How beverage alcohol brands can tap millennial sobriety

Why many in the segment are drinking less, and looking for new and interesting offerings when they do.

Beverage alcohol

Change is happening so fast in beverage alcohol that the term has become a misnomer for one of the industry’s biggest players.

Last month, Molson Coors Brewing Company announced it would drop the “brewing” from its name and become Molson Coors Beverage Company. Its Q3 financials were accompanied by a corporate revitalization plan that entails consolidating divisions and cutting between 400 and 500 jobs as it faces “an inflection point” and attempts to adapt to consumers’ changing drinking habits.

The plan at Molson Coors is to invest more heavily in the company’s biggest labels and above-premium brands (its fastest-growing segment), while focusing on recruiting consumers who have just turned the legal drinking age. After having launched two portfolio firsts in 2019 – a canned wine and a “hard” coffee – the company said in a release that it would continue to “invest in more whitespace opportunities and in growth spaces beyond the beer category.”

While brewers have been facing sales stagnation and decline for some time, Molson Coors’ decision to explore opportunities beyond the realm of suds points to a common challenge among companies in beverage alcohol: millennials are looking for new and interesting options, as many of them drink less or opt out of drinking all together.

In a recent YPulse survey, 37% of 21- to 36-year-olds said they planned to participate in “Dry January” this year, up from the 24% who planned to participate in 2018. In another nightlife and drinking survey conducted by the Gen Z and millennial-focused website, 16% of those aged 21 to 36 said they never drink alcoholic beverages, while 35% do so less than once per week.

“They are starting to go out less, entertain more at home,” says Michael Riley, a beverage alcohol consultant and owner of Proof Small Batch Spirits, who previously worked at Molson and the LCBO. “But when they drink, they are drinking better.”

As health and wellness considerations lead many to turn to spirits over beer – with vodka often being the spirit of choice – Riley believes the launch of lower-calorie spirits, beer and wine represent some of the biggest opportunities in beverage alcohol. “We will continue to see a shift in consumption from beer to spirits and better quality beverage alcohol choices.”

Research by industry group Beer Canada has shown that sales of non-alcoholic beer have grown by 50% since 2013 (although it still only accounted for around 1.2% of sales last year). Non-alcoholic cocktails are also striking a chord: earlier this year, Coca-Cola launched a concept called Bar None, a cocktail-inspired line of non-alcoholic beverages.

Johanna Faigelman, founding partner and CEO of Human Branding, agrees that millennial habits have opened up new opportunities for brands. “What is the alcohol industry’s answer to kale or quinoa?” she says. “Thinking about how to best position and celebrate the natural, local, unique ingredients of their alcohol brand presents an interesting opportunity to marketers.”

Millennials, Faigelman says, have become more aware of the nutritional, psychological and emotional benefits of the food they eat, and they’re now looking for similar benefits in the beverages they drink. Getting drunk is no longer a big motivator for drinking, she says, and many are actively turning away from the carbs and calories associated with sweet cocktails and heavy beers.

The rising acceptability and popularity of cannabis is also having an impact on millennial consumption choices, Faigelman believes. Some perceive it as being a better fit with their health and wellness lifestyles, be it in not doing as much “damage” as excessive drinking to purported health benefits of CBD to offering “mind-enhancing” properties that enable their “never-ending quest for self-discovery and betterment.”

It’s a strategy companies like Truss, a joint venture between Molson Coors and Quebec cannabis producer Hexo, will be able to tap for their brands. For instance, Flow Glow, a CBD-infused water made in partnership with Flow, is the first brand to be announced in the Truss portfolio, and will help Molson Coors reach into a demographic interested in premium packaged water.

“These benefits are seen to be much more nuanced than what they perceive to be able to be accomplished by drinking alcohol, where the only benefits are articulated as ‘getting buzzed’ or ‘flat out drunk,’” she says, adding that the real opportunity for marketers is to celebrate the more nuanced and varied experiential benefits associated with different types of alcoholic beverages.

One other thing may be driving millennials to rethink their alcohol consumption, according to the CEO of Human Branding. The cohort is living in an era of constant social media surveillance and has become aware of the lasting repercussions social photos of boozy nights can have on their personal lives. More and more, they are looking for the social experiences associated with alcohol, only without the reputational consequences that go with it.

And this, Faigelman says, gives marketers the opportunity to craft brand stories around the social, community and emotional benefits of drinking without the negative impact of high alcohol content.