Last Week our co-founder Mike South predicted what 2016 held for the beer industry - all three predictions were interlinked as he expected further premiumisation, the creation of more experiences and packaging change. You can read more about this here
This week it is the turn of Nick Priddle, one of our FMCG Drinks team. His three predictions come from different markets - Cider, Niche Products and the industry going Natural.
Lets take a look in more detail...
#1 Hugely interesting Cider Market
"The cider market has become very competitive – everyone is trying to get in on the surge in popularity in the category. We are going to see some big winners and some big losers this summer in the mainstream market, and the emergence of more 'craft' ciders."
Cider has undergone a resurgence over the past decade. Worth an estimated £297 million in 2007, cider sales are moving towards the £1 billion mark, with recorded sales over £900 million last year.
The fruit infused ciders are the main attraction with strong offerings from the likes of Rekorderlig, Old Mout and Kopparberg (to name a few.) These brands have proved popular, squeezing the more traditional apple cider off the supermarket shelves and out of pub fridges. In 2016, Nick expects more ciders to be made combining flavours like Elderflower, Ginger and Whisky rather than the usual fruit infusions.
The Grocer’s June 2015 category report indicated that cider volumes haven’t increased again on top of the strong 2014, but has remained strong. So what does 2016 hold for cider..?
Nick thinks that the category won’t see any significant further growth and, as the market gets more and more competitive, some highly backed brands will experience poor results. With the amount of products on the market, from the smaller producers to the larger businesses trying to get in on the act, the competition will be very high in 2016. With competition so high and businesses competing for a defined market share we will see some products excel and some fail. Expect a high marketing push during June and July as brands try to capitalise on Euro 2016.
#2 Niche Products to Dominate
“Cleverly branded, niche products will excel in 2016 and will see new categories grow considerably with larger businesses trying to release their own products.”
One of the big names to develop in 2014 and grow further in 2015 was Vita Coco. With a 75% market share in the UK and a specific consumer base the business has seized control over a niche market. Even with the entry of Innocent Drinks into the category, Vita Coco’s sales are remaining very strong and they lead the way in Coconut Water.
This is just one example of finding a niche market popular with consumers and having the product and brand to control it. So what markets will see the popularity boom in 2016?
There seems to be a buzz around Gin at the moment. There are a lot of experience-led events based around Gin tasting and Nick thinks that popularity is mainly coming from two different strands.
First, popularity has built up for smaller makers like Sipsmith, Williams Chase and Portobello – this Gin is artisan, stylish and has proved appealing with consumers.
Second, Gin infusions are proving extremely popular. A smaller, independent brand finding the right mix and fusion of flavours will surely have a very positive 2016.
The conventional coffee market shares many similarities with the craft beer market. Constant stream of new products using quality ingredients. There is a huge market interested in trying varieties of coffee. One variety I think will see a surge in popularity in 2016 is Iced Coffee accessible away from your Starbucks and other coffee chains.
As with Vita Coco, branding is crucial to dominate a niche market so I have my eye on Jimmy’s Iced Coffee in this category. It is very cleverly branded with a fun rap video, attractive packaging and laid back attitude. Already stocked in a number of the big supermarkets we expect a huge amount of growth for the business next summer. However with Vita Coco offering a version and others popping up it will be interesting to follow.
A very niche market here… but one that will be interesting to the fitness crowd. Blake Konrardy, a beer and workout enthusiast is raising funds on Kickstarter to create two protein based beers. Will it take off… not for me!
#3 Going Natural
"There is going to be a major movement towards healthier, natural products in 2016. With the call for reducing sugar and a savvier consumer that has the power of choice - brands hitting this sweet spot will be well placed for success."
Quality nutrition, quality ingredients and a healthy lifestyle are going to be even bigger in 2016. There’s a huge number of products dedicated to the consumer group that scrutinises ingredient lists more than ever.
This interest in ingredients is coupled with the ‘War on Sugar’ with brands and companies committing to reduce the amount of sugar in products, especially drinks. All in all 2016 should bring us big changes in established products and a whole host of new, natural goods.
Companies like Fever-Tree Tonics, Gluten-free businesses, smoothie makers like Savse and Naked and some craft beers are just a few businesses appealing to this market and we predict big successes in 2016.
What do you think? All comments are very much appreciated.
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