Recent figures from Circana (the insights company formerly known as IRI) suggest that there were 31% fewer new alcohol product launches in 2022, compared to the previous year.
The research, which covers France, Italy, Germany, Spain, UK and Netherlands, is part of Circana’s Race for Resilience: Innovation Pacesetters report.
Ananda Roy, global SVP, strategic growth insights at Circana says the drop in new product launches has been driven by high food inflation. Roy says alcohol sales “have become discretionary despite retailers increasing prices at a slower pace and offering some promotions overall”.
According to Circana, alcohol innovations contributed just 8% of value sales in FMCG innovations, down 2 percentage points from a year ago; reflecting the drop in purchase and consumption, and the inability to justify higher prices.
“Only 3.1% of value sales in the alcohol category came from innovations, well below the FMCG benchmark of c11% which is surprising given innovation is a well-recognised source of resilient demand,” Roy adds.
He says innovation in alcohol is able to command a 20% premium over core products, but this must be read in the context that overall inflation in alcohol pricing has been less than in food categories.
While many cash-strapped shoppers turn to private labels for food, the report finds that alcohol is one of the few categories where private labels have not gained share of value.
“The strong brand images built up over several generations by global beer, wine and spirits brands has been hard to shake off,” the report says.
That’s not to say there aren’t pockets of interesting innovation and Circana suggests that launches in the low and no alcohol as well as the RTD space appeal to a wider demographic of shoppers.
Roy says innovation in RTD sprits as well as low and no is a “core growth area”, especially in private label. He says that those flocking to these categories include women, health and lifestyle aware consumers who drink less frequently, and those going out to on-trade less frequently.
Roy says Dry January is “extending further into the year as consumers reduce consumption switching to lower alcohol, or simply drinking less frequently, and drinking less volume when they do consume alcoholic beverages”.
Circana also points to collaborations between smaller brewers and discount retailers to create exclusive products in an effort to give customers “increased choice, quality and value”.
Of the overall FMCG space, Roy says: “Brands must match private labels in meeting the evolving needs of consumers, delivering innovative, quality products at the best possible price.”