Brand Innovators 2022 Outlook: Spirits & Alcohol
In the 13th installment of our 2022 Outlook Series, Brand Innovators speaks to leaders at Spirits & Alcohol brands about what is on the horizon for 2022.
COVID significantly shifted the way consumers imbibe. The pandemic has slowed down the on-premise restaurant and bar business since 2020, but this summer consumers began going out again. A new variant threatens to stagnate this momentum but alcohol brands are making up for this loss through ecommerce and digital ordering as consumers continue to socialize in smaller groups at home. The category has been driven by innovations in convenience, taste and premiumization.
For Pernod Ricard, growth is being driven by ready-to-drink cocktails, American whiskey and tequila. Pernod Ricard’s portfolio hit its highest growth mark ever, with annual sales up 16% in 2021. The company surpassed the $2 billion annual sales mark for the first time ever and hopes to continue this growth in 2022.
“Like every industry, the spirits sector experienced numerous challenges throughout the year, mostly as a result of the pandemic,” says Pam Forbus, SVP, chief marketing officer at Pernod Ricard North America. “As we approach 2022, we’re doubling down on data & analytics to meet consumer expectations around convenience and transparency. The ability of consumers to purchase our products through e-commerce is radically different, and vastly improved today from what it was just two years ago. Now that our consumers are used to this increased convenience, there is no turning back. We’re leveraging advanced data & analytics capabilities to identify shifts in consumer demand more quickly and accurately so that we can be more agile with our retailers and wholesalers to meet those demands, while still keeping data transparency top of mind.”
The Spirits & Alcohol category will face the same supply chain and inflationary issues as any other sector of the economy, which will lead to the importance of quality in order to stand out in the marketplace.
“If you zoom out from alcohol and you look at the current inflation rates, this is insane. I think you are going to see the cost of goods due to supply pressures, inflationary pressures go up,” says Sophie Kelly, Sr. VP North American Whiskies, Diageo. “You are going to see challenges from all of the categories whether it be non-alcohol or cannabis coming to play. The lines in the sand around categories have kind of blurred. Premiumization is going to be a big theme. You better be sure that you are providing the quality of products and experiences to consumers so that you are at the top of their list. I suspect that experimentation is going to get lower due to the inflationary impact and you better be visible and represent quality so that you are the go to for people.”
Consumers are also looking for convenience in how they access alcohol and brands that make digital shopping easier will stand out. “We are seeing in the beverage alcohol category that convenience is the biggest driver of innovation,” says Lesya Lysyj, chief marketing officer at Boston Beer Company. “From ready to drink cocktails to alcohol delivery services, everything relating to convenience will continue to be a big trend in 2022.”
“As COVID accelerated digital behaviors with the alcohol category, I’m not expecting this to slow down in any shape or form,” says Luis Freitas, CRM & Omnichannel Director at Moet & Chandon. “While we are all eager to return to some level of normalcy and to places where we can safely enjoy a drink with friends, the truth is that two years is a long time for behaviors to settle. Some of the levels of convenience pursued by consumers that our category delivered in the last two years are here to stay – be it delivery services, assisted shopping or influencer-based shopping experiences or many other new ways we engage our consumers in the new reality. Because of this, I believe our category is going to focus on this continued evolution vs preparing for a ‘return’ to normal. There is no ‘return’ in my opinion, there’s just a continuation of life as it adjusts to new ways of interacting and behaving under COVID.”
Jennifer Holiday Hudson, director at Smirnoff Vodka & NA Trademark Brand Leader believes that brand values will play a large role in 2022.
“The industry has experienced a lot of changes over the past two years, and we have worked diligently to make a meaningful difference as culture is continuously evolving in today's world,” she says. “We are a brand that is truly ‘for the people’ and have been steadfast in leading the way when it comes to inclusivity and driving change both in the industry and society. In 2022, we will continue doing that with our Vodka for The People initiative, which is our way of bringing flavor, fun, forward thinking and giving people the change they want to see across all that we do from our diversity and inclusion commitments and sustainability efforts to impactful responsible drinking programming.”
“As a brand known for mixing cocktails, this year Absolut has focused on empowering our consumers to keep responsibility at the center of reconnecting and acknowledge that everybody mixes a little differently these days so to mix with respect,” says Lara O’Brien, senior brand director at Absolut. “Looking at trends, we’ve seen popularity in at-home entertaining leading Absolut to partner with the go-to resource in the space, Social Studies, to offer consumers a holiday kit inspired by the Absolut Espresso Martini that is designed to help any host elevate his or her holiday get-together. In addition to this sophisticated yet effortless way to come together, it is no surprise that the ready-to-drink category continues to grow in popularity outpacing traditional options like beer, wine and cider. We know our consumers continue to crave convenient on-the-go options, as well as rich at-home experiences, so you’ll see Absolut continue to deliver on that while prioritizing quality and taste as a beloved global brand with deep roots in cocktail culture.”
Diageo’s Kelly expects to see community and club type experiences on the rise. “Look at what is going on with NFTs. People ultimately are buying into their communities,” she says. “The notion of consumers buying into community club type experiences is really interesting. What has the pandemic done? It has blurred the lines between physical and digital in a way that we have never seen, in a way that is accelerating. The sexy terms out there are the metaverse and NFTs, but there is also ecomm and everybody buying and ordering digitally. You are going to have to have ease of transaction, convenience and a frictionless experience.”