Opportunities and Challenges in Today's Beverage World

We are excited that Tony Tahmosh, CSW has joined Matrix Restaurant Consulting. I recently asked Tony to outline the opportunities and challenges operators will face in 2022 as they look at their beverage programs, specifically the future of wine sales and how to react to consumer shifts in wine consumption. Here's what Tony said....

State of the Beverage Industry
Consumer Beverage Spend in the U.S. increased by almost 2% in 2021, and is currently valued at $146 billion.  Although wine consumption continues to decrease, the U.S. Beverage Industry is projected to continue to grow at an average rate of 1.7% through the end of 2026.
Here are some challenges and opportunities in today’s beverage world.

Some of the challenges operators are facing today....

• The importance of wine as a viable sales channel will likely continue to decline in the restaurant industry due to overpricing on the menu and consumers placing a higher value on other alcoholic beverages. And because of the ‘dine at home’ trend, a result of the COVID pandemic, consumers have become more educated regarding the retail prices of wines. Restaurants may find that wine is not in demand at these higher prices and thus questioning the cost to maintain deep stocks of wine. 
• With movements like mindful drinking and “sober curious” gaining popularity, research indicates that alcohol consumption has declined in the U.S., with younger generations drinking less as they show greater interest in holistic wellness and health. This trend is expected to continue at least through the end of the decade.
• The challenge of recruiting younger, health-conscious, multicultural consumers into the wine category, combined with the aging of the older core wine consumer, remains. These consumer groups have different values and spending patterns. The wine industry has done little to alter their marketing message to attract or retain either consumer cohort. 

Opportunities for Operators to Increase overall Beverage Sales

• “Better-for-you” beverages, featuring clean labels, natural ingredients, less sugar, fewer calories, and caffeine alternatives are on the rise. Products with these qualities have been in high demand, as the pandemic only heightened people’s focus on wellness, immunity and stress reduction. The next wave of “better-for-you” drinks spotlight ingredients that have perceived health benefits such as superfoods, probiotics, prebiotics, antioxidants, vitamins, minerals, botanicals, and protein. This trend is impacting every beverage category, particularly tea and kombucha, energy and sports drinks, and bottled water.
• CBD is another ingredient to watch. Although the FDA has not approved the use of CBD in foods and beverages sold in interstate commerce, some marketers are bringing products to market. Molson Coors recently introduced Verywell, a line of sparkling waters with hemp-derived CBD and adaptogens, through a subsidiary. The drink is currently only available in Colorado.
• Many wineries are prospering by focusing on premiumization. Their customers have been trading up for years, paying more for better quality. 75% of the wine sold in the U.S. costs less than $10 a bottle retail, and those wines are suffering from shrinking sales, sometimes by more than 10 percent a year. Younger consumers are interested in luxury products, at least ones they can afford. While COVID continued to accelerate premiumization, and while total volumes of wine sold are dropping, wines in the premium segment increased the volume sold at higher prices in 2021, and this trend is expected to continue for several years.
• Celebrity beverage endorsements are nothing new. Think George Clooney and Nespresso, Jennifer Aniston and Smart Water, or countless sporting stars endorsing energy drinks. But expect to see more and more vineyards and champagne houses partnering with big names to capitalize on their glamorous images and extend their respective brand portfolios. After John Legend or Brad Pitt, Cameron Diaz is the latest celebrity to venture into the wine business with her “clean” wines. The range comprises of an organic and vegan French rosé and Spanish white with no added sugar, with Diaz tapping into both the wellness trend and that of the growing thirst for ‘pink wine’.

The hospitality industry continues to evolve and shift at a rapid rate and Matrix Restaurant Consulting is here to help you navigate through the ever changing beverage world.

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