Post COVID Beverage Industry Insights

Written by David Dafoe, Cheif Executive Officer & Founder

When I started working in the beverage industry in 1986, almost all of the beverages we created contained flavors that were natural and artificial. The beverage landscape was quite simple, with a mix of typical soda flavors, a few juices, traditional wines, spirits, and beers sold by large companies with little to no choice for variation. These beverages, for the most part, were packaged in standard bottles and cans with relatively simple graphics, side by side on store shelves.

This was a time before wine coolers, energy drinks, ready-made cocktails, tropical juice flavors, “all-natural” health beverages, dozens of beer variations, and spirits in hundreds of categories, representing a myriad of packaging and serving styles from manufacturers large and small. The beverage industry had wildly progressed into an ever-changing mix of trends, flavors, fads, and fickle consumer preferences. Then, in 2020, we paused.

Consumer Habits

In the sudden shock of COVID, consumers were comforted with familiar flavors in beverages across all categories. Childhood favorites like watermelon, strawberry, cherry, apple, and grape saw a resurgence as consumers gravitated towards immediately recognizable flavor profiles, preferring to reach for drinks that were traditional, relatable, and familiar. It seemed like overnight, consumers had stepped back to the things they knew and understood to bring comfort and make the ridiculously absurd COVID world feel normal, at least for a moment.

Consumers quickly trended toward “ready to drink” pre-mixed alcoholic beverages that were easy to buy, store and drink. Ready-to-drink (RTD) cocktails had started to build steam in recent years, but took off like a rocket during quarantine, delivering an easy solution for consumers to drink at home the cocktails they may have previously consumed in a bar or restaurant. Manhattans, Margaritas, and Gin and Tonic are now close at hand and available with the crack of a tab. Store shelves ballooned with carbonated cocktails, noncarbonated favorites, and cream-based RTDs. It was a match made in COVIDville!

Similarly, healthy and clean-label drinks became a favorite of families with kids at home learning remotely. Beverages with low sugar content and vitamins and minerals enhanced with flavors their parents recognized from their childhood were rising in popularity and being generated by product developers all around the country. “Make it healthy, simple, and familiar” was the demand of this market.

Generally, large alcohol companies sold well, as their brands were well-known and comfortable for consumers–a clear disadvantage for craft distillers. In a flash, consumers were more willing to spend money on something tried and true, and became less likely to spend money on a more expensive craft beverage that they had never tried. Adventure and exploration had been thrown out the window and classic was king. At the same time, newly health-conscious consumers became familiar with low- or no-alcohol brands and mocktails. Although both classic, established beverages and “good-for-you” spirits gained ground during COVID, no large alcohol companies seemed to lean into the healthy trend, keeping this market segment popular and “new.”

And let us not forget the common COVID symptom, loss of taste and smell, pushing afflicted consumers into bolder, more flavorful options and giving beverage manufacturers an advantage in introducing new products. Making drinks more flavorful became the mantra in beverage creation labs. Add a bit more flavor to the beverage, make it more distinct, but still keep with traditional favorites so COVID-affected consumers have choices.

Conclusions

As we move towards the end of major COVID surges, we can see several things that will likely remain in the beverage industry for some time. First, consumers have driven flavor profiles to a more familiar and nostalgic slant. Although we cannot control what has happened in our COVID world, we can imbibe on beverages and flavors that take us back to a simpler, “normal” time. Secondly, “ready to drink” is here to stay, making it easy to buy, store and enjoy a cocktail anytime and anywhere. Third, tried and true beverages will continue to see strong sales as we sail away from the last several years of wild experimentation. Lastly, beverages will continue to see growth in healthy, clean-label offerings that have risen to the surface through the health concerns of our COVID era.

Like many industries through COVID, beverage and flavor companies adapted quickly to the needs and desires of consumers. Although supply chain issues caused many of us to lose sleep (and hair!), the industry as a whole reacted and rolled with consumers. I suspect that when we look back, we will see that this beverage industry has been changed for the better, while receiving good grades for our rapid changes in consumer demands. Now, please let us move on.

When you’re ready to talk about your beverage idea, give us a call at (502) 273-5214 or get started with this web form.

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