intoxicating opportunities.

The ever-elusive Millennial demographic is, after all, firmly in the industry's cross hairs.

  • Generational shifts: From millions of Boomers to booming Millenials

As the inebriated cohorts of Bay Boomers are asking for their bar bill, and Generation X is nursing its final round in the corner, Generation Y will elbow its way to the front of the bar.

They are deal-seekers, brand promiscuous, focused on pre-store, on-line content and demand relevant and engaging stories. They will seek immersive experiences, question established definitional taboos and category fault lines, opt for resonant narratives and bespoke offerings while battling with ever-shorter attention spans.

While they do share a degree of common attributes, they are by no means uniform. Stratification initiatives will hone the focus on older or younger Millennials, at the same time that drinks brands will increasingly turn into content-providers in order to harness rapidly-evolving trends and secure emotive - if fleeting - following. Blurbs will replace self-indulgent, long winded creatives. 

  • Health & wellness - In moderation

From the revision of health guidelines to the introduction of punitive taxation and, from advertising restrictions to the rise of abstinence as a lifestyle choice, anti-alcohol rhetoric will grow even more loud and inflammatory. Lower-abv and non-alcoholic product lines and extensions will form the industry's first line of defence, but calorie-labelling and nutritional information initiatives will deflect the neo-prohibitionary chorus too - at least, for the short term

Remembering that the life-cycle of alcoholic products positioned purely within the 'health and wellness' trend has historically tended to be shorter than a Millenial's attention span, implementation and positioning will be key; A positive approach, underscoring added benefits and attributes, instead of a patronising spin attempting to reductively-mimic alcoholic varietals, is essential. Occasions, and a respectful acknowledgement of the industry's ultimately-hedonistic and indulgence-orientated nature, will deflect the danger of a backlash brought on by health fatigue.

  • Cannabis rising; Symbiotic, competitive or a controversial hybrid?

With the recreational and medicinal use of marijuana being decriminalised in a rising number of US states and Canada, episodic- or regular-consumption will rise or, at the very least, enter the mass market as the stigma subsides.

The (multi) billion dollar question(s)?  Is there a direct or inverse correlation between cannabinoids and alcohol? How will the tiers of distribution - and the sales channels - involved be optimised? What are the legislative directives that the alcohol industry will inevitably provide to a cannabis industry still taking its first tentative baby steps? The 'substitutions versus complementary use' argument will become a key area of focus for research.

In the meantime, hybrids and cross pollination initiatives ranging from cannabis flavourings to infusions or fortification experiments will open the floodgates for new avenues of innovation - and for legal challenges - to flourish. 

  • Macroeconomic hangovers and debunking the linear-growth mantra

As Cognac has hit the Chinese wall of austerity in the last four years, as major export-driven categories were amongst the first casualties of the Ukrainian conflict engulfing Eastern Europe, and inflationary pressures or currency volatility derailed the seemingly-impervious growth narrative across Latin American as well as commodity-producing African markets, a cautionary tale emerges: Emerging market growth is neither infinite nor is it linear.

Regional diversification is imperative as new 'black swan' events are already hatching on the horizon.

  • Craft fatigue

Peak craft is now upon us. While the trend itself still holds huge momentum, and is finally reaching escape velocity, the much-disputed, -debated and over-used term will increasingly become ever more dubious.

Minimal intervention production techniques, natural and artisanal credentials, genuine provenance characteristics, and localisation and single-estate offerings will provide much-needed clarity, at the same time as opportunistic lawsuits against 'crafty' offerings will underscore definitional shortcomings.

From micro-breweries to boutique distillers, and from off-trade outlets to cocktail parlours, a backlash against pretentious and superfluous positioning - and a shift from moustachioed mixology to a sophisticated, yet more modest and grounded approach to drinking - will hit western trend-setting metropolitan areas. As the plethora of speakeasies fade away, new forms of approachable and improved neighbourhood dives will steal the limelight.