Lulie Halstead Identifies the Opportunities in the Beverage Alcohol Market

The data maven has crunched the numbers

The Drinks Insider newsletter is back! And I’ve got a lot of catching up to do, as I’ve put out five podcasts since the last newsletter. 

OK, let’s get into it. This is a recap of the interview I did with the wonderful Lulie Halstead.

Is the downturn in beverage alcohol structural or cyclical?

The person who knows more about the market than just about anybody else is Lulie Halstead.

She founded the research firm Wine Intelligence in the UK in 2002:

• In 2021, Wine Intelligence was sold to IWSR, the most significant name in beverage alcohol research.

• Today, Lulie is on several boards and advises multiple companies.

• In July 2022 she founded Intellima advisory and intelligence services.

• She also has a vineyard — and sheep!

Lulie generously shared key insights on the podcast.

Here are 5 takeaways:

1. Volume dropping, value increasing

“In the 10 years to 2028, there will be a 20% reduction in the volume of wine consumed globally,” says Lulie.

“This comes from a combination of macro trends; what is happening in total beverage alcohol, and then specifically what is happening in wine.”

According to Lulie, there was a 1% decline in total beverage alcohol consumption in 2023, but a value increase of 3%.

2. Abstainers versus moderators

“One of the key structural changes in beverage alcohol is an increase in moderation,” says Lulie. “There is a marginal increase in the proportion of adults globally who are abstaining totally from alcohol consumption,” but the real reduction is coming from people who still drink alcohol, but are just drinking less.

There are key differences across different markets:

• Around 30% of adults are abstainers in the US. 

• That number is about 9% in China. 

• In Germany, 24% of adults of legal drinking age abstain — but of those in their 20s, 35% abstain. 

• In the UK, 18% of adults abstain, “but nearly a third of GenZ adults in the UK total abstain from alcohol”.

But, as Lulie points out, GenZ has only just entered the legal drinking years.

3. This is what drives brand growth

“How do you position your brand?”

Lulie says that marketing academics have spent the last 10 to 15 years debating the role of distinctiveness versus differentiation.

Differentiation is about the features of a product — the gin with more botanicals than its rival. 

Distinctiveness is about making the brand easy to identify. Think of the Nike swoosh — as soon as you see it, you think about Nike.

Lulie says academics have concluded that distinctiveness is the key driver of brand growth. 

She says that most consumers don’t care about background stories because they “just want a refreshing or full-bodied beverage. It’s not a fundamental or structural part of most consumers’ lives.” Consumers just need quick cues so they can remember the product.

“Have those distinctive brand assets, which means consumers go, ‘yeah, I recognise that. I’ll just pick that off the shelf’.”

4. Diversity is critical for success

When it comes to wine, “where we are seeing growth globally are in developing or non-traditional consumption markets,” says Lulie.

“The consumer’s mindset, or experience set — what they’ve grown up with — what types of flavours in food and drink that they are used to, is going to be different.”

This means a new set of consumers bringing a new set of references to the category. The best way to connect with them is to understand them — and that starts with having a diverse team.

5. Watch what consumers do in real life

Beverage businesses now have an incredible wealth of data at their fingertips, from free resources to research agencies.

“At IWSR, for example, we’re putting out stories and newsletters and infographics every day,” said Lulie.

But real world observations are just as important as in-the-weeds data.

“Go into a bar. Observe what people are ordering. How are they ordering it?” Or go into a store and watch the beverage aisle. “How long are people spending there? What are they picking up? What are they looking at?”

“Listen and observe the reality of the people who are putting their hands in their pockets to actually buy the products.”

(This, by the way, is what the big companies do. They send people to tastings and bars, just to watch what is being consumed — it’s how they identify early trends.)

The Big Opportunity

The moderation trend isn’t going away, and neither is the growing desire for refreshing styles. “All of those lead to an RTD-style opportunity,” says Lulie.

In other words, there are big opportunities for spritz-style wines.

“It might not be the long-term saviour, but for individual wineries it might make that difference in terms of ROI and capital investment.”

On the other hand, “I don’t see a strong opportunity for low or zero alcohol still wine. Sparkling is more of an opportunity.”

Personal News

A big, deep, warm thank you to everyone who subscribed or became a Founder of my new Wine + Health podcast. I was blown away by the response, and want to thank everyone from the bottom of my heart. I’ve put the money aside for travel, so I can report first-hand on what’s going on. In December, for example, I am going to Brussels for the launch of a new, Europe-wide wine initiative, and I’ll let you know what I find.

And while I was on hiatus, I wrote these:

A debunking of the wine and Blue Zones story

A report from the Areni Global fine wine summit in Helsinki

Drinks Insider is a resource for anyone who wants to make money in beverages. If there’s something you particularly want to know about, let me know in the comments or by emailing me at carter.felicity(a)gmail.com and I’ll do my best to make it happen.

I’ve already had one reader ask me about growth opportunities in a particular beverage area, and I’m in the process of tracking down the right person to interview.