Beverage Industry Report Reveals Flavor, Innovation Propelling Spirits, Wine and Beer Sales

With sales approaching a record $200 billion, the adult beverage industry continued on its growth path in 2012, despite the challenging economic environment. Total adult beverage volume grew 1 percent to 7.7 million gallons, while sales dollars increased 3.6 percent to reach $199.8 billion. This is according to Technomic’s recently-released Special Trends in Adult Beverage Report.

“Many factors drove the industry in 2012, but the real driver was and continues to be flavor,” said Eric Schmidt , Director of Research at Technomic. “In every category and segment of spirits, wine and beer, flavor is what attracts consumers and keeps them coming back. The impact is that the lines are blurring somewhat between the categories, making the industry more competitive than ever. This trend will intensify throughout 2013, and product innovation around flavor will continue to play an important role.”

In addition to innovations in flavor, the other significant trend revealed in the study is the somewhat surprising expansion of beer volume. For the past several years, beer sales have been declining. “It may be surprising, in light of the slow economic recovery, that the growth in beer occurred in the more expensive segments,” said Schmidt. “Again, product innovation and flavor provided the momentum.” The beer category experienced a 0.7 percent volume increase last year. The major domestic categories stabilized somewhat, while craft, imports, flavored malt beverage and cider each posted gains.

According to the Technomic report, spirits experienced the highest volume growth rate (3.2 percent). Spirits categories that experienced particularly strong growth include American whiskey, Irish whiskey, vodka, tequila and cordials/liqueurs. Imported spirits volume growth outpaced growth in domestic spirits.

Wine’s momentum slowed slightly. The industry achieved a 2.8 percent gain, growing to account for 10.5 percent of total adult beverage market volume. An explosion of new wine offerings in a range of varietals and styles designed to appeal to consumers seeking sweeter flavor profiles was on trend, with red blends, sweet reds, sangrias and Moscato remaining popular. In addition, wines infused with fruit, chocolate and other flavors also gained attention. Wine introductions comprised the majority of the new adult beverage products coming to market in 2012.

Restaurants, bars and other on-premise locations contributed to the adult beverage industry’s overall growth, with on-premise dollar growth slightly outpacing off-premise expansion (3.9 vs. 3.4 percent). This was driven by a combination of increased spending in the channel, consumers trading up in some categories and operators raising prices.

“We anticipate many of these trends continuing in 2013 and expect consumers to seek out new flavor experiences, experiment with new products and explore the various segments of the industry,” said Donna Hood Crecca, Senior Director at Technomic. “The entry of more millennials—who value authenticity and experience in their food and beverage choices—into the legal drinking age population will influence adult beverage on-premise and retail [sales], as will this year’s economic situation.”

The 2013 State of the Industry report includes a first look at total 2012 adult beverage metrics, as well as spirits, wine and beer information including category trends, on- and off-premise information, leading brands, new product introductions, import/export trends and projections for 2013 performance. For more information or to request a copy of the report, visit www.technomic.com.

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