Can the well-oiled drinks industry tempt a ‘choosier’ generation that’s going against the grain?

The Drum 11 May 2020 07:20

”Alcohol tastes really fucking great and it makes you feel really nice,” says the boss of BrewDog’s spirits wing, in a style we’ve come to expect from the provocative pale ale maker.

David Gates, who spent 25 years at alcohol giant Diageo marketing its core spirit brands including Johnnie Walker, Smirnoff and Captain Morgan, has been chief exec of BrewDog Distilling Co since late 2018, when the Scottish self-styled giant-slayer brought him in to manage its growing portfolio of whiskies, vodkas and gins. The brewer gained barrels of goodwill when, in the first weeks of the pandemic hitting the UK, it pivoted to produce hand-sanitizer gel. It is bound to have benefited commercially, too, with alcohol sales rising 30% in March and one in five drinkers reporting a higher regular intake under lockdown.

But while some drinkers are indulging, with pubs and bars closed many other drinkers are choosing to forgo the ale entirely. Charity Alcohol Change UK found in a survey of 2,000 that 35% of drinkers were cutting down and 6% had given up entirely. And according to the analysis of many in the industry, those changing their habits are likely to be younger. Despite Gates’s own glowing endorsement of the grog, he says younger consumers are being more “choosey” when it comes to booze.

Not that this has stopped new brands coming on to the market. A “ridiculous” 285 new gins launched in Europe in 2018, says Gates, explaining how you can “make gin one day and sell it the next, unlike whisky, which needs to mature”. Some, he says, are really authentic. “But others are utter bullshit.”

Gates doesn’t tell us what he thinks of Carlsberg’s new offering, but instead expresses admiration for “local brands, made by real people, challenging faceless corporates”.

The craft beer sector, which is only starting to mature after cropping up in the 80s, is where “innovation happens” she tells us. “It was an easy sport until 2018… until then, very few brands thought to take on monstrosities like AB InBev.”

Norman believes craft can kill the mainstream, but this comes with a caveat. “If craft brands hold out and don’t fall prey to buyouts, the collective will continue to gain market share. Consumers want more than just a Budweiser.”

“America is just beginning to enjoy the glorious wild-fermented, sours and experimental lagers that will eventually gain popularity as more palates are exposed to those styles. You won’t find the old guys successfully experimenting there unless through a craft brewery they’ve bought. “Mainstream beers of the past will die with the boomers.”

And yet there is no denying that many are defecting, in many cases toward CBD – the non-psychoactive component of cannabis that helps manage mood, anxiety and pain without any high. Cannabis (components) could cannibalize alcohol. In US states with legal medical marijuana, alcohol sales have dropped by as much as 15%. This could widen as a greater array of cannabis and CBD products become readily available.

Meanwhile, Bale Breaker’s Norman predicts that CBD will grow faster than that other challenger to booze – non-alcoholic drinks. “Wellness is the incentive, but an alcoholic flavor without the ‘benefits’ just doesn’t make a lot of sense for the average consumer. As CBD and marijuana are likely to be legalized on a national level soon, CBD will grow very quickly because there’s too much opportunity to race for.”

Cindy Tervoort, who is marketing director at Heineken UK, tells The Drum that the segment is growing more than 20% annually. And while “millions of people are choosing to moderate their consumption of alcohol”, she claims that, until the launch of Heineken 0.0, “there just wasn’t a credible choice”.

To unlock further growth the brewer has to bring 0.0 to draught, but there was a barrier to entry here. “Running alcohol-free beer through a pub’s traditional cellar equipment is very challenging.” As a result, Heineken developed the ‘Blade’ pump in the knowledge that 93% of beer sold in UK pubs is on draught.

Soft-drink companies have failed to disrupt booze and, at best, serve as mixers rather than replacements. But Gates points with admiration to the success of non-alcoholic spirit brand Seedlip, which he says nailed the “semiotics” of spirits with its branding, marketing, packaging and in-bar placement – unlike most alcohol alternatives.

Thomson was surprised that Seedlip’s niche in the market wasn’t already filled. “We’ve created driverless cars and walked on the moon, and yet if you’re not drinking you couldn’t get a good grown-up non-alcoholic drink.

The three-year-old company has benefited from a shift in the role alcohol plays in people’s lives – and it’s something that Diageo, the world’s largest producer of spirits and a major producer of beer, is also concerned with. It holds a minority stake in Seedlip and is “becoming increasingly diverse to cater for those who choose not to drink alcohol”. It says demand from consumers for credible low or non-alcoholic alternatives is currently “not being fully met”.

A Diageo spokesperson tells The Drum: “Drinking alcohol isn’t just about the ABV, it’s about intriguing and complex flavor, sociability and ritual. Consumers still want that when they aren’t drinking alcohol and we are passionate about bringing new and exciting socializing experiences to consumers, whether they choose to drink on these occasions or not.”

Lee Beattie, co-founder of marketing comms agency Wire which works with numerous scotch brands including Whyte & Mackay, says brands must adapt fast.

Whisky can make strong gains if it recognizes the opportunity. “Provenance, authenticity and quality are already associated with this sector, but there’s a need to break down some of the technical jargon that can be off-putting to younger drinkers and to tell more distinctive stories if brands want to stand out in the category and create recall at the bar.”

There is a clear blindness to the harm humans do to themselves with alcohol. Research from the World Health Organization says “the global burden of disease caused by alcohol’s harmful use is enormous” and “exceeds those caused by many other risk factors and diseases high on the global health agenda”.

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Bale BreakerGatesDiageo marketingBrewDog Distilling CoCarlsberg
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