After a lively year for our industry, Stuart Whitwell from Intangible Business takes a look at what the next 12 months could have in store for the beer and spirits categories.

It’s fair to say that 2013 has been a big year for the major alcoholic drinks brand-owners. With the likes of Diageo and Pernod Ricard announcing their intentions this year to invest heavily in their Scotch whisky production capacity and Anheuser-Busch InBev and SABMiller regularly being linked with a mega-merger, the coming few years also look set to be lively.

Competition in the alcohol industry remains fierce, with many brands having to develop strategies to appeal to the next generation, thereby keeping themselves relevant to changes in trends and fashion.

And yet, as Intangible Business’ 'Power 100' brand report, released earlier this year, indicates, there is rarely much movement among the top ten brands worldwide; Johnnie Walker, Absolut, Bacardi, Jim Beam and Jack Daniels always place highly in the annual list. However, this competitive market is creating a landscape that is ripe for innovation further down the chain. We can expect, then, to see even more interesting and original drinks, flavours and branding concepts in 2014.

Movers and Shakers

The following sectors in particular are expected to make waves in the next year:

• Irish whiskey - This category is growing fast globally, driven by a 460% sales increase in the US since 2002, according to the Distilled Spirits Council of the United States. With drinks giants Pernod Ricard, Beam Inc and Diageo all making significant investments in the industry, we shall see more movement in this small but lucrative category in 2014.
• Bourbon - Innovation has shifted this category's appeal away from long-standing loyal customers to introduce new drinkers. With new flavours, brands and styles, Bourbon has taken on a whole new meaning to consumers, with many new expressions attracting younger drinkers and female consumers.
• Rum - The emerging markets are developing a taste for rum, a fact that has seen the category enjoy strong, steady growth of late. Smaller craft players have enjoyed higher growth, thanks to their use of innovation. Also, spiced rum has grown in popularity, bolstering the category.
• Beer - Again, innovation has played a major role in this market in recent years, especially among craft ales and beers. Today, in the UK alone, there are estimated to be over 1,000 microbreweries. And, globally – especially in the US - craft beer has moved from being a niche segment to being seen as a broader, powerful movement.

Changes in branding

As the drinks market becomes increasingly more innovative, it follows that branding and market positioning will also evolve to carve a niche or capitalise on new audiences.

• Innovative branding - In the UK's craft beer category, Brewdog stands out as an innovator: With its ‘punky’ branding and overall image as an independent, rebellious business, it is also using its website as a platform to raise finance. By inviting the public to become shareholders (or “equity punks”), Brewdog is further underlining its ethos as “the craft beer for the people”. It won’t be too surprising, then, if we see a move away from ‘traditional’ branding and see more businesses, especially the smaller, more artisan drinks brands, take a leaf out of Brewdog’s book and leverage a left-field brand to speak directly to consumers and even to raise finance.
• Targeting the female market - More generally, the female market is also a large area of focus for drinks brands across spirits, wines and beers. Again in the UK, consumer group the Campaign for Real Ale reported in August that it has seen an increase of 20,000 female members in the last decade. In spirits, flavour innovations such as honey-flavoured whisky are designed to not only widen a brand’s portfolio, but also to make a traditionally masculine drink appeal to a more feminine market.
• Leveraging the brand elsewhere - Drinks brands have long used their branding to sell merchandise, for example Jack Daniels clothing or the vintage Guinness posters. An inventive example of this came recently from Grey Goose, which launched a pop-up bakery in London that uses the same wheat that also goes into the vodka. Tapping into the pop-up shop phenomenon in the capital, as well as highlighting where the vodka comes from helps to get some key brand messages across to a younger audience. We expect to see more initiatives like this in 2014 as drinks brands increasingly have to think outside the box to attract the internet- and media-savvy, under-30 audience.

Stuart Whitwell is joint managing director at brand valuation consultancy Intangible Business.