Over 120 million strong in the U.S., multicultural Americans are a large, young and growing segment. And similar to the Millennial demographic, of which they comprise 40%, they’re a key group for the alcoholic beverage market. This is particularly true when considering the U.S. Census Bureau projects the multicultural population above the age of 21 will increase by 20 million people over the next 10 years.
Sales of beer, wine, and spirit are trending up, and multicultural consumers of legal drinking age (LDA) are a key force behind this growth. In the last year, penetration of alcoholic beverages ticked up for Asian-Americans and Hispanics. Additionally, estimated expenditures for both African-Americans and Asian-Americans in the alcoholic beverage space (+6.6% and +10.2%, respectively) eclipse the category rate (+3.7%) by several points.
So what are these diverse consumer groups looking for in the alcoholic beverage aisle?
African-Americans prefer to spend the majority of their alcoholic beverage dollars on spirits. Vodka has shown the strongest growth with African-Americans, and these shoppers are 14% more likely than the general population to have consumed the drink within the last month. In addition to vodka, African-Americans are also increasingly purchasing gin, bourbon, brandy and cognac. Given their preference for spirits, it’s not surprising that African-Americans are more likely to buy alcoholic drinks from small stores (such as independent liquor stores or convenience stores where relevant) or social spaces (such as stadiums, night clubs, etc.) than from grocery and club stores.
Hispanic shoppers, on the other hand, get behind beer in a big way. This consumer group gives a greater share of their wallet to beer than other multicultural consumers. In fact, 44% of Hispanic adults claim to have consumed a beer within the last 30 days, slightly above the U.S. average overall. Hispanics prefer domestic light beers and imported beers, with brands in those segments receiving more than their fair share of Hispanic dollars.
Of all these multicultural groups, Asian-Americans are the most engaged across the whole beverage alcohol industry. These consumers value variety. Over 40% of Asian-American LDA adults have consumed or purchased a bottle of wine, spirits or beer in the past month. In the spirits category, Asian-Americans consume whiskey more frequently in a month than other spirits. These consumers are also more likely than other multicultural consumers to buy premium-priced wine, highlighting their preference for quality.
Even within these categories, multicultural consumer groups have flavor preferences that influence their choices at the store.
African-Americans and Hispanics tend to prefer products with sweeter notes—both gravitate toward white wines with a sweeter profile, such as moscato. In the hopes of appealing to these consumers and driving growth, many alcoholic beverage producers (particularly spirits producers) are expanding their flavor offerings to include sweeter or fruitier variations. Based on recent sales trends in measured channels, this strategy seems to be paying dividends and affecting the look of the entire industry.
While spirits sales grew at a rate of 5.9% in mainstream retail (grocery stores, mass merchandisers and other non-specialty retailers), flavored spirits eclipsed that rate by nearly three points. This, coupled with the continued presence of ciders and the arrival of “hard sodas,” points to demand for more flavor, as well as the demand having a multicultural influence. African-Americans are especially drawn to flavored spirits in part due to spending relatively more of their dollars on the segment and also because flavor appeals to them more strongly. Asian-Americans and Hispanics may not over-index in the same way, but both consumer segments still feed into this growth as the size of their population over 21 years of age continues to expand.
In addition to the activity happening within flavored spirits, many other brands in adjacent alcoholic beverage segments are also attempting to reach multicultural consumers. Instead of explicitly creating or marketing “flavored” options, brands can often be seen promoting the “sweeter,” “floral” or “fruity” accents that arise from their production processes. Meanwhile, the aforementioned emergence of hard sodas builds upon the insight of flavor appeal, and these brands seem well positioned to score some success with multicultural consumers considering the relative preference indicated by sales of fruit-flavored, full-calorie soft drinks among African-Americans (52% above expectation considering their share of the general population), Asian-Americans (15% above expectation) and Hispanics (14% above expectation).
Multicultural consumers are relevant for many fast-moving consumer goods (FMCG) categories, and the alcoholic beverages industry is no different. Many categories’ sales trends show powerful evidence of multicultural consumers acting as the accelerators for growing categories and the brakes for declining ones. Understanding multicultural consumers’ preferences and tailoring products or strategy to meet their wants and needs is crucial for driving business growth today.
The insights in this article were derived from four different Nielsen sources: Nielsen Homescan Premium, 52 weeks ending Dec. 26, 2015; Nielsen Scarborough USA+ (age 21+ only) 2015 Release 2 Total (August 2014-October 2015), Base: Total Adults 21+ years old, Projected: 231,594,950, Respondents: 199,303; and Nielsen Homescan Hispanic Expansion Panel, 52 Weeks ending Jan. 2, 2016, which includes English-preferred, bilingual and Spanish-preferred households while the other included sources are more strongly weighted toward English-speakers. Number from Nielsen Homescan Panel may underrepresent sales from on-the-go/immediate consumption occasions.