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Beyond craft: What are the latest trends in the alcohol market?

Over the last few years, one word’s dominated the UK alcohol market – “craft”. Independent breweries and major distilleries have popularised alcoholic beverages that are high quality, created in small batches, use experimental flavours and focus on provenance.

But what’s the current market focus? Can craft last? Where will booze head next?

Consumption habits are changing

According to research, the image of young adults binge drinking and enjoying multiple booze-fuelled nights out each week is no longer true. A 2016 survey from Heineken showed that 38% of millennials moderate their alcohol intake every time they go out, while 75% say they limit their consumption on most of their nights out.

Furthermore, the study shows that millennials rate taste and quality over alcohol strength when deciding which drink to choose.

It’s not just millennials cutting back. ONS statistics show a rise in teetotalism, with 21% of adults abstaining from alcohol completely, and only 56.9% of those aged 16+ having enjoyed a drink in the week before being interviewed (down from 64.2% in 2005).

With alcohol consumption falling, we’re seeing a rise in an alternative: alcohol-free drinks that target adults.

Is no alcohol the future of alcohol?

Gone are the days when the only alternatives to alcoholic drinks were sugary, fizzy soft drinks. Both established brands and challengers are taking advantage of a booming premium soft drinks market, which in the on-trade alone grew to a value of more than £4.1bn in 2015.

Premium soft drinks are often crafted using similar processes to their alcoholic counterparts. They feature a lower sugar content than mainstream alternatives, flavours designed to appeal to adults rather than children, and sophisticated packaging that takes its design cues from the alcohol industry.

In 2016, Diageo invested in the world’s first distilled non-alcoholic spirit, Seedlip, via spirits innovation group Distill Ventures. Distilled gin-style in copper pots and designed to be served with tonic, Seedlip’s branding evokes gin bottles too, with its distinctive monogram, copper detailing and botanical imagery giving it a refined and adult feel.

On a more independent level, Rare client Gunna also takes its lead from alcoholic drinks. Gunna offers reduced sugar and natural flavours in a distinctive style, reminiscent of craft beer cans to target those millennials who shy away from alcohol on a night out.

This emergent market has huge potential – and just as the tobacco industry has invested in e-cigarettes, brands such as Diageo are looking to take a slice of the lucrative pie if adult soft drinks continue to succeed at the current rate.

Craft becomes hyperlocal

A January 2017 article from Eater claimed the craft beer movement was slowing, with drinkers returning to the classic mainstream favourites. Drinks International believe the craft drinks market needs to evolve to remain current.

Amongst millennials in particular, we’ve seen a rise in the popularity of local food – and now hyperlocal drinks are emerging to bring a sense of provenance to the alcohol market.

Examples can be seen in the ever-growing gin market, where UK sales broke the £1m barrier for the first time in 2016. To cater for the demand for all things local, we’re seeing the likes of Masons Yorkshire Gin who use Yorkshire water and even grow their own juniper bushes. Bristol’s Psychopomp go further. They team up with local coffee roasters to create coffee digestifs, sell directly to consumers from their on-site bar, and even create bespoke gins for local restaurants, using botanicals that match their menu and identity.

We’re also seeing a boom in microbreweries and brewpubs with their own taprooms, giving customers the chance to enjoy a freshly brewed beer on-site. In London alone, you’ll find options from Brew By Numbers in the south to Beavertown in the north: breweries who open their doors to offer customers a truly hyperlocal experience.

DIY drinks

Taking the hyperlocal approach, some drinks manufacturers – both big and small – are thinking beyond the bottle, focusing on experiential offerings to bring the consumer closer to the product.

Southwold brewery and distillery Adnams offers a “Make Your Own Gin” experience where participants can choose their own botanicals and name for their creation. Psychopomp, who we’ve already mentioned, runs a “Distil Your Own Gin” session every Saturday afternoon. At pub and microbrewery chain Brewhouse & Kitchen, those interested in learning the beer making process can book onto a 7-hour Brewery Experience Day where they’ll take part in the brewing process from start to finish.

A look to the future

What trends are drinks industry experts are predicting going forward?

Minimum alcohol pricing laws could be on the horizon, with a 50p per unit minimum price on the cards. Whether or not this goes ahead, however, will depend on the scheme’s success in Scotland, where it was brought in as an attempt to curb excessive drinking.

The premium soft drink market is set to grow still further, with health drinks such as kombucha and brands such as Italy’s Crodino non-alcoholic aperitif touted as the next big thing for the on-trade. The low-ABV category will resurge too: Ubrew’s 0.5% pale ale Responsibly is one of many recent launches comparable with the rise of craft beer.

A focus on health and the low price of supermarket alcohol is also contributing to the closure of more and more independent licensed premises. Could this signal continued growth in opportunity for brands looking to capture a share of the home drinking market?

Current trends in the alcohol industry come with their own challenges, but both smaller brands and the larger industry players have proven it possible to compete successfully. All it needs is the right understanding of the market, the audience and the design challenges encountered in appealing to today’s drinker.

For more food trends and brand insights, take a look at the Rare blog, or follow us on Twitter.

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