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Imbibe 2022: Let’s Raise A Toast!

Last week the drinks industry got together at their annual trade show in London, Imbibe Live. Bringing brands, buyers, restaurateurs, and on-trade personnel together, the two-day show saw attendance in the thousands with seminars on trends in the drinks industry coupled with unique tasting sessions.

Inflation, staff shortages & supply chain issues are hurting everyone

A common theme highlighted by brands and restaurateurs was how the cost-of-living crisis was harming them from both ends, with input costs rising and consumer spending decreasing. On-premise sales volume for the drinks category is down 5% compared to pre-Covid levels1, with c.40% of consumers highlighting they plan to go out less frequently and 1 in 5 consumers indicating they plan to order fewer drinks2. According to the Office for National Statistics, there were 164,000 hospitality vacancies between January and March 2022 (over 2x vs a year ago), reflecting additional operational challenges brands have to deal with.

Sustainability & flavour variety are driving consumer preferences

Increasingly, consumers want beverage options which utilize different flavour profiles and are made from locally sourced, sustainable ingredients like raw botanicals. On-premise sales for flavoured vodka are up 33% vs. 2019 while flavoured rum sales are 2x that of 20191.

Cocktails, craft beers & low/no alcohol beverages are emerging hotspots

Spirits is the only parent category to grow value share (+3.2pp3), stealing share from every other category (beer, wine, cider and soft drinks), with the cocktail sub-category sales being up 8%, on the back of people going out to pubs more, craving for experiences.

With the pandemic continuing to act as a tailwind to the health and wellness discussion, more and more consumers are considering drinking in moderation and/or consuming low / no alcohol beverages, with the category being considered a novelty by many until now with mainstream penetration still in very early stages. The market for such drinks in the on-premise channel is currently <£100M, with low/no beer beverages accounting for a bulk of that value. Kantar pegs the retail value of the category at c. £260M with wine being the biggest sub-category4.

However, it’s the low/no spirits segment which has seen growth explode from c.£1M pre-pandemic to £10M in 20223. Many small competitors are going direct-to-consumer and trying to capture the latent demand with unique flavours e.g., Caleño Drinks launched a no-alcohol gin influenced by Colombian flavours. Incumbents are losing share to these players with consumer willingness to try new products at an all-time high.

Looking ahead

As brands continue to adapt to changing consumer preferences, we expect to see new and exciting product development in different drinks categories and formats (e.g. RTD, low/no alcohol wine and spirits) with more investments being made by business leaders to expand the selection on offer.

Food Strategy Associates are leading advisors in the UK food & drinks industry, providing both commercial & operational support for transactional & strategy projects. Please get in touch here to see how we can help your business.

1. CGA OPMS QTR to P03 2022 VS. 2YA – 24/03/2022; 2. CGA GB Reach 2022 (Sample size: 1,000); 3. CGA OPMS MAT to P05 2022 – 21/05/2022; 4. The Grocer/Kantar 52 w/e 20 February 2022