Health And Wellness Trend Drives 2020 U.S. Beverage Industry, And Wine Suffers

Food & Drink

In a press release, Jaysen Gillespie, VP, Head of Analytics and Data Science at Criteo, explains that “Gen-Z and Millennials are constantly seeking products that not only fit into social trends, but also elevate life experiences.”

Criteo is a web-based consumer tracking company that serves advertisers, so perhaps companies listen, when Gillespie intimates that Dry January is more than just a passing fad. According to him, “Cultural trends and shifts in consumer purchase sentiment don’t happen in a vacuum: it’s important to understand what’s going on in consumers’ lives.” He follows with, “…more consumers are saying ‘I want to be health-conscious,’” and one way to do that might be to temporarily reduce alcohol consumption–or it might be to abstain.”

Gillespie claims, according to his company’s survey, “…one in six U.S. shoppers has chosen to stop buying from brands whose values conflict with their own personal beliefs.” 

That leads him to believe the “sober curious” trend will “…have legs for some time.”

Gillespie points to a Bon Appétit survey which mirrors a Nielsen CGA survey. The market for low alcohol and no-alcohol products is expected to grow 32% by 2022 from its 2018 status. Rather than the alternative market many have called it, Gillespie views the low/no-alcohol market as a new opportunity—for beverage alcohol companies. As noted in this space earlier this month, the beer industry is expected to invest heavily in seltzer and other non-alcoholic brands. Gillespie agrees with Nielsen in recommending more “…sober bars, pop-ups, and alcohol-free menus.”

In fact, Nielsen CGA’s latest data shows that soda drinks were the most popular option (46%) for last year’s Dry January participants, and “U.S. retail sales of soft drinks are experiencing 2.9% growth in the past year.” 

According to Nielsen, non-alcoholic beverages are worth $7 billion more at retail than they were four years ago. Nielsen says this January may solidify the trend toward soft drinks, as its data for 2019 shows nearly 48% of people dining out choose soft drinks with their food—beer is at 29%, cocktails,13%.

Using the phrase “sober curious” and the word “buzz” implies consumers drink only to get drunk. Wine consumers might especially object to that view. But what about wine and the latest consumer shift?

This headline is from the drinks market research and analyst firm IWSR: “Wine Consumption in US Declines for First Time in 25 Years.”

According to IWSR, “Though sparkling wine in the US grew last year by almost 4%, it wasn’t enough to offset the decrease in the large still wine category (-1.5%), which brought total wine down by -0.9%. The last volume loss in the category occurred in 1994…”

Then, there’s this press release headline: “Silicon Valley Bank Predicts 2020 Will Bring the Best Wine Values in 20 Years for US Wine Consumers.”

In its 2020 State of the Wine Industry Report released today, SVB tells us despite smaller 2019 harvest in California, Oregon and Washington, there remains quite an oversupply of U.S. wine on the market and it will be reflected in wide-spread discounting at retail, and at the winery “…confidence in current market conditions dropped precipitously in 2019, with 49 percent of respondents taking a pessimistic view, compared to only one percent who were pessimistic in 2018.”

In a few words: there will be more bulk wine on the market.

SVB blames millennials for not having embraced wine. The bank’s wine division founder, Rob McMillan is convinced domestic wineries must understand what he calls an “evolving consumer profile.”

Could it be the real culprit isn’t the millennial generation not appreciating wine, but a cultural shift? That evolving consumer profile McMillan refers to likely includes the upcoming Generation Z, which we hear from other data reapers may have a predilection for low and non-alcoholic drinks as well as spirits/cocktails. 

Maybe lower prices can help the domestic wine industry and maybe tariffs on imported wine will create new demand for U.S. wines, but if fewer people are brought into wine consumption, gains as a result of price and lack of availability of imports could prove to be nebulous.

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