The alcohol industry is a challenging business. Whether you’re in the beer, wine, or spirits business, many current trends pose enormous challenges as we enter 2023.
The shifts happening don’t only affect those in the United States. Challenges are present in all corners of the world. For example, there’s currently a good measure of influence from the European alcohol industry and the population’s attitude toward consuming alcoholic beverages that will impact how business is done in the U.S.
Additionally, lawmakers are crafting legislation daily that distributors and distillers must comply with to reach customers.
Challenges the alcohol industry needs to solve in 2023
1. Creating an Effective Online Presence
Tradition is at the heart of how beer, wine, and spirits are distributed and marketed. While most industries are succeeding online to reach broader markets, the alcohol industry still attempts to carve out a unique presence. While some alcohol brands have created successful online companies, others have found that it helps to develop strategic partnerships.
In the U.S., online efforts pale in comparison to many foreign competitors. To compete, U.S. companies need to adopt a feeling of luxury and convenience in their online marketing strategies if they hope to remain competitive.
2. Customers Look For Ethical Brands
Assuming a customer is 21 or older, alcoholic beverages transcend all age and gender lines. However, in 2023, customers are becoming more conscientious about buying alcoholic beverages marketed as gender-neutral.
This trend is happening in many other areas of the business world. However, in the alcohol industry, Johnny Walker has stayed a step ahead of the movement by introducing a revamped logo that depicts a female.
The truth is that drinking alcoholic beverages is no longer a male-dominated market. So if you want to remain relevant and grow your business, it’s time to tailor more marketing campaigns to be socially inclusive. It will broaden your demographic appeal and open your brand to new markets.
3. There’s More Competition Than Ever… and It’s Not What You Think
Almost every day, new legislation is developed across the U.S. that makes buying and using cannabis legal. Unfortunately, the rising popularity of cannabis has hampered the growth of the alcoholic beverage industry.
However, it’s interesting to note that women (who make up a substantial portion of U.S. alcohol consumers) aren’t leading the way toward the shift to cannabis. In general, women still prefer wine and spirits.
For alcoholic beverage companies to remain relevant and competitive during this cannabis popularity, they must attract as many female consumers as possible. The male market isn’t going to disappear, but the female market is where you can find the most growth.
4. Dealing with Regulations
If you’re conducting business within the United States, dealing with regulations is the biggest challenge of doing business in the alcohol industry.
Beyond the stacks of federal laws, you must also comply with state and local laws to sell your product. On top of that, excess taxation can quickly kill a developing business model.
These rules vary from state to state. If possible, move your operations to a less restrictive form toward alcohol regulations.
5. Smaller Portions and Moderation
With the overall rise in the consumption of cannabis and the competition it brings, the alcoholic beverage industry needs to consider how it packages its product in a mindful way for customers.
Cannabis is touted as a healthier alternative to alcohol. However, for the beverage industry to compete, they must take calculated measures that market smaller packaging sizes and serving options.
The industry also faces a moderation movement. By offering smaller serving options, you can balance the consumer moderation desire in both new and mature drinkers.
6. It’s Time for Direct-To-Consumer Marketing
Traditionally, alcohol sold in stores has relied on the three-tier distribution model. Essentially, an alcohol manufacturer must sell their product to distributors that then sell to the retailers. Because of this model, only top-level brands have had the opportunity to be distributed nationally.
However, U.S. law states that wine and other lower alcohol content can get around this system by selling directly to consumers. Many winemakers have already done this nationally and internationally through subscription wine clubs.
For direct-to-consumer brands of alcohol, the challenge lies in getting a buyer to purchase a drink online when they’ve never tasted it. Direct-to-consumer style and branding can help combat this challenge.
When the brand Haus recently launched an online campaign, they aimed their branding and marketing strategies toward more affluent millennials. They hired direct-to-consumer agency Gin Lane as a branding partner to sell their $35 bottles of alcohol.
The brand is now cleverly positioned as a health-conscious, online-only hard alcohol alternative.
7. How to Add to Other Consumer Experiences
Promoting your brand of alcohol doesn’t require that you completely reinvent the wheel. Instead, the best approach is often to go precisely where people already enjoy alcoholic products.
Many alcohol brands find incredibly receptive customers at music festivals, sporting events, and large seasonal gatherings. By adding to an attendee’s fun experience, these brands know how to secure their place in the memories of consumers. It makes an impression that lasts.
Top beer brands are known for implementing this strategy. Bud Light, for example, routinely sponsors parades for cities celebrating a sports championship. As fans enjoy the day, they can enjoy a complimentary Budweiser product.
Other alcohol brands have taken note of this practice and are working to build better awareness of it.
8. Effective Alcohol Digital Marketing Strategy
The effective use of digital channels to drive sales and MRR are two primary digital transformation challenges the alcohol industry faces. Unfortunately, many alcohol companies have difficulty being efficient and effective and measuring the impact of their marketing channels, such as paid media, enterprise SEO, Local SEO, content strategy, or social media.
These companies’ primary challenges are their digital experience, website design, and brand presentation. As we enter a new year, pay attention to these common challenges facing the alcohol industry. You’re not the only one dealing with them. But, as an industry, we can start to solve them.
Trends In the Alcoholic Beverage Market
The alcoholic beverage industry is not mainly known for being stagnant. On the contrary, significant changes and surprising trends emerge yearly, and 2023 is no exception.
The alcohol industry is not without its challenges. To better understand where things currently stand in the alcoholic beverage industry for this year, we’ve highlighted some of the stats and trends you need to note.
Without further ado, let’s take a closer look at some of the more exciting developments, starting with the more general trends impacting sales.
1. The alcoholic beverage industry is not slowing down just yet
With more and more people becoming health-conscious, alcoholic drinks are increasingly being dropped. You probably have at least a few friends or family members who have pulled back on their alcohol consumption lately or perhaps have even tried to stop it altogether.
It’s obviously up to the individuals to decide what they want to do about their alcohol consumption moving forward. Still, it is worth noting that the industry is not being impacted just yet by folks opting to drink less.
Via FoodBev Media, the alcoholic beverage market is expected to grow at a CAGR (compound annual growth rate) of over 4 percent over the next six years. Of course, things can change, and the expected growth rate could shrink, but the outlook for the industry continues to be positive for now.
2. Selling alcohol online is becoming more popular
The idea that alcoholic drinks can be purchased online and delivered to your doorstep may seem foreign to many. Still, industry insiders already know that those things are becoming common.
More recent numbers about the popularity of online sales of alcoholic beverages have yet to be made available. Still, it wasn’t too long ago when online alcohol sales reached $1.7 billion. More specifically, the online sales numbers were back in 2017, per Grocery Dive.
It’s not hard to imagine the numbers growing significantly since then.
Companies like Drizly and Thirstie are already starting to reap huge rewards from selling alcohol online. The market is flooded with even more options shortly would hardly be a surprise.
3. Whisky is becoming an increasingly popular alcoholic beverage
Whisky is already the drink of choice for many fans of alcoholic beverages nationwide. Prized for its distinct flavor that brings together some lovely notes, earthy tastes, and even hints of spice, whisky is a staple of many household liquor cabinets.
And it figures to stay that way for the foreseeable future.
Statista says revenues in the United States whisky sector are $18.126 million this year. As impressive as that is, the numbers could grow even more significantly in the coming years.
By 2023, whisky-related revenues could spill over $20 million.
It is also important to note that whisky is famous, not just in the United States. Sales of the spirit are also remarkably high in other corners of the globe, with India standing out as one of the more voracious consumers of the liquor above.
4. The best-selling cocktail of 2019 so far is the Old Fashioned
Considering the popularity of whisky, it should be no surprise that the top-selling cocktail of the year at this point prominently features the spirit above.
According to Drinks International, the Old Fashioned cocktail is the best seller and is sold in 30 percent of bars. But, of course, this is also nothing new.
The Old Fashioned has remained the cocktail of choice for many alcohol lovers for quite some time now. Drinks International even points out that this is the fifth year the cocktail above has emerged as the top seller.
Putting together the conventional Old Fashioned cocktail involves mixing sugars and some bitters. Whisky is then often poured into the mixture, although there are some instances wherein brandy may be used as a substitute.
As a finishing flourish, bartenders may add some citrus rind to the cocktail to give it a hint of freshness and acidity.
5. Sake is no longer just a popular drink in Japan
Whisky is not the only alcoholic beverage making waves in terms of sales. In recent years, a popular alcoholic drink from Asia also shows that it has fans worldwide.
The drink in question is none other than Japanese sake. According to Nippon.com, overseas sales of rice wine went over ¥22.2 billion in 2018. That translates to just a little under $205 million.
The site also noted that 2018 was the first year international sales of Japanese sake surpassed the ¥20 billion mark.
So, who are the biggest fans of sake outside of Japan? As it turns out, the folks in the United States can’t get enough of it. Americans accounted for about 30 percent of sake’s international sales last year.
Residents of Asian nations have long known about the merits of sake, and it seems like people from other parts of the globe are wising up to them too.
6. High-end spirits remain highly coveted
Due in large part to the pervasive nature of the internet, you can learn just about anything regarding almost every possible field of interest. So, for example, if you’re into alcoholic drinks and want to know the best options, you can quickly look them up online.
Perhaps because of that easy access to information, more people are aware of high-end spirits and willing to spend on those sought-after products.
Per the Brindiamo Group, sales of the “super-premium” and “high-end premium” spirits rose by 6 and 7 percent in 2018. So it’s good that more people know about those premium products, although their fans may want to stock up in case the demand gets too high.
7. Craft beer is no longer just a niche offering
Getting that first taste of craft beer can be a transformative experience. After settling down with the mass-produced beers that flood the marketplace, trying something different can suddenly awaken the alcohol connoisseur in you.
Craft beer has done that for many people, so it should not be surprising that the beverage has become immensely popular.
Per Austria Juice, craft beer sales in 2018 rose by 5 percent. On top of that, around 8,000 craft breweries are expected to operate in the United States by the end of this year. In 2007, the number of craft breweries stood at just over 1,511.
The popularity of craft beer has reached the point where even the more prominent players in the alcoholic beverage industry are expected to get in on the action at some point. Whether or not they will succeed in producing craft beer is another matter altogether.
8. Ready-to-drink alcoholic beverages are not going away anytime soon
You can’t read up on the latest goings-on inside the alcoholic beverage industry without hearing about the increasing popularity of ready-to-drink (RTD) options. Notably, these RTD alcoholic beverages have been around for a long time, but it seems they are gaining popularity now.
To give you a better idea of just how popular alcoholic RTD beverages have become, Nielsen notes that the sales of malt-based cocktail variants grew by 597 percent compared to last year. Not to be outdone, hard seltzer RTDs are at 193 percent, while the canned wine options are at 77.5 percent.
If you’ve noticed that these RTD alcoholic beverages have become more prevalent, there’s a good reason; as it turns out, plenty of people like them.
9. Wine is going beyond the bottle
When you think of wine, you probably conjure up this image of red or white wine flowing forth from an elegant-looking bottle as the luscious drink is poured into a glass. Of course, that’s a classic image, but there’s a decent chance you may be drinking wine from a can sometime soon.
Going back to Nielsen, the data firm points out that there are now 22 wine brands that offer their products in cans. In addition, as many as 386 wine options can be sipped directly from a can.
Wine lovers have also not shied away from the canned variants, as sales figures have skyrocketed to $81 million after finishing at $46 million last year. As a result, drinking wine from a can could be a more common practice.