Friday, September 10, 2010

The rise of the RTDs -Trends in alcohol consumption

Cocooning is a major trend when times are tough, and for several reasons. During periods of turmoil, family, home, belonging to a group seem more important than when good times are ahead and that are probably a part of our genetic set up. . The other aspect to take into consideration is economy – as incomes are more uncertain, cut backs are made into the part of expenditures that seem most unnecessary – travelling, restaurants, fashion etc. This seems pretty logical.

Having this as a background let us discuss the subject of alcoholic consumption for a while and see how values and macro-economical trends affect consumption of liquor.

All cultures have had their favorite way to get stoned. The Germans and English are into beer, Frenchmen, Spanish and Italians have a love for wine, while Swedes and Finns along with Russians and other Easter Europeans need Vodka to endure the harsh winters in the north. Apart from this heritage almost every culture have found their own way of fabricating spirits from various local plants such as potatoes, rye, wheat, sugar cane and cactus. Drinking habits has also had an political dimension as colonial powers and then during the 20th century, specific spirits have been labeled as “in”. Whiskey for example had a rise after WWII as being the preferred drink of US and UK, associated to victory and progress in other parts of the world. So, to conclude, alcohol has been playing a major role in the culture of the western hemisphere.

Ever since the then major trends have come and gone, making some brands and categories more profitable or popular during periods and then degenerate and pass away as new consumer wishes sparkle new inventions in another category. From time to time, some brands have been able to vitalize an entire category.

ABSOLUT for example, did this to the vodka category in the 80s by introducing a premium brand and later follow up with flavored vodkas, introduced through the hip and trend sensitive gay communities in the US. As other brands moved up to launch their versions of flavored vodkas, ABSOLUT managed to keep a distance as they in a very Troutian way, invented a new ladder in the minds of the consumer, and where a little faster and edgier in launching new innovative flavors. But as in all success stories, all trends have a peak, and at some point, consumers go and look for something new. Flavored vodkas are still large in volumes but one might expect that new tastes will have a shorter life span and be sold at a lower price that what would be the case in the 80s.

A new trend in the vodka category is attempts to launch new premium brands in the ecological segment, appealing to a more ecologically oriented consumer. Several example of this exists. Only a few have made it over the generic level, in terms of having a story to tell. The Smooth Vodka above though, has managed to win several international gold and platinum awards over the last few years, making it one of a few promising products in this sub-category of vodka. Other, so long more far-fetched examples are to infuse vodkas with different kind of mind or state altering herbs and chemicals , for example the energy booster Taurine of energy drinks such as Red Bull or other performance altering ingredients.

Today´s market could be divided into HoReCa (Hotel, Restaurants, Cafées), GTR (Global Travel Retail) and home consumption. Since 9/11 travelling the world has been associated with fears for terrorist attacks and the last years economic turmoil have had a negative effect of world travel, the cocooning effect set aside, making GTR a less profitable operation. The same goes for HoReCa as private spending are cut. This makes home consumption an interesting arena for retailers and brands. And this is also a big possibility to innovate and start new trends.

Look at how our homes have evolved the last decades. Kitchens are no longer cramped compartments where wife´s struggle to serve the needs of hungry families. It is a computerized workshop where guests and hosts prepare dinners together often integrated into the living rooms in order to simplify communication with other members of the herd that engages in other activities such as helping Mario to another level on the Wii-console. Electrolux´s design department declared "War on white" a couple of years ago, meaning that white goods design were meant to position the appliances as designer objects in the kitchens of tomorrow. The bathroom, before a moist temple of dirt cleansing, has turned into home spas.

The barbecue, a black-burned incinerator for various animal parts has turned into a men´s heaven of polished steel, with heavy duty tools in order to maneuver delicatessen over the giant surface of gas burners. The living room contains more computer power that the entire NASA controlled at the time of the moon-landings. During the good years, several categories have got an upswing with a new premium level, previously known to a very small number of enthusiasts, coffee and chocolate being two of them. Just look at the premium coffee machines on display in any home appliances store today. 15 years ago, there was none of their kind.

Our homes are reflections of the best of what we have seen in the outside world. That is, even if times are rough, we have gotten used to a certain level of standard in our consumption. We have learned new things and changed our ways of living and the way we drink and eat. Just because times are harder, does this mean that we all should go back to the times before all this happened in terms of food and drinking habits. I don´t think so. We translate our habits into new forms of consumption, and look for things we can bring home without lowering our standards.

This makes the RTD (Ready To Drink) category interesting. The home bar has been a concept during some periods the latest decades, with the 70s and 80s as peak periods. But, really, it never where any better than a pale shadow of the real thing. Mixology is not for everyone, and as the evening went by, the quality of the family bartender seldom went beyond gin and tonic, despite his monstrous and very manly bar set up. This is a parallel to all the handy men out there, who buys premium tools in order to put in a screw in a wall every second year making every project a $50 investment all things taken into consideration.

This is a good example of what this could mean. Tasty drink and estethically pleasing design from GeVe Spirits. Aside from beeing a better alternative than what probably would be the outcome of the home chemists version of those famous drinks after 15 minutes of splattering, they are also containing less alcohol than most drinks, making them a better alternative for social gatherings.

The rise of the RTD segment is driven by the cocooning trend, the economic downturn, but also by the fact that new product are at hand that makes it possible to serve a real, premium tasting drink, only with the addition of a few ice cubes and a shaker. No need for home bars, splashing twenty different fluids and filling the fridge with various juices and other appliances. This is what I mean with reflecting the outside world at home. The "At Home trend" will be covered in other segments in coming posts.o