CHAPTER 1 EXECUTIVE SUMMARY 3
The hot topic 3
The future decoded 3
Action points 4
CHAPTER 2 THE FUTURE DECODED 8
Introduction 8
TREND: Alcohol consumption is flat or decreasing in most Western markets 8
Alcohol volumes are languishing across Europe and the US 8
The popularity of the beer category is fluctuating 9
Spirits are coming back into fashion but this is not reflected in volume growth 14
Trends in wine consumption vary by country 15
INSIGHT: Beer consumption is dominated by males in a time of changing consumer perceptions and preferences 17
Beer remains a male preserve 17
Midlifers are the core beer volume drinkers while Young Adults account for the most per capita consumption 18
The popularity of beer declines with age 18
Falling birth rates represents a threat to future growth prospects in beer 19
Consumers often turn to beer as a facilitator of social connections 20
Re-prioritizing family/friend time has grown in importance although consumers are finding it hard to do so in practice 20
Beer is considered an inherently social product 21
Beer's sociability drives sales during major sporting events 22
But discounting is potentially undermining the volume gains being made 22
Consumers' perceptions of beer are slowly changing after its image became somewhat old-fashioned and stodgy 23
Young Adults in particular have begun to see beer as old-fashioned 23
The SAB-owned Fosters brand in the US has been tackling this problem head on with an innovative tack 24
Consumer perceptions of beer can be shaped by effective marketing 24
Beer is also fighting against decline in the European brewing stronghold countries by focusing on quality 25
The reality is that beer drinkers are increasingly seeking out quality and credibility 26
The premiumization trend seen in many industrialized countries is very much in evidence in the lager market 29
Consumers are worried about the negative health impact of beer consumption espcially with regard to calories 30
Consumers are worried about the fattening properties of beer 30
Low alcohol and low calorie beers have traditionally been viewed as a compromise 31
The low alcohol market has generally failed to match expectations despite some growth 32
Uncompromising consumers with specific perceptions of a tasty beer will be difficult to convince 33
Beer's 'naturalness' is well-aligned with consumer trends 35
Consumer attitudes towards organic products generally suggests considerable potential for organic beers 35
The German case highlights scope for brewers to leverage the natural brewing process 36
Consumers are generally unaware that beer has its own health-boosting credentials 37
Consumers' propensity to consume beer is affected by seasonality 38
Beer sales in Italy are strongest in summer 38
New Product Development is needed to boost winter sales of beer 39
Launches of seasonal winter beers are bouncing back after decline 39
INSIGHT: European and US consumers are showing an increased propensity to switch to wine 41
Wine is gaining preference on more occasions in both Europe and the US 41
Wine sales in the US are growing from a comparatively small base 41
Wine consumption in Europe is a more ingrained cultural norm but market growth is nonetheless impressive 42
Wine retains its sophisticated image and per capita consumption is still dominated by mature consumers 43
Gender-based value consumption of wine is relatively even 43
But research has shown that women are less knowledgeable about wine 43
More sophisticated tastes of older consumers drives an age-consumption correlation 44
Wine consumption in traditional beer markets is taking off 45
But long-term problems may lie in wait because of demographic shifts 46
More sophisticated wine consumption is far from guaranteed by using entry level products such as wine coolers 47
Economic slowdown would hit wine more than other drinks categories 47
The wine category has not yet seen a significant premiumization 48
Wine consumption has become more accessible, rather than quality focused 49
Growth in volume of the wine market has yet to translate into trading up 50
Packaging is an important factor influencing wine preferences and perceptions 50
Women use packaging cues to define product quality more frequently because they are less knowledgeable about wine 51
Screw tops are gaining favor among consumers although there are country variances 51
Ease of opening is something that is important to all consumers 53
Traditional packaging formats are often unappealing for younger age cohorts 53
Glass bottles are still the preferred wine packaging 54
Wine consumption is increasingly focused on the home 55
Restaurant mark-ups are inhibiting further progress of on-trade wine sales 57
INSIGHT: Spirits are on the rise everywhere 58
Mature consumers remain the core spirits consumers 58
Premiumization in spirits is strongest in France and Sweden 60
Premiumization varies by country and sub-category 61
Case study: Innovation and joined-up thinking combine to wow consumers 61
Young Adults prefer offering rather than receiving personal recommendations 62
Word-of-mouth and viral campaigns must be credible to succeed 63
Body image health concerns are key to the success of spirits 63
Spirits are seen as less fattening by image-conscious consumers 64
If premiumization continues it can help alleviate binge drinking concerns 65
Premium spirits show the importance of differentiated packaging 65
The image of spirits is key for Young Adults 66
INSIGHT: Consumers are changing drinking habits in response to social changes 67
Consumer health concerns will radically alter the on-trade 67
Consumers' reaction to smoking bans will polarize the on-trade and offer new opportunities in Europe 69
Home entertaining is important for US consumers 71
Home entertaining in Europe is rising among Young Adults 72
Property market fluctuations will impact home entertaining in the UK and US 73
Conclusions: implications for manufacturers and retailers 74
The declining popularity of beer is not as bad as many industry bodies suggest 74
Wine has been a real success in recent years 75
Spirits have shown positive growth in recent years across a host of countries 75
A common goal unites all categories 75
Channel dynamics are also likely to change in coming years 76
CHAPTER 3 ACTION POINTS 77
Introduction 77
ACTION: Aid moderation with low alcohol content 77
Recognize that quality perceptions are often shaped by alcohol content 78
Facilitate frequent non-binge drinking by education and small/resealable formats 79
ACTION: Use marketing that reflects the changes in the beer market 80
Target the polarization of the male market 80
Address seasonality with on-trade only specials 81
Address seasonality with seasonal winter beers 81
ACTION: Capitalize on the mass market appeal that increasingly characterizes wine 82
Improve wine consistency by gradually moving to new bottle closures 82
Adopt a multi-pronged approach to attract a variety of consumers to wine 83
The drive to recruit young wine drinkers needs to start here and now 86
ACTION: Learn the lessons of spirits brands 87
Categories beyond spirits should heed the trading up lessons 87
Marketers must work with the key 'gatekeepers' in the value chain 88
Go clear: fewer congeners may reduce after-effects 89
CHAPTER 4 APPENDIX 91
Supplementary data 91
Research methodology 100
Definitions 100
Further readings 101
How to contact experts in your industry 102
List of Tables
Table 1: Consumption of alcoholic beverages by category (liters m), US & Europe, 2001-2011 9
Table 2: Beer category sales volume (liters m), US & Europe, 2001-2011 10
Table 3: Beer category (Beer, Cider&Perry, FABs) per capita sales volume (liters/person), US & Europe, 2001-2011 10
Table 4: Beer sub-category sales volume (liters m), US & Europe, 2001-2011 11
Table 5: Beer sub-category per capita sales volume (liters/person), US & Europe, 2001-2011 11
Table 6: Cider & perry sub-category sales volume (liters m), US & Europe, 2001-2011 12
Table 7: Cider & perry sub-category per capita sales volume (liters/person), US & Europe, 2001-2011 12
Table 8: FABs sub-category sales volume (liters m), US & Europe, 2001-2011 13
Table 9: FABs sub-category per capita sales volume (liters/person), US & Europe, 2001-2011 14
Table 10: Spirits category sales volume (liters m), US & Europe, 2001-2011 15
Table 11: Spirits category per capita sales volume (liters/person), US & Europe, 2001-2011 15
Table 12: Wine category* sales volume (liters m), US & Europe, 2001-2011 16
Table 13: Wine category* per capita sales volume (liters/person), US & Europe, 2001-2011 16
Table 14: Beer consumption in value terms (US$ %) by age, gender and country, US & Europe, 2005 18
Table 15: Per capita beer consumption value (US$/person) by age, gender, and country, US & Europe, 2005 19
Table 16: Specialty beer market value (US$ m), US & Europe, 2001-2011 28
Table 17: European and US sales of Premium Lager as % of lager market, by country, 2001-2011 29
Table 18: Low / no alcohol beer market value (US$ m), US & Europe, 2001-2011 32
Table 19: Consumer survey: responses to the question ``How important is eating organic food and drinks in maintaining a healthy diet?``, US & Europe, 2006 36
Table 20: Alcohol content of drinks segments by popular serving measures 37
Table 21: Still wine consumption in value terms (US$ %) by age, gender, and country, US & Europe, 2005 44
Table 22: Per capita still wine consumption in value terms (US$/person) by age, gender, and country, US & Europe, 2005 45
Table 23: Consumer survey: American trends in home entertaining by gender, age group & household income, 2006 56
Table 24: Consumer survey: European trends in home entertaining by gender, age group & household income, 2006 57
Table 25: Spirits consumption in value terms (US$ %) by age, gender and country, US & Europe, 2005 59
Table 26: Per capita spirits consumption value (US$/person), by age, gender, and country, US & Europe, 2005 59
Table 27: Price Per Unit (PPU) (US$/liter) of spirits, US & Europe, 2001-2011 60
Table 28: Importance of calorie counting to consumers by country, US & Europe, 2006 64
Table 29: Trends in consumer attitudes to smoking, US, 2006 68
Table 30: Trends in consumer attitudes to smoking, Europe*, 2006 70
Table 31: Trends in home entertaining, by gender, age & household income, US, 2005-06 72
Table 32: Trends in home entertaining, by gender, age & household income, Europe*, 2005-06 73
Table 33: Consumer survey: trends in home entertaining by gender, age group & household income, France, 2006 91
Table 34: Consumer survey: attitudes to smoke-free on-trade premises, by gender, age group & household income France, 2006 92
Table 35: Consumer survey: attitudes to smoke-free on-trade premises, by gender, age group & household income, Germany, 2006 92
Table 36: Consumer survey: trends in home entertaining by gender, age group & household income, Germany, 2006 93
Table 37: Consumer survey: attitudes to smoke-free on-trade premises, by gender, age group & household income, Italy, 2006 93
Table 38: Consumer survey: trends in home entertaining by gender, age group & household income, Italy, 2006 94
Table 39: Consumer survey: attitudes to smoke-free on-trade premises, by gender, age group & household income, Netherlands, 2006 94
Table 40: Consumer survey: trends in home entertaining by gender, age group & household income, Netherlands, 2006 95
Table 41: Consumer survey: attitudes to smoke-free on-trade premises, by gender, age group & household income, Spain, 2006 95
Table 42: Consumer survey: trends in home entertaining by gender, age group & household income, Spain, 2006 96
Table 43: Consumer survey: attitudes to smoke-free on-trade premises, by gender, age group & household income, Sweden, 2006 96
Table 44: Consumer survey: trends in home entertaining by gender, age group & household income, Sweden, 2006 97
Table 45: Consumer survey: attitudes to smoke-free on-trade premises, by gender, age group & household income, UK, 2006 97
Table 46: Consumer survey: trends in home entertaining by gender, age group & household income, UK, 2006 98
Table 47: Summary of smoking bans in US & Europe 99
Table 48: Definitions used in the report 101
List of Figures
Figure 1: Time series survey data suggests that consumers are finding it difficult to spend more time with family and friends 21
Figure 2: The sociability of beer is a key selling point, especially for men 22
Figure 3: Quality, experience orientated marketing campaigns can help to change consumer perception of all alcoholic drinks 25
Figure 4: Heineken's 'Culture Bière' is an attempt to reinvigorate the image of beer 26
Figure 5: More than a third of European and US consumers traded up more frequently to higher quality packaged goods for extra indulgence and enjoyment in 2005-06 27
Figure 6: Premium lagers account for a growing share of the lager market in most countries 30
Figure 7: Launches of low calorie & low carbohydrate beer, US & Europe, 2001-06 31
Figure 8: Launches of reduced alcohol beers, US & Europe, 2001-06 33
Figure 9: Carling's C2 is the best conceived approach yet to the low-alcohol beer category 34
Figure 10: Volume of beer sales by month, Italy, 2003-2005 39
Figure 11: New product launches of seasonal winter beers, US & Europe, 2001-2006 40
Figure 12: New product launches of seasonal winter beers as % of overall beer launches, US & Europe, 2001-2006 40
Figure 13: Wine is also the fastest-growing category in the US alcoholic drinks market 42
Figure 14: The wine category has been and will continue to be the best performer in the European alcoholic drinks market 43
Figure 15: Wine consumption is closely linked to GDP growth in the US 48
Figure 16: The average price of (still) table wine is growing slowly in the US & Europe 49
Figure 17: The transition to modern closures in the wine category must be gradual 53
Figure 18: Balancing quality perceptions and convenience is key to positioning good quality accessible wines 54
Figure 19: French Rabbit has used environmentalism in its positioning to promote wine cartons 55
Figure 20: Today's homes are not just shut-off havens; they are used to facilitate connections 56
Figure 21: Premium packaging is essential but not a long-term advantage 66
Figure 22: Smoking bans will inevitably impact the on-trade and off-trade 71
Figure 23: Low alcohol content on its own is not enough 78
Figure 24: Format variety can facilitate a host of consumption occasions 79
Figure 25: Polarization of the beer brings both opportunities and threats 80
Figure 26: Seasonal beers offer many positioning opportunities 81
Figure 27: Alcohol control states are present across the US 84
Figure 28: Core wine drinkers in the US are found on both coasts 85
Figure 29: Roadmap for the future expansion of the wine category in the US 86
Figure 30: Education is key to protecting future wine sales 87
Figure 31: Targeting key gatekeepers is vital for on-trade success 89
Figure 32: Reducing impurities has untapped market potential 90
