4 Industry Trends Every Beverage Entrepreneur Should Know

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Entrepreneurs in the beverage space are facing a critical moment as economic turbulence affects their industry. However, even in uncertain times, there are still opportunities for drink companies to adapt, innovate and grow.

Here are four impactful trends that every beverage entrepreneur should pay attention to:

1. Changing consumer preferences

Consumer tastes continue to evolve, particularly in the liquor sector. In recent years there has been a surge in consumers purchasing more spirits, largely thanks to the growing popularity of whiskey and agave-based alcohols like tequila.

Younger consumers are driving some changes in the market with their preference for canned products (like hard seltzers and ready-made cocktails) over wine, for example. And, while millennials and Gen Z are purchasing less wine, the sparkling wine market has grown for 21 consecutive years and is projected to be worth $56 billion by 2028.

In the non-alcoholic sector, entrepreneurs and investors should keep an eye on the growing sober and sober-curious movements. These days, it’s also not unusual to spot alcohol brands like Heineken and White Claw offering their non-alcoholic choices, fine dining hotspots like Nobu introducing non-alcoholic drink lists or celebrities such as Blake Lively launching zero-proof brands.

2. Premiumization

Even as inflation remains relatively high, buyers are going up-market. Premiumization — when brands develop luxury products that can be sold at higher prices or when consumers gravitate to higher-priced items — continues to trend in the beverage industry. Although overall wine and beer sales declined last year, their respective premium segments increased (wine by 6 percent and beer by 4 percent).

Long-time industry players may recognize that premiumization is not new in the beverage sector. Customers in this space are used to spending more than $50 on a bottle of Patron Tequila or thousands on a bottle of Pappy Van Winkle’s Family Reserve.

But, what makes this trend worth tracking is that there are signs premiumization in the beverage industry is still growing. Last year, 33 percent of Americans said they spent $50 or more on a bottle of alcohol, up from 24 percent in 2021. Investors take note: premiumization is considered a long-term trend.

3. Beverage-based tourism

Consumers are also keen on experiences. This is particularly true for travelers, who are prioritizing authentic experiences over costs and tourist attractions and they are flocking to beverage-based excursions, such as winery, brewery and distillery tours. This year, 81 percent of respondents in an American Express survey said trying local cuisine was their most anticipated vacation activity. This offers drink companies opportunities for increased sales, higher brand awareness and new avenues for customer engagement.

Entrepreneurs can capitalize on this trend by offering unique, local experiences to their customers, such as guided tours, tastings and other interactive events. Experiences can also help companies connect with local professionals, creatives and other businesses through collaborative offerings, such as multi-course dinners and after-hour gatherings.

4. Functional beverages

Wellness has remained big business post-pandemic — the global wellness industry ballooned from $3.4 trillion in 2013 to $5.6 trillion last year and is projected to grow 57 percent by 2027.

The rise of more health-conscious consumers has led to a demand for functional drinks (beverages that serve wellness needs, like Kombucha for gut health or Kava drinks for anxiety relief). Entrepreneurs in this space can meet wellness demands by producing innovative functional beverages, and marketing campaigns, that target health-focused consumers. This can include nutritionally dense drinks, herbal teas with calming properties and beverages that target health concerns such as fatigue, inflammation and brain fog.

Established brands like Coca-Cola are also hopping on the bandwagon and establishing themselves in this burgeoning segment. This year, the industry giant released a new smartwater product that includes antioxidants aimed at increasing hydration. Upon launching, Coca-Cola collaborated with fitness influencers and even created digital marketing touchpoints in gyms across the country.

Adapting to trends

While the beverage industry rapidly adapts to changing economic conditions and consumer behaviors, entrepreneurs can take advantage of the myriad of new growth opportunities. For instance, even as wine sales take a hit, makers of Processo have experienced increased demand thanks, in part, to culinary tourism and the rise of functional wellness products. Similarly, by catering to evolving trends, beverage companies can find new ways to serve loyal customers, grow sales and even thrive in a changing climate.

Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.

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