In mid-December, Empirical Spirits captured headlines and people’s curiosity with the debut of Doritos Vodka. The limited-edition 84-proof novelty spirit purports to smell and taste like the top-selling nacho chip. It is sold in select New York and California markets as well as online at a retail price of $65 for a 750-milliliter bottle.
While a cheesy-flavored vodka may not be everyone’s cup of tea, its release is indicative of an alcoholic beverage market that welcomes innovative concoctions. In fact, the tasty combinations NielsenIQ (NIQ) analysts expect to be hot this year are sweet heat, indulgent flavors like caramel, and Hispanic influences like tropical fruits and mezcal, as highlighted in the market research firm’s “Sipping Into the Future: Four BevAl Trends for 2024” webinar presented in December.
Flavor Experimentation
“As seltzers are kind of slowing down, you can see people wanting products with more flavors and sugar. People are ready to move back to full-body drinks, so we’re leaning more toward tea, Smirnoff or Jack Daniels — the bigger name brands that convey quality favor,” said Terry Messner, category and sales manager for Tri Star Energy, which owns and operates 196 Twice Daily and Sudden Service convenience stores in Tennessee, Alabama and Kentucky.
But it’s not just taste driving trends for this crowded category. Sales data shows customers are more willing to experiment when the bartending is already done for them.
This preference emerged a few years ago with ready-to-drink (RTD) flavored malt beverages, which remain a popular choice with hard teas, hard lemonades and hard sodas. Goldman Sachs reported last month that hard tea, the subcategory’s leader, posted dollar sales gains of 29.4% for the two weeks ending Dec. 16 and 31.4% for the previous four weeks, based on NIQ data. However, analysts pointed out that growth has slightly cooled.
Now, RTD spirits are gaining more attention. The Goldman Sachs report shows spirits-based RTD drinks climbed 31.1% for the two-week period, highlighting Jack Daniels’ RTD, which registered a positive 1887.8% in dollar sales. Circana research also revealed a dramatic shift: Dollar sales for spirits seltzers in U.S. convenience stores jumped 106.9% for the 52 weeks ending Dec. 3, and case sales climbed 101.1%.
Non-Alcoholic Segment Grows
This year, though, Messner plans to experiment with inventory distribution. For example, he believes customers in some areas will respond positively to more non-alcoholic options. Over the past few years, the trend for moderation keeps growing and is not only seasonally tied to “Dry January” resolutions.
“(Consumers) aren’t necessarily giving something up completely and switching over to non-al. … (They’re) really adding it to their broader repertoire as a choice for when they want to consume other products but still feel like they are part of the party,” said Kaleigh Theriault, director of thought leadership for NIQ’s Beverage Alcohol Vertical.
Circana reported gains in year-over-year dollar sales for non-alcoholic beer (27.3%), non-alcoholic drinks within the wine segment (20.7%) and non-alcoholic mixers (2.9%). NIQ also highlighted innovative non-alcoholic products, such as hop water that contains zero alcohol, zero carbs, zero sugars and zero calories. These carbonated drinks grew sales by 143% over 2022.
To tap into this segment, Messner will test markets with prominent sales on non-alcoholic beer brands in other retail channels. “We have six stores that could be good candidates. If that works, we can expand it out. We’ll also see if non-al needs two or three brands, but space in the beer cooler is at a premium,” he said.
Innovation Continues
In Lubbock, Texas, Tony Sparks, head of customer wow for Curby’s Express Market, believes his customers will appreciate even more innovative choices. Last year, he added beverages infused with tetrahydrocannabinol (THC).
“I do like this emerging Delta 8,9,10 product type. Also, there are some mushroom-based products coming out as well. These will have a slight hallucinogenic effect but perfectly legal,” he explained, adding that RTD wine-based cocktails have performed well, too.
Of course, beer remains the category’s preeminent profit producer. Both Circana and NIQ confirm imports continue to outperform domestic brands. NIQ data shows import beers claim nearly 29% of the total retail sales for the 52 weeks ending Dec. 16 and domestic premium holds onto slightly more than 30%.
But to keep the category competitive, c-stores will have to stock cold vaults and store shelves with more than just beer. A strategic variety of flavors and formulations, perhaps even including some of the more kooky limited-edition concoctions, will be sure to gain favor with customers.