A Mega-Trend in the Beverage Industry – A Proliferation of New and Emerging Brands
01 / 08 / 2018 by IDW
One of the most powerful trends affecting the beverage industry is the surge in new brands. In some cases, these are local brands catering to niche markets and competing for consumers against established big name brands. In other cases, the new brands are operating under the corporate umbrella of established beverage brands. Both of these cases reflect macro trends affecting the beverage industry. The first is the rise of craft beverages. The second is the recognition on the part of the biggest players in the beverage industry that consumer desires and purchasing power have shifted, requiring adaptation in order to stay competitive. In this article, we’ll outline how these two factors are intertwined, and have each contributed to the proliferation of new and emerging brands in the beverage industry.
The emergence of a proliferation of craft beverage brands is tied to changing consumption patterns. Over the past decade, consumers have become increasingly discerning in the products they choose to purchase. Wielding their purchasing power, the modern consumer is more likely to research a product before buying it, be cognizant of the environmental and health impact of the products they consume, and gravitate towards products that provide them with an experience. Craft beverages are more likely to contain ingredients that provide a perceived health benefit, such as kombucha, matcha, or teas, while also staying away from processed or refined ingredients such as corn syrup or granulated sugar. Related to this, craft beverages are more likely to be formulated using a special process or technique, as in the case of cold brew coffees and teas. Craft beverages also tend to leverage the power of sustainability, tying in their success to the emergence of the environmentally conscious consumer and drawing on the power of the “green” movement. The experience that craft beverages provide is related to their artisanal quality, while they are often marketed with a traceable and relatable origin story. These factors are highly sought after by the modern millennial consumer, a main driving force behind the success of the craft beverage market.
Adapting to changing consumption patterns
The craft beverage industry, and many of the more recent smaller beverage brands, rose alongside the emergence of the changing consumption patterns of the modern consumer. Capitalizing on these changes to consumption patterns and the expectations of the modern consumer has contributed significantly to the proliferation of new and emergent beverage brands. Savvy beverage brand marketing campaigns have helped smaller players in the beverage industry improve their market reach, in some cases leading to their products being sold in stores throughout the country. The use of social media, guerilla marketing techniques, and word-of-mouth has proven to be a powerful driver of success in the craft beverage industry, and has led to the recognition and adoption of these marketing techniques by the biggest players in the industry.
In addition to incorporating the marketing techniques of smaller brands, the largest players in the industry have been aggressively acquiring emergent brands and bringing them under the umbrella of their supply chain and distribution. Acquiring smaller brands has allowed big players to still meet the needs of niche market consumers. At the same time, many of the brands that are acquired are popular with millennial consumers. Large beverage brands have traditionally struggled appealing to millennial consumers, as their core product lines are predominantly viewed as having a negative health impact. By acquiring craft or smaller scale beverage brands that have already cultivated a niche following, large beverage brands are able to capitalize on the purchasing power of millennial consumers while still leaving their core product lines intact for their more traditional consumer base.
The emergence of a number of smaller craft beverage brands has forced the big names in the industry to adapt. Bringing craft beverage brands under the umbrella of large industry players has been one response to the emergence of new brands. In its own way, this process has also resulted in increased staying power for many of the craft brands. Large industry players saw the successes of the craft industry as a chance to generate popularity among millennial consumers. Lastly, changes to consumption patterns have also influenced fundamental changes to marketing techniques and even product formulations to meet the demand for healthier and sustainable beverages.