How to market moderation - Consumer Trends

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Reconciling two prevalent trends in the alcohol sector – moderation and premiumisation – represents one of the critical challenges facing alcohol marketers, writes Ben Cooper. Particularly as they seek to attract and retain young adult consumers.

Younger consumers are already keen on drinking less, but drinking better

Younger consumers are already keen on drinking less, but drinking better

Tapping into consumers' declining desire for alcohol - especially prevalent at this time of year - may sound like a rather counter-intuitive notion, but it is, in some ways, precisely the challenge that alcohol brands are facing, particularly in winning favour with the all-important Millennial consumer.

In the UK, the publication earlier this month of new Government alcohol consumption guidelines, warning that any level of drinking carries a heightened risk of cancer, underlines once again the huge influence health concerns exert on alcohol consumers and the market. It was no surprise, therefore, to see health factors feature prominently in the new just-drinks Emerging Drinks Industry Trends report. It rightly states that political pressure on alcohol companies will mean producers and brand owners will have to take "even more dramatic steps" to manage the industry in step with government public health objectives, with alcohol consumption clearly in the firing-line.

However, health concerns have an impact well beyond how companies act on pricing, promotions or advertising. Above all, health concerns are the key catalyst for the trend towards moderation, which, the report forecasts, will continue. As the report states: "Moderation is a growing trend amongst consumers, particularly younger drinkers entering the market for the first time."

As reported by just-drinks earlier this month, research commissioned by Heineken, looking at young adult beer drinkers across the US, UK and Netherlands, Brazil and Mexico, revealed that 75% of Millennials limit the amount of alcohol they drink "on the majority of their nights out".

Moderation per se is not a negative message for the alcohol sector to work with, and nothing in itself to be feared. Quietly – and, my goodness, they are quiet about it – alcohol marketers may concede that those drinking above average - if not harmful - levels of alcohol are important consumers, but the over-riding message the industry seeks to get across is that moderate consumption can – some health risks notwithstanding – be part of a healthy lifestyle. In any case, the purported health benefits of alcohol consumption is a controversial area for brands to become too closely involved with. This can be circumvented by emphasising the less-controversial point of moderate consumption. Indeed, the "drink less, but drink better" mantra has been a constant theme in the alcohol sector for decades.

However, for all the mounting concern over alcohol-related health problems, it has been known for some time that younger adults coming into the alcohol market are likely to drink less than their parents. Recent research from Nielsen bears this out: According to the market research firm, British Millennials only devote 3.5% of what they spend on consumer goods to alcoholic beverages, compared with 9.2% for the adult population at large. At the same time, they pay greater attention to their health and physical fitness, the research reveals, further influencing alcohol consumption.

The trend among Millennials would, therefore, appear to be "drink even less, but drink better". However, there is a further complication: As the Emerging Drinks Industry Trends report points out, consumers in general - and Millennials in particular - are becoming more capricious and fickle in their product choices and more demanding in terms of the cues and credentials they expect from higher-priced offerings. The report also highlights the importance of provenance and having a story to tell, as well as the influence the craft boom is having on the mainstream beer and spirits sectors.

In short, the post-recession premium consumer is a very different beast from those that fuelled the booms of the 1980s and 1990s, when the emphasis was on conspicuous consumption rather than discernment.

Premiumisation may have been a feature of the drinks sector for some time, but it was unquestionably an easier business in times gone by. The consumer – if not every company – appears to have moved on from the days when putting a drink in either a dressy or minimalist bottle would be enough. Given the increased emphasis on moderation, one particular favoured premiumisation device, the higher abv offering, appears particularly out of tune with younger generations of drinkers.

While the Emerging Drinks Industry Trends report states that premiumisation remains a key driver influencing all the main spirits categories, it adds that "to stand out in the future, brands will need to demonstrate far more depth to their story if they are to connect with an increasingly-educated consumer".

However, the report also suggests a number of the principal spirits companies are "massively under-indexing on premiumisation". In other words, the potential is there but, with the moderation trend and the more exacting requirements of young adult drinkers, companies will simply have to be more savvy to capitalise on it.

In the spirits sector, for instance, in addition to the importance of provenance and authenticity, most clearly seen in the influence of the craft boom, the report notes that sweeter styles, and, perhaps not surprisingly, lower alcohol offerings are likely to represent significant trade-up potential for younger adult consumers going forward.

Taking the latter point one considerable step further is the "non-alcoholic spirit". Seedlip, which claims to be the first non-alcoholic spirit, was launched in the UK in November, and is an example, the report states, of "how far the spirits category is being stretched".

Seedlip is described by its founder as "meeting a demand for more interesting, innovative, non-sugar based drinks for people who want to moderate their alcohol intake, but still want the experience of ordering a drink at the bar".

Whether Seedlip is followed by more non-alcoholic spirits remains to be seen, but the trend towards drinking less is a reality the alcohol sector will have to live with. Encouraging consumers to drink "drink less, but drink better" will, therefore, become ever more crucial, but notions of what constitutes "better" are clearly changing and becoming more nuanced.

Understanding what 'premium' means to Millennial drinkers could be one of the critical challenges alcohol companies must meet in order to prosper in a new world order.

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