Having a pint in a pandemic … new consumer behaviours are just part of accelerating change … from craft beers to AI-driven brewing and hard coffee
September 4, 2020
Every category is now in a state of Covid hangover, uncertain about what happens next. Some markets have largely migrated online, and will remain so, new categories have emerged, and new technologies make new experiences possible. It’s not just about access and safety, it’s about attitudes and behaviours, opportunities and innovation.
Take beer for example.
Locked down, we inevitably started drink more at home, and bars and restaurants stood empty. At the same time, our concerns about health and wellbeing grew, but anxiety and boredom grew too. Store visits were limited, and essential items took priority. Now as we tentatively try to open up bars and restaurants, confidence and footfall are still low.
So how is the beer market changing?
For major brewers, the market has been flat for some time, as new challengers have emerged. The rise of craft beer been particularly significant in transforming the market, with a multitude of local brands from microbreweries, playing on authenticity and heritage. Meanwhile more commercial brands and business models like Brewdog and Mikkeller have accelerated the trend.
Hard seltzers have grown massively in North America, while health-conscious consumers are increasingly looking at alcohol-free or lighter alcoholic drinks.
Consumers’ increasing focus on health is creating space for new beverage categories to emerge, including cannabis-infused drinks, alcohol-free alternatives, and hard seltzer, among others. The latter was almost unheard of a couple of years ago, but is expected to generate $2.5B in sales by 2021
CB Insights identified some of these disruptors across 3 main categories, from traditional options taking the craft route to low- and non-alcoholic options.
In a recent report they describe these players in more detail:
Spirits: These startups produce spirits, ranging from mezcal with El Silencio, to a Greek liqueur called mastiha with Kleos Spirits, to direct-to-consumer aperitif brand Haus. The vast majority of companies here are craft brands, meaning they are independently owned and produce lower volumes of spirits than the brands owned by large spirits companies, such as Diageo or Pernod Ricard.
Wine: Companies in this category are making it possible to “adopt” some vines to produce your own wine (Cuvée Privée), order champagne directly from producers (EPC), and support charitable causes by buying wine (ONEHOPE).
Beer & cider: This category includes smaller beer and cider brands, with most of them being independently owned and producing lower volumes, thus qualifying as craft. Among them, India-based Bira91 is the most well-funded, with $83M in total funding. With the increasingly crowded craft beer space, some brands are betting on sustainability to differentiate themselves. This includes Toast Ale, which brews beer with bread that would otherwise go to waste.
New alcohol categories:
Hard seltzer: Startups like Willie’s Superbrew and NOCA Beverages have recently raised funding to tap into the fast-growing hard seltzer market. Hard seltzer is a low-alcohol, low-calorie water-based drink that has been popularized by the White Claw brand in the US.
Hard tea & coffee: These companies offer alcoholic tea and alcoholic coffee drinks. This also includes hard kombucha brands such as Flying Embers, which has raised $25M to date.
Canned wine & cocktails: This category is centered around convenience by offering canned alcoholic beverages such as wine and cocktails that are easy to carry around. Social, for instance, offers canned sparkling wine blended with super-food extracts and flower essences, while Ohza produces ready-to-drink mimosas.
Mixers: This category includes non-alcoholic beverages that are meant to be mixed with alcohol. Startups like US-based Owen’s Craft Mixers and India-based Svami offer premium mixers such as tonic water, while Kelvin Slush creates mixers specifically for frozen cocktails.
Cannabis-infused drinks: With more states legalizing cannabis, the cannabis-infused beverages category is emerging to compete with alcoholic drinks. This category focuses on cannabis-infused beverage brands, such as Cann,that specifically target social drinking occasions.
Alcohol-free drinks: Riding the low- or no-alcohol trend, these startups offer alcohol-free alternatives to replace beer (Athletic Brewing Co), wine (Tost), cocktails (Mocktail Beverages), and spirits (Stryyk). Among them, UK-based Crave targets party-goers with a canned caffeinated virgin mojito.
Big brewers like AB InBev have turned to tech. It has partnered with identity management startup Civic to test out a blockchain-enabled beer vending machine, for instance. At the same time, Carlsberg is using artificial intelligence to develop new beer flavours faster. And startups are entering the game as well, offering self-pouring beer machines, at-home brewing devices, and delivery services.
Consider this mapping of a changing industry, also from CB Insights:
They describe the changing in these categories in more detail:
Craft Beers — These startups are independently owned and produce lower volumes of beer than big brands such as Heineken. Among them, UK-based Brewdog is the most well-funded with $297M in total funding.
Bar Tech — Companies in this category bring big data, online features, and discovery platforms to bars. SteadyServe Technologies ($22M in disclosed funding) provides connected scales to track beer levels in kegs, while SevenFifty Technologies ($8.5M in disclosed funding) offers a marketplace for bars to connect with alcohol distributors.
Alternative Beers — This category includes companies offering non-traditional beers. Province Brand, for one, is developing non-alcoholic beer brewed from the cannabis plant, while JoyBrau offers a non-alcoholic protein-infused beer targeted at people who work out.
At-Home Devices — Startups in this category are making at-home brewing and consumption easier. PicoBrew and Minibrew have both developed at-home brewing machines, allowing users to brew their own beer in small batches.
Delivery Platforms — These companies offer on-demand beer delivery. US-based Drizly is the most well-funded startup in this category, with $69M in total funding.
Experiences — While many craft beer brands opt for taprooms to offer a beer-centric experience, companies such as Hospters are allowing customers to brew their own beer. Another experience-focused startup, Ripples, has developed a machine that prints personalised messages on foamy drinks like beer.
Beer-Derived Products — This category is home to companies using byproducts of the brewing process to offer new types of products. It includes snack bars (Regrained, Anu Snacks), drinks (Canvas), and flour (Rise Products), all made from spent grains.
Self-Service — These startups are making it easier for customers to buy beer conveniently, from vending machines (Beer Box) to self-service pouring dispensers (PourMyBeer) that can be installed in bars, restaurants, clubs, and more.
Brewing Tech — The brewery is also getting its tech upgrade. This category includes companies that are making it faster, cheaper, and more convenient to brew and transport beer. IntelligentX Brewing Co., for example, is using artificial intelligence to reduce the number of iterations needed to create a new beer.
Source: CB Insights, McKinsey, Mintel