Last drinks? The changing face of liquor industry

Wednesday 19 July 2017
Nic Crowther's picture
Co Editor
The Shaker

For around 4,000 years, humanity has relaxed with a drink. In 2017, the sheer variety on offer is baffling, and the way we consume our favourite tipple is rapidly changing.

Here are three trends to look out for in the coming years:

 

Bars and restaurants are under threat

The corner pub is not such a big deal in Canberra, but is much more prevalent in the larger capitals (and definitely in Europe). In 2017, the idea of a ‘local’  watering hole with a regular clientele might be in trouble, and there are a couple of things at play.

The first is availability. Not only are giant chains of bottle-shops putting downward pressure on price, companies such as Deliveroo and UberEats will bring a bottle straight to your house.

 

 

Secondly, rising cost of building and staffing a bar, pub or restaurant plays directly into this challenge, by increasing the price of drinks on a night out. Why pay $15.00 for a glass of wine when you can buy the bottle at BWS for $35.00? As a result, there is a lot more ‘preloading’ and less trade over the bar.

Housing affordability has also played a large role in the changed drinking habits of 25-40 year olds through a significant reduction in discretionary income over the last decade.

 

Big brands are struggling for authenticity.

A direct result of etsy.com and the maker-movement, consumers are now looking for a local–rather than global–product.

In social networks (both online and in real life), influencers now invariably know someone who is in the business of producing their own beer, wine or spirits.

 


Southern Comfort's rebrand introduces gold accents for a more premium feel

 

As a result, these brands are heavily promoted within the geographic region, and benefit from feeling being both accessible and unique. Established brands–think Smirnoff or Johnny Walker–struggle to achieve this particular style of credibility.

It’s true that the micro-brands still make a tiny percentage of the global booze market (their inability to compete on scale and price being the main limiter), however major brands are slowly beginning to adjust their bottle presentation to counter the trend.

 

People are drinking less

This is the single biggest challenge to the domestic liquor industry. Heightened awareness of the health impacts of drinking, a societal shift away from binge drinking, and tougher licensing laws have all had an impact on the way Gen-Xers and Boomers consume alcohol.

 


Source: Australian Institute for Health and Wellbeing

 

Millennials are very different. There is an ever-increasing focus on health and beauty, with apps such as Instagram endlessly promoting a positive lifestyle (the artifice of which could be the basis of an entirely different series of articles!). But the outcome is simply that the 18-30 bracket drinks significantly less than previous generations.

 


Instagram is filled with people who are fitter and healthier than you

 

If they are dinking, they tend to trade up to craft beer, premium spirits or local wines.

 


 

In conclusion, these three factors often overlap. There is no doubt that there has been a large shift in drinking habits.

You can bet analysts and producers are carefully watching these changes carefully. At stake is a global $1.5 trillion industry, and brands that have existed for a century or more are determined to survive another 100 years.

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