Almost every event or gathering includes alcoholic beverages, which serve as an excellent icebreaker. It also is a sign of luxury and as a result, including premium drinks at events and otherwise have been a growing trend. A majority of the drink companies have been making new deals and offerings of spirits that resulted in the growth of the industry causing it to reach a $1 trillion global market for alcoholic drinks. Over the previous 12 to 18 months, there has been an upsurge in the sales of luxury and premium categories of alcohol.
A report provided by Statista shows an expected compound annual growth rate of 12.41 percent between 2021 and 2025. In addition, the consumption patterns of alcohol among millennials have been changing. Nearly 54 percent of millennials consume premium alcohol compared to just about 35 percent of people over the age of 55. A significant contributor to this shift in the trend of alcohol consumption towards premium drinks has been the transition towards a more healthy way of life. More importantly, this trend of premium alcohol consumption has been more popular in the urban areas as they have always been more receptive towards super-premium quality spirits.
Impact of the Lockdown
Nationwide lockdowns and new norms of masks and social distancing impacted alcohol manufacturers, liquor stores, and bartenders. However, alcoholic beverage sales have recovered significantly in recent months as a result of new government policies devised to assist the alco-bev sector for losses incurred as a result of the Covid-induced lockdowns.
People's drinking habits have changed dramatically as a result of the pandemic and subsequent lockdowns, with consumption shifting from pubs and restaurants to their homes. Simply put, consumer behavior has evolved substantially. Premiumization, on the other hand, is stimulating industry growth, which is a good indication for manufacturers. People are becoming more willing to pay a premium for high-quality alcoholic drinks.
Consumers' at-home drinking habits have certainly changed as a result of the country's lockdown, and they are no longer looking for basic servings. We've also noticed an intriguing shift in consumer behavior, where they're now willing to experiment with their consumption while relaxing at home. It's fascinating to watch how they're experimenting with beverages they may not have had previously, such as craft whisky, craft rum, and craft gin. At-home consumption increased as a result of the closure of pubs and bars, and many Indian consumers are eager to explore high-quality imported as well as home-grown Indian brands. Consumers are seeking products, services, and experiences that provide meaning and value in their everyday life.
The Ultimate Strategy to Enter the Market
The ultra-premium as well as the super-premium blended and malt Scotch, has been on an increasing volume since 2020. This increase has been directly linked to the shift of super-premium branded alcohol from duty-free outlets to the retail sector. As a result, the reach and availability of super-premium and ultra-premium alcohol increased. When it comes to the market strategy to be adopted for this increase in consumption of premium alcohol, it is key to understand that the primary market segment lies in the millennial age group. They are bound to be the drivers of these trends in the premiumization of alcohol. Moreover, they also have tremendous knowledge and awareness of the quality of alcohol along with its health impacts.
So, it would be appropriate and helpful to understand this user segment and their purchasing behavior to satiate their evolved palettes and offer exquisite experiences.
The social media platforms and the plethora of digital tools can also be leveraged to reach this customer base. Finally, it would also be helpful to consider innovative ad campaigns to catch the eye of this user segment.
In a Nutshell
While revenge shopping may have contributed to some growth, the overall growth of the luxury and super-premium segment must be attributed to a shift in consumer perception and evolving drinking habits. The younger generation is more cautious of the alcohol they consume because they value its quality. This generation's alcohol preferences reflect an evolved demand for flavor, a rich history, sustainability, and other such factors. The Indian flavor profile for alcohol has evolved and now includes the subtle nuances found in luxury spirits. As we raise our glasses to the major shifts in consumer behavior in 2021, one thing is certain: with health consciousness on the rise, more shifts are on the way.