Ahead of the Summer Heat, These Three Trends Are Shaking Up the Alcohol Market

May 22, 2022

Summer is so close that you can almost feel it, which means it’s almost prime time for poolside lounging and porch sitting.

That, of course, calls for a beverage of choice.

At LikeFolio, we’re watching for signs that consumers are planning on cracking open a can or bottle — specifically, WHICH can or bottle.

And data reveals three key consumer trends related to recreational beverage consumption… two of which really surprised me.

1. Non-Alcoholic Drinks Are More Popular Than Ever

Nielsen calls the rise in non-alcoholic beverages part of a “sober-curious movement,” driven in part by consumers embracing healthier lifestyles and examining their relationship with alcohol.

To give scale, in January, total alcohol sales decreased 6.7% YoY while non-alcohol product sales increased by 19% YoY as reported by off-premise outlets in the U.S. It’s important to note the year-over-year measuring stick here. This means the behavior shift was not just a seasonal shift as consumers kicked off New Year’s resolutions; it’s a priority shift.

This phenomenon is especially true of younger generations.

LikeFolio data confirms this mindset.

Consumer demand for non-alcoholic beverages has risen by 40% YoY.

Tweets reveal that consumers are turning toward non-alcoholic replacements that taste like the real thing but lack the punch… brands like Seedlip, Ritual, and Lyre.

While these brands ARE gaining popularity among this specific audience, not all consumers are giving up the real thing.

2. Pre-Mixed Canned Cocktail Demand Has More Than Doubled Since 2019

Consumer mentions of cracking open a pre-mixed cocktail just reached all-time highs.

And mentions suggest there are multiple drivers of demand. Many consumers like the convenience and grab-and-go element of the beverage, and others are seeking a non-carbonated option.

One brand on the rise benefiting from this tailwind is called NOCA, deeming itself “the boozy beverage for people who don’t like carbonation.”

Another brand, called Funny Water, was created with festival-goers in mind.

Looking ahead, keep an eye out for companies with ready-to-drink (RTD) canned cocktails in their arsenal. For example, Coca-Cola (KO) and Molson Coors (TAP) are partnering to introduce Simply Spiked Lemonade, powered by Simply Juice and marketed as a light summer cocktail.

Molson Coors is also testing Arnold Palmer Spiked Lite. Buzz for both brands is building significantly.

Each of these prior trends spells trouble for a once-idolized alcohol segment: hard seltzers.

3. Hard Seltzer Growth Is Waning

Demand growth continues to drop for the third summer in a row.

After rocketing onto the scene in 2019, these fizzy beverages are losing their luster in the eyes of consumers.

This played out in a harsh way for Boston Beer Co. (SAM) last fall, after the company noted it aggressively overestimated consumer consumption rates.

And the company wasn’t alone. Constellation Brands (STZ) also racked up a $66 million obsolescence charge related to excess hard seltzer inventory.

The key takeaway: Based on current consumer trends, beverage companies can expect this demand slowdown to continue into the 2022 high season.

As always, when we see big opportunities (long or short) in this industry, LikeFolio clients will be the first to know.

Megan Brantley
Head of Research, LikeFolio