Innovation Investigation: Cheers to Flavored Alcoholic Drinks

by | Jun 13, 2024

The flavored alcoholic drink space is buzzing with new ideas and exciting combinations. Adding flavor to alcoholic beverages offers formulators reliable taste delivery, ingredient consistency, and production efficiencies. It’s also a great way to create excitement and build awareness around your brand!

Let’s explore the market dynamics, evolving shopper needs, and recent innovation trends to discover how you can meet and exceed expectations with flavored alcoholic drinks.

Flavored Alcoholic Drinks Market Dynamics

OVERALL REVENUE GROWTH

The global flavored alcoholic beverage market is predicted to reach $54.32 billion by 2033, just over double the estimated revenue in 2023 (evolvebi.com). The CAGR for the upcoming decade is 16%, outpacing the overall alcoholic drinks market.

The U.S. accounts for a significant portion of the market, with $10.8 billion in sales from March 2023 to March 2024. Of these sales, Ready-To-Drink Cocktails made up 19.6% of the dollars, and Hard Seltzers and Flavored Malt Beverages made up the remaining 80.3% (Nielsen IQ).

CROWDED MARKET SLOWS INNOVATION

Despite rapid growth, innovation in North America has slowed as the market becomes more saturated. Overall launches dropped by -17% from April 2023 to April 2024 (Mintel). The largest segment of the market includes Flavored RTDs, Malt Beverages, and Spirits, and is down -17%. Smaller segments like flavored beer and cider are down -20% and -33% respectively.

How Evolving Shopper Needs Affect Innovation

PEOPLE ARE DRINKING LESS, BUT SPIRITS GAINING SHARE

North Americans are becoming more health-conscious and mindful of their drinking habits. Overall, U.S. total beverage alcohol consumption slipped from 135.9 billion servings in 2018 to 134.3 billion servings five years later, according to data compiled by S&D Insights (formerly BMC Strategic Associates).

The chart below illustrates gains and losses for the three main beverage types: beer, spirits, and wine. Beer, which accounted for more than half of total servings in 2018, saw its share dip to 47.7%. Its loss was the biggest of any segment. Wine also lost a few percentage points, moving from a 16.1% share in 2018 to 14.6% in 2023. Consequently, spirits gained 4.3 share points, reaching 37.7% in 2023, up from 33.4% in 2018.

YOUNGER GENERATIONS MORE LIKELY TO CHOOSE NON-ALC OPTION

Younger Americans are more likely to opt out of drinking altogether. Innova reports that one-third of 18-25 year olds say they never consume alcohol and our proprietary study found awareness and purchase of non-alcoholic RTDs and spirits is significantly higher among Gen Z and Millennials compared to older generations.

Creating a non-alcoholic beverage can be a challenging endeavor. People want the experience of a “normal” drink but without the key component that makes the drink exist. A thoughtful flavor solution is a great way to achieve a satisfying taste that mimics the experience of drinking without the buzz.

PRIORITIZING VALUE, NOT VOLUME

The shift toward mindful consumption goes hand-in-hand with the desire for premium options. People who don’t drink as often may be willing to splurge on a higher-quality drink that aligns with their goals or habits. The shift from volume to value is apparent with fuller flavors, ingredient quality, functional benefits, higher ABVs, and spirit-based RTD cocktails.

Innovation Trends In Flavored Alcoholic Drinks

CONTINUED EXPANSION OF READY-TO-SERVE FLAVORED ALCOHOLIC BEVERAGES

Ready-to-serve flavored beverage innovation is continuing its growth. The category is up 10% over the last five years compared to a -5% decline in all other sizes of alcoholic drinks. Large formats offer convenient ways to serve quality cocktails to a group. It saves the hassle of muddling fresh mint and sugar for a Mojito or having the right combination of spirits on hand to make a Long Island Iced Tea.

 

André Wine Cocktails Pineapple Mimos

Perfect for any festive occasion, this sweet ready-to-drink cocktail combines sparkling wine and bold fruit flavors. Almost 50% of shoppers surveyed indicate a willingness to buy, significantly outperforming other flavored alcoholic beverage launches.

U.S., April 2024

Polar Ice Orange Blizzard Juicy Orange Lemonade Vodka Beverage

A flavoured vodka with fresh citrus fruit, zesty lemon, ripe oranges, and floral notes. This versatile beverage can be enjoyed in cocktails, over ice, or chilled. Early online reviews have an average four-star rating.

Canada, April 2024

BOTANICAL FLAVORS ARE BLOOMING

Botanical flavors like lemon, lavender, ginger, or bergamot add depth and dimension to alcoholic beverages. Peppery, floral, or herbal notes can complement the complexities of gin or tequila or even take center stage in a non-alcoholic drink. Tastewise reports social discussions about botanical flavors in alcoholic beverages increased by 4.7% in the last year. Some North American brands are responding and launches of flavored alcoholic drinks featuring botanicals more than doubled in the 52 weeks ending April 2024.

Skyy Lemon & Elderflower Vodka & Soda

Thoughtfully chosen citrus zest and botanical accents enhance rather than mask the spirit inside. Personalize (and premiumize) by combining with the premium SKYY vodka. 90 calories, vegan, and appeals to 52% of shoppers, outpacing other launches.

U.S., April 2024

White Claw Non-Alc Peach Orange Blossom

A refreshing, non-alcoholic adult drink that looks as great as it tastes, just like a ripe Peach picked off a tree, with just a hint of floral Orange Blossom, creating amazing, uniquely delicious sensations.

U.S., February 2024

 

ISLAND VIBES WITH REFRESHING TROPICAL FLAVORS

Tropical fruit flavors deliver a bright zing of sweetness that supports alertness and energy. Last year, we predicted energizing launches would feature flavors like pineapple, passionfruit, and mango. Mintel reports a +15% gain in alcoholic beverage launches featuring tropical flavors in the last 52 weeks. Recent hard seltzer launches, like the ones featured below, have kicked the island vibes up a notch with dual tropical flavors like papaya pineapple and dragon fruit mango.

 

Vizzy Hard Seltzer Exotic Twist Variety Pack

This launch features vibrant dual flavours: papaya pineapple, dragon fruit mango, blueberry with peach, and passionfruit kiwi. All flavors of this spiked seltzer have a sparkling effervescence and a brisk and refreshingly clean finish. 7% ABV and favorable 4.5 star reviews.

Canada, April 2024

Captain Morgan Sliced Cocktail Can Variety Pack

This 5.8% ABV malt beverage features pineapple daiquiri, margarita, mango mai tai, and passionfruit hurricane flavors. 62% of shoppers expressed interest in trying the new entries, outpacing other flavored RTD alcoholic beverages.

U.S., April 2024

WHEN LIFE GIVES YOU LEMONS…

Hard lemonades aren’t a new trend, but the flavor profile is an enduring one, especially when paired with other fruit flavors. The acidity of citrus counteracts the “burn” of alcohol and adds a bright flavor to the drink. North American launches featuring lemon or lemonade flavors jumped 26% in the last 52 weeks (Mintel).

Smirnoff Ice Neon Lemonades

This malt beverage multi-pack features raspberry, peach, pink, and pineapple lemonade blends. At a 4.5% ABV, this launch generated high interest among 63% of U.S. shoppers. 

U.S., April 2024

SVNS Hard 7UP Lemonade Vodka Beverage

Crafted with zero grams of sugar, this hard lemonade combines alcohol with the signature flavor of 7Up soda. 7% ABV, available in Original and Lemonade flavors.

Canada, April 2024

AFTERNOON TEA WITH A TWIST

Hard teas are hardly a novelty, but some brands are leaning into the refreshing flavor profiles and hoping to win big. Teas appeal to shoppers who want a better-for-you option without artificial flavors and excessive amounts of sugar. Boozy teas often feature real brewed tea, antioxidants, natural flavors, and less sugar. North American hard tea launches tripled in the last year, with many entries featuring fruit flavors (Mintel).

Voodoo Ranger Hardcharged Tea Malt Beverage Variety Pack

This flavorful lineup includes Lemon, Peach, Half & Half, and Razz Pop. Made with steeped back tea powder and coming in at a 7% ABV, this hard tea appeals to 37% of drinkers, outpacing other RTD hard teas.

U.S. April 2024

Monster Nasty Beast Hard Tea Variety Pack

A 6% ABV beverage in Peach, Original, and Tea + Lemonade, the innovation gets kudos from 40% of drinkers.

U.S., April 2024

FlavorSum’s Approach to Flavored Alcoholic Drinks Innovation Prioritizes Your Goals

Flavors add complexity and uniqueness to alcoholic beverages. Adding just one flavor can turn an ordinary drink into an opportunity to indulge, relax, or explore something new. Blake Lyon, FlavorSum’s senior applications scientist, recently told Beverage Master Magazine that flavors bring dreams to life. “A flavor company can help create your vision of a strawberry fudge sundae beer or vodka cocktail and make little adjustments until you have a smile that shows you’re proud of something you created,” he said. “Developing uniquely great-tasting craft beverages without flavor is extremely challenging and time-consuming. Even if your first batch meets your expectations, you may be unable to reproduce it. Flavors have your back!”

Our approach to innovation in flavored alcoholic drinks starts by asking what your goals are. Do you want to do what other brands are doing or forge your own path? Together, we’ll collaborate on a framework that taps into FlavorSum’s broad portfolio of TTB-approved flavors and applications expertise.

Partner With FlavorSum On Your Next Flavorful Innovation

The FlavorSum team is ready to help you explore your flavor options. Whether you’re developing an alcoholic or non-alcoholic beverage, we can support your launch with our expertise in food science, regulatory affairs, marketing, and production technology. Connect with our team to learn more.

You can also explore more flavorful resources by downloading our premium RTD cocktail ebook or signing up for quarterly insights with FlavorSum Discover

Author

Phil a’Becket

Phil a’Becket is the Senior Consumer Insights Manager for FlavorSum. He has eight years of experience in food ingredient market research, focusing on both primary research and secondary data analysis. He earned his MBA from Clemson University, and joined FlavorSum in 2022.

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