Macro and Innovation Drink trends – Insights from the ILG Conference

06 September, 2019 by Andy Young

In part one of this two-part update, Shane T Williams details some of the key insight from the ILG Conference recently held in Vienna and Budapest.

The business sessions at the recent Independent Liquor Group (ILG) conference held in Vienna-Budapest shared key insights and trends to help members better run their retail outlets, bars and pubs. Treasury Wine Estates (TWE) David Wright, Diageo’s Riley Fisher as well as Lion’s Richard Matthews and Robbie Jurcevich shared their industry insights and trends with delegates.

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Convenience and frictionless shopping

Consumers are researching online then coming in-store, so be ready. The increase in ‘click and collect’ across all categories is crowding out traditional in-store browsing, says TWE’s Wright. The challenge for retailers is when consumers come instore they need to provide a frictionless shopping experience and remove barriers to purchase. Esposito hammered home this point and said that retailers need to make stores more ‘shoppable’, less cluttered and to give consumers what they want. The whole local and craft explosion plays right into the hands of local family run businesses so retailers should take advantage of this trend.

No and low alcohol, health and wellbeing

Changing demographics including the rise in the buying power of millennials, changing drinking occasions, an increase in immigration along with a general health and wellbeing trend has driven growth in no and low alcoholic drinks, as well as drinks with lower sugar and carbs.

“We used to call this a health trend but it’s so much more, it’s now a lifestyle and more and more consumers are adopting it and it is here to stay,” said Diageo’s Fisher.

No and low alcohol, lower sugar, organic and healthier drinks are here to stay and this pivot in consumer behaviour represents an opportunity for liquor retailers and also throws up a few challenges. Consumers are more aware of the drinks they purchase and want to know their origin, what’s in them, where they are made and how it will affect them.

TWE’s Wright (pictured below) links the desire dimension with the health and well-being trend, “the more these consumers know, the more they tend to spend”. It makes good business sense to educate the trade and consumers to meet their desires and at the same time increase sales. “These consumers want to know the ingredients, is it organic, biodynamic or vegan and all this information needs to be communicated in-store. These consumers want to be educated and there’s margin and dollars to be made in the process.”

Mass luxury and premiumisation

Mass luxury builds on premiumisation and will be a key growth driver over the coming years. In the past 10 years full strength bottled spirits (FSBS) with a luxury price tag of between $50 and $70 have grown from 24 per cent to 46 per cent of all FSBS sold.

Diageo’s Fisher talks up ‘mass luxury’. “It’s like treating some of your luxury products like you treat your big movers,” he says. Mass luxury is about accessible, approachable and authentic brands on scale. Fisher points out that if 46 per cent of all FSBS are in the luxury price range, retailers should be taking advantage of this growing trend and allocate appropriate space in their spirit bays to drive luxury sales.

Drinking local – craft vs corporate

With a greater focus on provenance, retailers are also placing more emphasis on products that resinate within their local demographic. From craft beers to local gins, more and more categories are weighted towards locally produced brands over corporate or multinationals. Having said that, there is still a place for the big end of town, larger suppliers are changing the way they do business by approaching brands from a more local perspective.

“There is a massive push towards local, how we get more people involved from the local community and how we as suppliers and as venues can support the local community,” said Lion’s Jurcevich.

We’ll bring you part two of the insights on Monday and the full report on the Vienna Budapest ILG conference can be read in the September issue of National Liquor News.

 

 

 

 

 

 

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