Around the world, there are five key ways that consumers are influencing the fast moving consumer goods sector and these trends are consistent with what we are currently seeing in New Zealand. All of these factors create new demand for consumers and new growth opportunities for manufacturers and retailers.
- Changes in population with shifts in household sizes, ethnic make-up and ageing consumers
- Increased focus on health and wellness
- Openness to trialling new products that cross multiple categories, or new store formats that cater to different shopper needs
- An emphasis on experience, not price
- Products and stores that cater to time-poor consumers
In recent years, New Zealand’s liquor sector has shown clearly catered to Kiwi consumers by innovating in two of these five areas – health and wellness, and in the blurring of category lines.
THE RISE OF MINDFUL DRINKING IN NEW ZEALAND
The rising popularity of Dry January, Sober September, low-carb beer, alcohol-free spirits and hard kombucha in New Zealand suggest that ‘mindful drinking’ is the latest health-craze among Kiwi consumers.
Recent liquor sales in New Zealand show that manufacturers are actively trying to tap into the growing number of health-minded consumers. And their efforts appear to be paying off. For example, dollar sales for the lighter option beer segment grew 28.6% in the year ending 11 August 2019, fuelled by growth in low carb beer (+29%) and alcohol-free beer (+200.1%).
And New Zealand is not alone; in the UK market, the no/low beer category has grown by £16.1 million in the latest 12 months by attracting new buyers.
The rise of mindful drinking globally highlights that no-alcohol options will grow as a consumer beverage choice during social occasions. Aside from the successful launch of Heineken Zero in 2018, there is a rise in non-alcoholic craft spirits. Global brands like Seedlip and local entrants like Ecology & Co are providing consumers with more options than ever before.
Manufacturers are also channelling their innovation efforts to hit the sweet spot between ‘good for me’ and ‘good for we’ options across channels and categories. Consumers are increasingly seeking options that are better for their own health and that of their families, whilst also being better for the wider community and the environment. Aside from being a strong premiumisation play, the target market for this sweet spot is highly engaged and readily identifiable making it an attractive proposition for marketers.
In New Zealand, perhaps the best example of this is Part Time Rangers, who have launched three RTD products that are low in sugar, free of preservatives and contain natural fruit flavouring. For every can sold, Part Time Rangers donate 10% of profits toward animal conservation efforts around the world. Despite being a relatively new entrant, sales are already worth $3.2 million and growing, showing that there is demand at the intersection between ‘good for me’ and ‘good for we’.
INNOVATION AND BLURRED LINES
Nielsen continues to see innovation in the liquor market that’s increasingly blurring category lines with collaboration between breweries, distilleries and wine-makers. Whilst still small in New Zealand, Craft Brewers like Garage Project are continually innovating in the blurred-lines space, launching flavours that appeal to the more experimental and adventurous drinker (examples like Fairy Bread Rose and Vino Magico) Rekorderlig’s Cider Cocktails are another example (Rum and Vodka blended with Cider).
Looking to the US market for inspiration, there’s significant growth in the Hard Seltzer category, which is a carbonated alcoholic beverage. Before the year ends, Hard Seltzers will be worth over $1 billion USD – almost doubling in the last year. Highlighting the appeal of this segment to a wider audience, Nielsen Homescan data shows that over half of these sales have been due to new buyers entering the liquor category, with the remainder of the sales being driven by consumers switching from wine and spirits.
In New Zealand, brands like Happy Booch are looking to mirror the rise of the Hard Kombucha category globally. Hard Kombucha is now worth $1 million USD but rapidly growing at 237% compared to last year.
Ready-to-drink (RTD) spirits is one category that is set to take off with a proliferation of new products and innovation aimed at meeting the evolving needs of Kiwi drinkers. Traditionally popular with the male market, the next generation of RTD products are also resonating with female drinkers as shoppers seek out healthier beverage choices.