Can the well-oiled drinks industry tempt a ‘choosier’ generation that’s going against the grain?

David Gates, who spent 25 years at alcohol giant Diageo marketing its core spirit brands including Johnnie Walker, Smirnoff and Captain Morgan, has been chief exec of BrewDog Distilling Co since late 2018, when the Scottish self-styled giant-slayer brought him in to manage its growing portfolio of whiskies, vodkas and gins. The brewer gained barrels of goodwill when, in the first weeks of the pandemic hitting the UK, it pivoted to produce hand-sanitizer gel. It is bound to have benefited commercially, too, with alcohol sales rising 30% in March and one in five drinkers reporting a higher regular intake under lockdown.

But while some drinkers are indulging, with pubs and bars closed many other drinkers are choosing to forgo the ale entirely. Charity Alcohol Change UK found in a survey of 2,000 that 35% of drinkers were cutting down and 6% had given up entirely. And according to the analysis of many in the industry, those changing their habits are likely to be younger. Despite Gates’s own glowing endorsement of the grog, he says younger consumers are being more “choosey” when it comes to booze.

“They are drinking less, they are drinking better and, more than ever, they are drink-abstinent,” he says. “Many would rather gain a six pack than drink one.”

Not that this has stopped new brands coming on to the market. A “ridiculous” 285 new gins launched in Europe in 2018, says Gates, explaining how you can “make gin one day and sell it the next, unlike whisky, which needs to mature”. Some, he says, are really authentic. “But others are utter bullshit.”

Speaking of bullshit – or cat’s piss at least – Carlsberg targeted this “drinking better” crowd identified by Gates with a make-or-break 2019 campaign that promoted tweets likening its mass-market lager to ‘cat piss’, ‘the rancid piss of Satan’, ‘dead grandmother’s bathwater’ and other similarly less-than-appealing liquids, before releasing a spot fronted by Hannibal’s Mads Mikkelsen announcing it has replaced what is probably not the best beer in the world with a premium Danish Pilsner.

Gates doesn’t tell us what he thinks of Carlsberg’s new offering, but instead expresses admiration for “local brands, made by real people, challenging faceless corporates”.

Danika Norman, who featured in The Drum’s Future 50 list of young marketers worth watching, works at one of these local brands. As the marketing manager of family-owned craft brewer Bale Breaker, founded in 1932 in Washington’s Yakima Valley, she is of the opinion that “beer is old, but craft is young”.

The craft beer sector, which is only starting to mature after cropping up in the 80s, is where “innovation happens” she tells us. “It was an easy sport until 2018… until then, very few brands thought to take on monstrosities like AB InBev.”

Bale Breaker sits atop a hop farm. In addition to logistical benefits, this creates a hefty narrative. “Without our hop farm story, we’d just be another craft brewery. We make sure that we’re properly telling the consumer precisely why they should care about us and why they should be allegiant to our brand.”

Norman believes craft can kill the mainstream, but this comes with a caveat. “If craft brands hold out and don’t fall prey to buyouts, the collective will continue to gain market share. Consumers want more than just a Budweiser.”

The giants are playing catch-up and will be late to the next big thing, she believes – IPAs are only the beginning of the craft revolution.

“America is just beginning to enjoy the glorious wild-fermented, sours and experimental lagers that will eventually gain popularity as more palates are exposed to those styles. You won’t find the old guys successfully experimenting there unless through a craft brewery they’ve bought. “Mainstream beers of the past will die with the boomers.”

But while Norman welcomes the changing habits and refined palates of younger drinkers, she isn’t quite so concerned by the increase in drink abstinence. “Booze has been around since the dawn of time. Prohibition couldn’t stop it. Drinking won’t go away completely.”

And yet there is no denying that many are defecting, in many cases toward CBD – the non-psychoactive component of cannabis that helps manage mood, anxiety and pain without any high. Cannabis (components) could cannibalize alcohol. In US states with legal medical marijuana, alcohol sales have dropped by as much as 15%. This could widen as a greater array of cannabis and CBD products become readily available.

Brewdog’s Gates explains: “Some cannabinoids make you feel like super-relaxed, chilled or sleepy, or make you feel uplifted. If these products can prove to have a clear physiological impact, they could really take off.”

Meanwhile, Bale Breaker’s Norman predicts that CBD will grow faster than that other challenger to booze – non-alcoholic drinks. “Wellness is the incentive, but an alcoholic flavor without the ‘benefits’ just doesn’t make a lot of sense for the average consumer. As CBD and marijuana are likely to be legalized on a national level soon, CBD will grow very quickly because there’s too much opportunity to race for.”

Despite Norman’s skepticism around the alcohol-free segment, many brands out there are putting great emphasis on it. Heineken’s 0.0 beer brand, for example, is now being marketed to gym-goers, drivers and office workers globally.

Cindy Tervoort, who is marketing director at Heineken UK, tells The Drum that the segment is growing more than 20% annually. And while “millions of people are choosing to moderate their consumption of alcohol”, she claims that, until the launch of Heineken 0.0, “there just wasn’t a credible choice”.

“We wanted to disrupt the market and make moderation cool with a great-tasting beer.”

To unlock further growth the brewer has to bring 0.0 to draught, but there was a barrier to entry here. “Running alcohol-free beer through a pub’s traditional cellar equipment is very challenging.” As a result, Heineken developed the ‘Blade’ pump in the knowledge that 93% of beer sold in UK pubs is on draught.

“We’ve been around for 130 years, so building a long-term sustainable beer, cider and pub market is hugely important. People will still love pubs, cider and beer. There will be more entrants to the market, more choice, but the winners in the market will be those brands that act with integrity, honesty and purpose.”

Soft-drink companies have failed to disrupt booze and, at best, serve as mixers rather than replacements. But Gates points with admiration to the success of non-alcoholic spirit brand Seedlip, which he says nailed the “semiotics” of spirits with its branding, marketing, packaging and in-bar placement – unlike most alcohol alternatives.

Ben Thomson heads up Seedlip’s UK marketing and was also one of The Drum’s Future 50. Describing the growth of the company that was founded in 2016, he says: “Alcohol is in transition, from a ‘cultural norm’ to ‘cultural not’. Now, consumers are more healthy, more public through social media, more demanding and busy.”

Thomson was surprised that Seedlip’s niche in the market wasn’t already filled. “We’ve created driverless cars and walked on the moon, and yet if you’re not drinking you couldn’t get a good grown-up non-alcoholic drink.

“We are really proud to be leading the way and innovation within the category.”

The three-year-old company has benefited from a shift in the role alcohol plays in people’s lives – and it’s something that Diageo, the world’s largest producer of spirits and a major producer of beer, is also concerned with. It holds a minority stake in Seedlip and is “becoming increasingly diverse to cater for those who choose not to drink alcohol”. It says demand from consumers for credible low or non-alcoholic alternatives is currently “not being fully met”.

And so it is attempting to meet that demand. In June 2017 it launched Gordon’s Ultra Low Alcohol (less than 0.5% ABV) and, more recently, Baileys Almande, a dairy, lactose and gluten-free vegan drink.

A Diageo spokesperson tells The Drum: “Drinking alcohol isn’t just about the ABV, it’s about intriguing and complex flavor, sociability and ritual. Consumers still want that when they aren’t drinking alcohol and we are passionate about bringing new and exciting socializing experiences to consumers, whether they choose to drink on these occasions or not.”

Even whisky is adapting, in some cases lowering from 40% ABV. Whyte & Mackay Light, for example, came to market at 21.5% ABV “to deliver an attractive option for the growing number of consumers who may be looking to keep an eye on their alcohol intake”.

Lee Beattie, co-founder of marketing comms agency Wire which works with numerous scotch brands including Whyte & Mackay, says brands must adapt fast.

“People are increasingly considering what they eat, drink and do. This has contributed not only to the rise in abstinence but also to drinking in moderation. And when people drink less, it means that they’re looking for something a bit more special or distinctive when they do. This opens up opportunities for drinks brands to innovate with new products or to create new drinking occasions.”

Whisky can make strong gains if it recognizes the opportunity. “Provenance, authenticity and quality are already associated with this sector, but there’s a need to break down some of the technical jargon that can be off-putting to younger drinkers and to tell more distinctive stories if brands want to stand out in the category and create recall at the bar.”

Beattie notes that demand for low or non-ABV options will continue to increase in all age brackets. She says: “While there’s a variety of low and no options among the wine, beer and cider markets, there was a clear gap in spirits.”

There is a clear blindness to the harm humans do to themselves with alcohol. Research from the World Health Organization says “the global burden of disease caused by alcohol’s harmful use is enormous” and “exceeds those caused by many other risk factors and diseases high on the global health agenda”.

Back in 2016, it found that the harmful use of alcohol resulted in some 3 million deaths (5.3% of all deaths recorded that year). Atop of the financial incentive to crack booze alternatives, there is a moral imperative to reduce harm. It is here that premiumization, alcohol reduction or alternatives and brand purpose could meet to forge the next generation of leading brands.