There is no shortage of ink spilled covering the popularity of tequila, hard seltzer, and RTD products, but to only focus on the splashiest categories is to ignore the opportunity within smaller alcoholic beverage categories that are growing in the U.S. market. We’ve put together some of the sub-categories that are experiencing exciting momentum and development in 2022.
Hard Teas Align with Consumer Preferences
Previously dominated by malt-based products, the hard tea category is getting a fresh boost from spirit-based products. The popularity of hard tea products coincides with a few consumer-based trends in the wider alcoholic beverage market, including increased interest in canned drinks that capture better-for-you elements and lower alcohol content.
The market value of hard iced tea is expected to reach $2.47 billion this year and the segment is expected to reach a value of $14.5 billion by 2030 with a compound annual growth rate (CAGR) of 24.7% in that timeframe, according to Grand View Research. That forecast is supported by Nielsen’s 2022 Mid-Year Review which indicated that hard iced tea products are highly sought-after, with 55% of those surveyed saying that they have tried or would try the category. This interest outperformed other popular emerging categories like non-alcoholic and CBD-infused drinks. Of the categories surveyed, hard teas also generated the smallest portion of people who said they wouldn’t try the category at only 35%.
More resources on the Hard Tea Category
- Hard Tea Market Size, Share & Trends Analysis Report
- Category On the Rise: Hard Alternatives
- Where Is The Ready-To-Drink Category Headed?
- 2022 Drizly Consumer Trend Report
Sparkling Wine Bounces Back
2022 has brought with it new heights for the sparkling wine category. Traditionally a product for celebratory occasions, sparkling wines have transitioned into a staple of many regular drinking occasions, as well as a key ingredient in many cocktails.
According to Drizly’s Bev-Alc Insights, sparkling wine has been the fastest growing sub-category in the wine segment over the last two years. Champagne and prosecco in particular are driving growth for the category. Champagne growth slowed significantly during 2020 but the category is back to pre-pandemic growth. While Champagne is a mainstay in sparkling wine, prosecco is a hot commodity as volumes grew 25.4% in 2021 and the dollar value for the average bottle exported rose by 4%, according to Wine Industry Network.
More Resources on Sparkling Wine
- BevAlc Insights’ 2021/2022 Sparkling Wine & Champagne Forecast
- Sparkling Wine Trends in 2021-22
- The Future is a Diversity of Sparkling Wine
- Sparkling Wines Shifting Toward Day-To-Day Consumption
Low & No Alcohol Products Proliferate
One of the most promising avenues in beverage alcohol lies within the low & no beverage movement, as the U.S. picks up on this category that has long been popular in Europe. In a 2022 survey conducted by Nielsen, 50% of consumers said they either have tried or would try non-alcoholic drinks on-premise. Further, 56% of respondents noted that they have or want to try low-calorie drinks, with CBD drinks generating interest from 45%.
This space is providing opportunities for big and small beverage companies alike. Large-scale brewers like Anheuser Busch have introduced non-alcoholic versions of existing SKUs, while independent alternative brands are taking off as well, particularly within emerging segments like CBD, functional beverages, and non-alcoholic spirits. Significant opportunities exist for small brands to become market leaders in these underdeveloped categories.
The global market for low and no is currently valued at $10 billion, according to IWSR. Volumes are projected to grow at a CAGR of 8% between now and 2025.
More Resources on Low & No Alcohol
- The Lowdown on Alcohol Alternatives
- Growth Opportunities For the Low- and No-Alcohol Category
- No- and Low-Alcohol Products Gain Share Within Total Beverage Alcohol
High-end Spirits Lead Category Growth
The proliferation of super premium spirits has been a trend for years driving the growth of the overall spirits category, due in part to the rise in at-home consumption and more premium products on the market.
While the growth of fine and rare has slowed this year with off-premise super-premium spirits shares returning to their 2021 levels, long-term projections for this segment are bright. Moving forward, volumes for premium and above spirits are projected to grow by 25.6% from 2021 to 2025 according to IWSR.
Premium wine in particular has increased its value by 6% in the 52 weeks ending in June 2022, according to data from IRI’s mid-year report. Similarly, premium spirits have upped their value by 2% in that same timeframe. Growth in super-premium spirits has been driven by tequila and whiskey, with these categories showing the most growth in their share of premium products since 2019.
More Resources on Super Premium Spirits
- How the ‘Premiumization’ Trend Will Impact Retail
- Key Trends Driving the Global Beverage Alcohol Industry in 2022
- Premiumization and the Rise of RTDs Drive Shifts in Category Share
Gen-Z Keen on Soju
Although Soju is one of the most widely consumed spirits in the world, the Korean spirit has only recently made headlines in the U.S. for the first time as interest in Korean culture has been piqued. With a lower ABV than most spirits, the spirit is appealing to consumers looking for options with lower alcohol content. Gen-Z is the demographic which has gravitated most towards this up-and-coming spirit that is poised to continue growing. According to Drizly’s Bev-Alc Insights, the spirit takes up a 0.2% share of the spirits category and is expected to grow at a CAGR of 0.4% between now and 2025.
More Resources on Soju
The Rising Star of Agave: Sotol
This growth of Sotol marks the increasing diversification of the agave sector, with adjacent spirit varietals like it receiving continual investment and fueling consumer curiosity. Although it is riding the wave of popularity from tequila and mezcal categories, Sotol is not made from agave but a desert shrub known as Dasylirion Wheeleri. Areas in Texas, New Mexico, and Arizona are becoming hotspots for this up-and-coming category, serving as viable areas of production as the U.S. has not formalized a denomination of origin for the product.
More Resources on Sotol