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Flavored alcoholic beverages ranging from spirits to wine, cider, beer, ready-to-drink (RTD) and high-strength premixes were all the rage in the U.S. during 2012, says Euromonitor, and the trend is set to develop further in 2013.
According to an analyst insight post by Claire Moulin, a lead analyst for Euromonitor International, legal drinking age consumers, especially those under 30, the so-called “millennials," are exploring new types of drinking habits. "They are adventurous in terms of flavor and brand and they do not want to drink the same way their parents did," Moulin wrote.
The evolution of consumer drinking habits, demand for convenience and differentiation are boosting demand for alcoholic beverages that are recognizable yet different, Moulin adds. "The key word is differentiation. You are what you consume and what you drink is increasingly a matter of defining one’s lifestyle. Uniform and one-brand-fits-all is giving way to segmented, more artisanal products, with consumers mix-and-matching in-between," she said.
Although spirits have seen the most development in terms of flavoring over the past few years, according to Moulin, there are opportunities for flavor development in beer and beer-hybrid beverages, as illustrated by the success of Bud Light Lime-a-Rita. The brand was launched in April 2012 in the U.S. in both off and on-trade and was instrumental in AB InBev’s sales increase in 2012, having been in decline since 2008.
"Beer flavorization brings potential to a category that has been struggling since 2007, and helped sales turn around in 2012, while providing potential for brewers to expand in new categories such as malt-based RTDs. Malt-based RTDs vs craft beer," wrote Moulin. When looking at the flavor landscape in alcoholic drinks, there is a clear polarization trend. On one side the focus is on the convenience and accessibility of ready-mixed and easy to drink products, with a younger image, and on the other side it is on more acquired tastes, playing on authenticity and characterized by stronger flavors, with a more grown-up image."
The analyst notes beer is following a similar trend, with the range of flavors divided between fruity/sweet and more acquired/stronger tastes. Most products falling in the first segment are categorized as malt-based RTDs, as the beer is mixed with added sweetener and flavorings, while the latter is mostly found in craft dark beer. Malt-based RTDs is characterized by the convenience of ready-to-drink hybrid beverage. The fact it mixes different types of alcoholic beverages makes it intrinsically different, Moulin said.
In addition, convenient packaging makes it easy to purchase and consume on impulse. For example Bud Light Lime-a-Rita is available in 8 oz. cans, 12 oz. glass bottles and 24 oz. cans, sold individually, and typically in the chilled cabinets of convenience stores. In the on-trade, the brand is often sold under a special deal with several cans sold in a bucket of ice for convenience of sharing. Products are usually targeted at younger consumers, using a sweet taste with artificial fruit flavors, such as lime and blueberry, and high alcohol content: 8% abv for Bud Light Lime-a-Rita.
A key point for success is to bring differentiation while still retaining a recognizable and familiar aspect, said Moulin. In the case of Bud Light Lime-a-Rita, the brand uses terminology borrowed from the mixology world and uses the existing Bud Light Lime brand as a point of recognition. For craft beer, differentiation with a familiar twist is still true but is done in a different way, the analyst added. The trend is trying to steer away from sweet and artificial tastes and re-inventing classic (almost old-fashioned) flavors. Claims focus around authenticity and character of the product, borrowing from longstanding examples in spirits, for example using barrels that have previously been used for bourbon. Recognizable flavors are prominent, accentuating the natural and non-artificial artisanal process, to give a more mature, adult positioning.
Beyond sweet flavors and gender-specific limits, Moulin said it's easy to see beer consumption as gender-specific, with flavored malt-based RTDs being mostly targeted to women consumers, playing on the stereotype of women not liking the strong, ‘acquired’ taste of beer, a stereotype also seen in spirits, and instead seeking sweet alternatives.
"But in terms of actual consumption, men form a surprisingly large part of the consumer base for these products. There is a strong demand for flavored beer beverages that are socially acceptable for men to drink, a demand Mike's Hard Lemonade successfully fulfilled, making it leader of the malt-based RTD category," Moulin said.
"In an attempt to reach male consumers, Smirnoff launched Smirnoff Ice Black, a “male-friendly” malt-based beverage, in early 2012, a product that quickly got lost in the Smirnoff Ice range as it did not bring any real differentiation, apart from being targeted at men," Moulin added.
Key products in flavored beer, according to the analyst, have been the ones that have successfully transcended gender categorization, using differentiation with a familiar twist instead. She said Bud Light Lime-a-Rita has successfully appealed to men and is expanding its flavor portfolio, with Straw-Ber-Rita available since early 2013, and potential for more flavors such as berries or mango.
"Being solely gender-specific in terms of marketing is not enough and to be successful, brands must bring tangible differentiation and added-value beyond gender stereotypes. One of the only really successful alcoholic drinks with a clear gender positioning in the U.S. has been the Skinnygirl range, going beyond gender stereotypes and actually providing something different; the convenience of ready-mixed cocktails, without the high-sugar or artificial content of the competition," Moulin said.