The UK non-alcoholic spirits category has grown to be worth £37m in 2019, up 506 % versus 2014, and is forecast to more than double in size again over the next five years, according to GlobalData, a leading data and analytics company.
David Harris, Consumer Analyst at GlobalData, says: “Younger generations are drinking less, with Gen-Z only strengthening this trend as they reach legal drinking age. This is hardly ground-breaking news. Adult soft drinks, premium juices and a growing range of high-quality non-alcoholic beers are all targeted at this demographic, in addition to older consumers who simply want to moderate their alcohol consumption.”
So what about consumers who don’t want a non-alcoholic beer, but still want an ‘alcohol-alike’ beverage? This may be at a party, on a night out, or at home when everyone else is enjoying their gin and tonics. This is the specific opportunity non-alcoholic spirits are targeting. Where craft beers targeted consumers turned off by mainstream German and US lager brands, non-alcoholic spirits aim to engage consumers who want to feel part of the party, but who don’t want a sore head in the morning.
Harris adds: “Talking of craft beer, what is notable is how the rise of non-alcoholic spirits mirrors the rise of craft beer, arguably the beverage trend of the last decade. With laser targeting of a specific need, from a specific demographic, there are clear similarities between non-alcoholic spirits and craft beer.
“Both target younger legal age consumers. Both target consumers who are either tired of, or have no interest in, the mainstream variant of the offering, and both use flashy, stylized and no-nonsense packaging to engage with their audience.”
Excited with the prospect, major players in spirits are increasingly looking to get involved, with William Grant and Sons launching their Atopia range, Pernod-Ricard launching Celtic Soul, as well as the Diageo-funded Seedlip, which has now expanded out of the UK and into overseas markets.
Retailers also seem to agree that this is a category to watch too, with Tesco, Lidl, Asda, and more major UK retailers all stocking at least one non-alcoholic spirit.
Harris concludes: “While this may not be the next craft beer, the opportunity is certainly there, and both brands and retailers agree that this in an opportunity which is too big to miss.
2020 will be a period of ground-breaking innovations in the food and beverage (F&B) sector, with a focus on health and sustainability, says GlobalData, a leading data and analytics company.
Hakan Demirci, Consumer Analyst at GlobalData, comments: “Over the last couple of years, we have seen vast strides in the development of technology for the F&B sector. This year is set to become a watershed year as these technological innovations experience an expansion in their application across the industry.”
With the year promising a flurry of innovations in the industry – from personalized nutrition to alternative proteins, GlobalData lists five of the top F&B trends to watch out for in 2020, ranked:
5) Personalized Nutrition:
“Personalized nutrition will aim to revolutionize consumption habits among health-conscious consumers using nutrigenomics. The future will see targeted nutrition accounting for both genetic and environmental factors, to maximize the nutritional value of certain diets for consumers.
“One example of this is a company called Sun Genomics, who are currently testing tailored probiotics by sequencing the human gut and analyzing the distribution of the different types of microbes.”
4) 3D Printed Food:
“While 3D-printed food has been around for quite some time, it is an expensive and time-intensive method of producing food. Nevertheless, in 2019, 3D printing of plant-based meat received heavy investment due to its efficiency in comparison to current methods of extrusion, and for its ability to replicate the texture of meat.
“Innovations in 3D-printing technology throughout 2020 will see an increase in speed to delivery, a reduction in costs and an expansion of the types of products that can be created using 3D printing.”
3) Alternative Proteins:
“As veganism continues to become mainstream, so too will efforts in replicating certain animal proteins. This will range from the development of egg white cell cultures to lab grown cultured meat – bypassing the impact on sentient animals.
“Throughout the year, we will see these methods replicating a more diverse and niche variety of meats. For example, Impossible Burgers released their first vegan pork in early January 2020.
“Moreover, investment in this sector will flourish in 2020 as a growing coterie of fast-food conglomerates pour funds into the research and development (R&D) of vegan alternatives to their own meat-based products.”
2) Traceability:
“The next decade will see the transparent documentation of a product’s life cycle. This will improve food safety, as potential bacteria-related hazards can be pinpointed for detection and eliminated with ease and speed. This will be achieved as technological innovations such as the Internet of Things (IoT) and blockchain improves in application and efficiency.
“For example, blockchain can map a products lifespan on the chain, providing a transparent chain of ownership for a particular asset. These records cannot be erased or altered, ensuring accountability throughout the whole process, an important aspect of transparency.”
1) Biotechnology:
“The advent of biomolecular sciences and improvements in genetic editing and sequencing will aid in the development of highly nutritious crops, with extended expiration dates and improving resistance against genetic and environmental diseases and infections.
“For example, a current innovation underway aims to improve the shelf life of melons with a non-GMO molecular breeding technique, seeking to halt the ripening process after cultivation whilst simultaneously preventing this from negatively impacting upon the taste of the final product.”
For many consumers, the desire to nurture and protect the environment has motivated the decision to follow a vegan diet. However, the ‘low carbon’ diet could potentially attract a greater following than veganism due its relatively more flexible approach to reducing the greenhouse gas emissions associated with our diets, says GlobalData, a leading data and analytics company.
In fact, when asked what they find to be an appealing food and drink claim, 60 %* of global consumers answered ‘low carbon footprint’, compared with 39 %* of global consumers who answered ‘vegan’.
Lia Neophytou, Consumer Analyst at GlobalData, says: “Whereas veganism does not permit the consumption of any animal or animal-derived products, the low carbon diet allows for the consumption of any food/drink items as long as they align with the broader goal of reducing the carbon emissions of one’s overall diet. This could include reducing meat and dairy consumption, increasing one’s intake of local foods, and reducing food and packaging waste.”
This diet also recognizes that not all vegan foods have a low carbon footprint. For example, exotic fruits which require importation from abroad. It is for this reason that Lele’s vegan café in London recently announced that it will no longer include avocado in its dishes to avoid ‘indirectly fuelling illegal deforestation and environmental degradation’.
The appeal of a low carbon diet therefore spans consumers who are already vegan and those who simply want to reduce their carbon footprint, hence its broader appeal.
Neophytou concludes: “In future, ‘low carbon’ certifications could become mainstream and serve as a way of verifying the environmental impact of food and drink. This goes beyond simply indicating the absence of animal or animal-derived products which vegan certifications signal.”
*GlobalData’s 2019 Q3 global consumer survey
As this year saw the rise of the sober-curiousness trend, non-alcoholic drinks such as wine waters have a great market potential, due to their natural antioxidants content and their functionality. Wine water, either still or sparkling, is promoted as healthy and naturally functional, with a distinctive wine taste. According to GlobalData’s Q3 2019 global consumer survey, 92 % of surveyed consumers consider that eating healthily creates a feeling of wellness and 60 % say they believe antioxidants have a positive impact on their health.
Ana-Maria Iscru, Consumer Analyst at GlobalData, explains: “A new water concept, wine water is different from alcoholic seltzers, non-alcoholic wine and fruit flavored waters, in that it does not contain alcohol but does have a wine-infused flavor, for a more sophisticated taste. The wine essence water from Wine Water Ltd., for instance, was released last year and has already sparked interest. The brand taps into a few consumer trends, namely the absence of alcohol, low sugar content, low calories and an elegant glass bottle packaging instead of plastic.”
Another slightly similar brand is Napa Hills, flavored water ‘with red wine’s natural antioxidants’, but without a wine flavour. PepsiCo also gave the trend a try, releasing a limited-edition rosé-flavored sparkling cola, which was served at the first edition of the BravoCon in November. Moreover, Walmart recently introduced a rosé wine drink enhancer, but it is not expected to come too close to the wine taste.
Iscru adds: “Wine waters are seen as much lower in calories and sugar than actual wine, enough to respond to the growing health & wellness demands. All of this while not ditching the classic wine taste that a lot of people love.
“The category is yet to grow, as there is not a large variety of wine waters, but it has potential in the way it is presenting itself: natural, sustainable and tasty. However, until wine water as a category grows globally, for now consumers are just left wanting more.”
Enhanced beverages are gaining a strong market position, especially since consumers are seeking out products that benefit their health. According to GlobalData, a leading data and analytics company, 59 %* of consumers in North America say they purchase products that help save them time and effort – but high sugar content is the price to pay.
Holly Inglis, Consumer Analyst at GlobalData, says: “With less time in the working day to exercise, beverages that support an on-the-go lifestyle are therefore likely to prove popular. Healthy lifestyle trends have boosted the industry, with frequent adoption of healthier beverages dominating social media channels and supermarket promotions.”
Research conducted by the National Health and Nutrition Examination Survey found that plain water should be the optimal beverage choice in weight loss. This suggests that consuming vitamin and mineral enriched beverages does not actually aid dieting.
Inglis adds: “Typically drinks that claim they have added vitamins, electrolytes, potassium, antioxidants and fibres often have more sugars than other beverage types. In some cases, these benefits can be obtained by plain water.”
According to GlobalData’s Q2 2019 USA Quarterly Beverage Forecast, a 5.1 % growth in 2019 is forecast for enhanced water, despite awareness of high sugar content. This supports Minesota State University findings that although individuals know that sugar sweetened beverages are detrimental to health, two per week (average) are still consumed per person. This indicates the bridged gap between intention and indulgence.
Inglis concludes: “If you are looking to hydrate after exercise, or are substituting carbonated soft drinks that are high in sugar, then yes, but if you are consuming it as a food supplement, or are seeking weight loss, enhanced beverages are unlikely to provide an all-encompassing benefit.”
*GlobalData’s 2019 Q3 consumer survey
Premiumization has developed as an excellent way forward for the brands to make consumers feel valued and special in the Asia-Pacific (APAC) region as the consumers are preferring and consuming high value products, says GlobalData, a leading data and analytics company.
Across the FMCG sector, be it food, or beverages, the brands are releasing new premium products along with exclusive offerings that elevate them above the national mass brands and compete as recognized premium products.
With the socio-eco diversification, the purchasing behavior of consumer has totally altered in different countries of the same continent. For instance, 76 % of consumers in China typically relish the opportunity to consume the highest-quality food & drink, often justifying a higher price point.
Shagun Sachdeva, Consumer Insights Analyst at GlobalData, says: “Asia-Pacific region has huge potential for growth due to population growth, rapid urbanization and rising disposable incomes in its emerging economies. High on the list of consumer preferences are high quality products with a luxurious feel and the products that offer greater convenience. The consumers also prefer to have products that pass stringent safety standards and are produced with environmentally sustainable practices.
Adapting to the changing demands and values of today’s modern shoppers, brands have realized the need to upgrade to premium offerings. Manufacturers have their eyes set on the premium market and targeting the middle-to-high income segment through host of value-adds to lure people to upgrade.”
Total drinks industry merger and acquisition (M&A) deals in Q2 2019 worth $2.11bn were announced globally, according to GlobalData, a leading data and analytics company.
The value marked an increase of 74.6 % over the previous quarter and a drop of 44.1 % when compared with the last four-quarter average, which stood at $3.78bn.
Comparing deals value in different regions of the globe, North America held the top position, with total announced deals in the period worth $2.01bn. At the country level, the US topped the list in terms of deal value at $2bn.
In terms of volumes, Europe emerged as the top region for drinks industry M&A deals globally, followed by North America and then Asia-Pacific.
The top country in terms of M&A deals activity in Q2 2019 was the US with 18 deals, followed by the UK with seven and Spain with four.
At the end of Q2 2019, drinks M&A deals worth $3.32bn were announced globally, marking a decrease of 87.2% year on year.
Drinks industry M&A deals in Q2 2019: Top deals
The top five drinks industry M&A deals accounted for 98.2% of the overall value during Q2 2019.
The combined value of the top five drinks industry M&A deals stood at $2.08bn, against the overall value of $2.11bn recorded for the quarter. The top announced drinks industry M&A deal tracked by GlobalData in Q2 2019 was E. & J. Gallo Winery’s $1.7bn asset transaction with Constellation Brands.
In second place was the $300m acquisition of Dogfish Head Brewery by The Boston Beer and in third place was Cafento Coffee Factory S.L’s $33.58m acquisition of Java Republic.
The $21.62m asset transaction with McLeod Russel India by Luxmi TeaLimited and Lalique Group’s asset transaction with The Glenturret for $20.39m held fourth and fifth positions, respectively.
GlobalData’s Q4-2018 Quarterly Beverage Forecast reported a remarkable 6 % volume increase in consumption for UK Squash and Syrups in 2018*, the first time the category has seen growth since 2011.
Roisin Vulcheva, UK & Ireland Research Manager for Consumer at GlobalData, says, “This was an impressive result, particularly as Squash and Syrups have experienced several years of consecutive decline. The strong performance was driven by an array of factors including good weather, growth in adult soft drinks and new product development. Throughout 2018, there was a raft of premium launches helping Squash and Syrups to stage a turnaround and inject value growth back into the category.”
Throughout the year, growth was positive across all quarters, however summer was the key period of trading for the category, with the UK recording one of the hottest summers on record which helped to boost consumption.
Britvic was also instrumental in driving growth throughout the year. It invested heavily in Squash and Syrups, expanding its offering to appeal to a more mature demographic, in what is typically a category largely geared towards children. Britvic launched several new products targeted towards the adult segment under its Robinsons brand in 2018.
Interestingly, still ready-to-drink drinks, which include brands such as Capri Sun and Robinsons Fruit Shoot that also cater to the children’s demographic, declined by 10 % in volume terms for the year*, largely impacted by concerns around sugar and artificial sweeteners.
Vulcheva concludes, “Clearly the introduction of new flavours, packaging and more premium propositions helped to drive growth in the category which was further boosted by a hot summer. Looking ahead to 2019, the Squash and Syrups category is one to watch as it ticks the box in relation to several current key trends in the UK soft drinks market. More innovation is expected from branded players throughout 2019, with private label brands expected to emulate the efforts of branded players.”
*UK Quarterly Beverage Forecast Q4-18
The PET bottle has emerged as the preferred packaging for drinks among Japanese millennials due to its ease of use and eco-friendly nature. Against this backdrop, beverage giant Suntory Beverage & Food Limited (SBF) is looking to capitalize on the growing popularity of this packaging format to drive ready-to-drink (RTD) coffee sales amid a shrinking RTD market in Japan, says GlobalData, a leading data and analytics company.
According to the company’s report: Success Case Study: Suntory Craft Boss – Craft-style ready-to-drink coffee resonates with Japan’s Millennials, Japan is the largest RTD coffee market in the world, selling 3,574 million liters in 2017. However, the market volume growth in Japan has been slow in recent years and is expected to decline at a compound annual growth rate of -0.89 % between 2017 and 2022. On the other hand, GlobalData’s Market Analyzer reveals that the percentage of sales of PET bottled RTD tea & coffee has increased by 2.81 % from 6,659.30 million liters in 2017 to 6,851.58 million liters in 2018.
Suntory launched Craft Boss, a new range of RTD coffee under the Suntory Boss brand, in April 2017. The Craft Boss range is sold in PET bottles rather than metal cans to offer new consumption experience to millennial consumers.
Shagun Sachdeva, Consumer Insights Analyst at GlobalData, says: “The company’s move to launch craft-style coffee drinks in a PET bottle format is part of strategic product positioning to tap new consumer groups, particularly millennials. This clearly demonstrates that it has understood the importance of innovation in terms of appeal and packaging format, in line with the demographic changes in Japan.”
Craft Boss PET bottled coffee series crossed 27 million cases in 2018. It was the biggest driver of Boss coffee sales, which crossed 100 million cases last year. The success of this series helped Suntory compensate decline in other products, with a very strong growth of 8 million cases in 2018 compared to the previous year.
Sachdeva concludes: “Suntory is one of the first major manufacturers to react to the slow market growth of RTD coffee in Japan. The company has quickly identified the market gap and is catering to the evolving demands of the white-collar millennials to take advantage of the appealing market segment. Simply put, the company used incremental innovation and customer-centric strategy to gain a clear, competitive edge over rivals.”
The craft beer boom, which is primarily driven by younger consumers, is having spill-over effects on other industries, including the coffee sector. Within the sector, cold-brew coffee is gaining popularity. However, given its unique taste profile and perceived health benefits, opportunities exist for cold-brew producers to appeal to young as well as older age group consumers, finds leading data and analytics company GlobalData.
Since the brewing process does not require heat, the resulting cold-brew coffee drink has a smoother taste which often reduces the need for creamers, sugar or sweeteners. As a result, several consumers perceive cold-brew coffee to be a healthier alternative to traditional coffee.
GlobalData found that health and fitness is a high priority for younger consumers, hence the potential health benefits of cold-brew coffee are likely to be a key motivator for purchase among this cohort. This reflects in its 2017 Q4 global consumer survey, which shows that 21 % of consumers are interested and already purchasing beverages with cold-brew claims, while a further 27 % are interested but not yet actively buying such products.
Matthew Perry, Consumer Analyst at GlobalData, explains: “A number of consumers are now looking for more premium and indulgent soft drinks which demonstrate quality, authenticity and artisanal production methods. The fact that cold-brew coffee has been around for hundreds of years may heighten the appeal of the beverage among younger consumers driving the craft movement.”
In particular, younger consumers aged between 18 and 34 are more interested in cold-brew, with 28 % globally interested and actively buying such beverages, reveals the survey. This is 11 percentage points higher than those aged 35 and over.
Perry concludes: “Given the popularity of cold-brew among younger age groups, producers may wish to target these consumers with their offerings. However, it is important to understand that while the unique processing methods and sensory aspect of cold-brew may encourage younger consumers to experiment with the beverage, cold-brew coffee’s smoother, less acidic taste may resonate with older consumers who may prefer milder flavors and products which require less sugar.”
