Traditionalism/Authenticity

With recent political and geopolitical events, such as Brexit, ongoing unrest in Middle-East, an election of unpredictable US president tension with Putin’s Russia and others, and constant change in technology, future is more unpredictable as ever. To get some comfort in fast paced and ever changing lifestyle consumers are looking for traditions and authenticity. This doesn’t eliminate the need of innovations, instead its emphasizes the past as a reliable source for innovations – this can translate to the modern and innovative package to traditional beverages, craft movement with emphasis to authentic recipes or/and production methods, the launch of new products designed with local/traditional ingredients.

E-commerce

E-commerce is changing the whole consumer buying experience and it is going to influence the spirits industry. Brands who are exploiting the digital channels can interact faster and better with consumers, communicate their message to the consumer and gain new markets without heavy investment in distribution channels.

Terroir-driven spirits

It’s still debatable if distillation won’t strip the terroir differences, but it gives an opportunity for the producer to tell the story to the consumer about the product – why it was made, how the location was chosen, what differentiates his brand from the others and so on – it’s a very powerful marketing tool that helps to connect to consumer on deeper level.

Whiskey

Whiskey continues to diversify and grow. With the explosion of craft distillery in the US, growing popularity of flavored whiskeys and solid growth of Irish whiskey, the whole whiskey category looks good. Besides craft distillers, growth will be driven by experimenting with aging conditions, selection of the wood, experimenting with different yeast strains and, of course, new flavor profiles trying to match fireball success story.

Gin

Long time gin category was dominated by a few multinationals, but in recent years, gin is having a renaissance. The biggest growth is coming from craft distillers who are boldly experimenting with new flavors and botanicals.

Rum

Although rum category is stagnant, it has a tremendous opportunity to grow to exploit same trends as whiskey – premiumization, launching new, single barrel, older expressions, experimenting with barrels, emphasizing country of origin and source/terroir of the main ingredient – molasses or sugar cane juice.

Coffee

Coffee is one of the most popular non-alcoholic drink. With varietal coffees and innovative brewing techniques such as cold brew, vacuum pot, aero press, or a moka pot going mainstream, it’s only a question when it will translate to alcohol-spiked coffee to replace traditional over-sweet liqueurs.

Brexit

Nobody for sure knows how it’s going to affect markets and economy and spirits industry in particular. Now the trade agreements are in place, but it may change soon. Even if trade agreements will be renegotiated successfully or Brexit won’t happen (UK parliament still need to vote) it will bring uncertainty in the whole drinks industry. The UK produced spirits (Scotch and gin mainly) might lose grounds in other markets to products produced in other countries. On the other hand, UK should see the growth of locally produced Eaux-de-vie, cognac/calvados type brandies, liqueurs, etc.

Original article was published in Beverage Industry Blog.

There is no clear and consistent definition of liqueurs (produced all over the world and are regulated/defined by local laws and rules) but in general it can be described as sweet alcoholic drink with at least 2,5% of sugar by weight (most liqueurs having 17%-35% of sugar) and with an alcohol range from 15% abv to 40% abv (can go up to 55% abv and higher).

The main processes of production of liqueur are infusion/maceration and/or distillation of herbs, spices, fruits, berries, etc. or just simple alcohol flavoring with highly concentrated flavors and extracts. Formulations can be very simple, containing just a few ingredients or very complex, using hundreds of different aromatic ingredients (blend of 130 ingredients are used to make Chartreuse liqueur).

It can be consumed by themselves as an after-dinner drink or dessert, poured over ice, as a mixer in cocktails, etc.

Liqueur can trace its roots to 13^th century Europe when monks begun to use eau-de-vie, supposedly with healing properties, to make herbal tinctures using local herbs, spices and berries. To make tinctures more palatable (to mask bitterness of herbs/spices and harshness of alcohol, at some point honey (most widely available sweetener at that time) was added.

With the expansion of colonial Europe, new trade routes were added, allowing to have access to reasonably priced new spices and sugar, thus enabling monks and apothecaries to create new and amazing liqueur.

Some of today’s most famous liqueurs can trace its roots back to 16^th century – Benedictine was formulated in 1510 by the monks in the town of Fecamp, in the Caux district of Normandy, Bols Distillery in Amsterdam opened in 1575, Krupnikas (or Krupnik) was created by Benedictine monks in 1593 at a monastery in Niaśviž of Grand Duchy of Lithuania, Chartreuse made by the Carthusian Monks in France, based on the instructions set out in a manuscript dated in 1605.

Since the beginning, the whole process of liqueur making didn’t change a lot – still the same flavoring and sweetening the base alcohol, just new technologies allowed to make them more consistent, less harmful (strict regulations on ingredients used and their purity), more colorful (new and stable natural colors), more “healthful” (calorie reduction with derived from nature zero calorie sweeteners) and globalization allowed to introduce new flavors from different part of the world.

It is very hard to categorize liqueurs, because there are endless possibilities to flavor your base spirit, mixing various ingredients, but main types of liqueurs are crème (low alcohol content and very sweet (syrupy)), cream (blend of alcohol, cream, sweetener and flavors), herbal/floral, fruit/berry, nut, chocolate and coffee.

And then there are different base alcohol – neutral spirit (vodka), whisky, rum, tequila and other local spirits to choose from.

Despite all the possibilities, liqueurs as a category faces a lot of challenges. The main one, probably, is the shifting alcohol consumption patterns – younger generations are switching to lighter (taste, alcohol amount, calories, etc.) alcoholic drinks such as low abv beers, flavored ciders, mixed drinks, brown spirits popularity, gin resurrection just to name a few. The emphasis on traditions and innovation in liqueurs are the key to make category relevant.

The whole beverage industry is effected by the same behavior changes as the whole food industry – sustainability, premiumization, health and wellness, craft movement, flavor innovation – just to mention a few of them.

Take advantage of healthy consumer trend

Probably one of the biggest driver in product innovation is health and wellness. Due to the aging population in most developed countries, consumers are becoming more health conscious and are striving to consume products with perceived nutritional/health benefits. It’s a bit tricky for the alcohol producers (can’t claim health benefits), but there is the way to benefit from this trend.

Calorie reduction is the easiest path to achieve it – sugar reduction (using alternative natural or derived from nature low/zero calorie sweeteners or adding flavors with perceived sweetness sensation), fat reduction (most flavor companies are working on the taste modulators to substitute milk/cream in the final product and still deliver same great taste), lover abv products (beer mixes with juice, RTD cocktails and other categories).

Another way to benefit from the trend is to use ingredients with perceived health benefits – natural juice, organic/natural flavors, superfruits, chocolate, etc.

More value more business

Another big innovation driver is premiumization – even though alcohol consumption is on decline, people still consume alcohol on regular basis. Consumers are willing to spend more if they see value – that can be achieved with innovative packaging, clean/sophisticate labeling, ingredient selection, etc.

Business partners are just around the corner

One of the easiest way for small companies and startups to differentiate themselves in overcrowded beverage market is to exploit “craft” movement.

Same as with premiumization, consumers are willing to spend more when they think they support local producers – why to spend hard earn money on product produced in somewhere thousands of kilometers away, shipped for bottling to the other end of the world, and then shipped again to be sold in local corner shop, when you can get the same great product produced just around the corner, most likely using locally grown products, visit them, hear the great story how the brewery/distillery started and experience the production by yourself ?

Be creative when it comes to flavors

And don’t forget the flavor innovation – from dessert type to savory flavors in vodkas, different aging techniques in brown spirits, gin renaissance along with the “craft” movement, blending different distill spirits for the flavor profile uniqueness, beer brewing innovations, growing popularity of Latin America spirits (mescal, pisco, cachaça) – possibilities are endless.

Original article was published in Beverage Industry Blog.