Trend analysis: innovation opportunities for out-of-home drinks manufacturers
Consumers choosing to enjoy products away from the home present unique challenges for brands. Eloise McLennan wraps up the out-of-home drinks trends identified by Canadean in a new report by Ronan Stafford and Kirsty Nolan
New drinking occasions created by the shift away from at-home consumption provides fresh innovation opportunities for beverage manufacturers. Image courtesy of Monkey Business Images
Out-of-home consumption includes all occasions when a consumer makes a deliberate stop to use or enjoy a product away from their home. For a number of alcoholic and non-alcoholic drinks brands, the move away from at-home consumption has the potential to revive sales, or diminish them. Either brands work to address and accommodate the rapidly evolving needs of consumers to become a favoured choice, or risk being substituted in what is becoming a highly fragmented, rapid turnover landscape.
In a new report, ‘TrendSights Analysis: Out-of-Home’, Canadean explores the challenges facing Out-of-Home consumption. There are a number of motivating factors behind the move away from at-home consumption that brands will need to address in order to successfully target changing consumption occasions. For many, price and convenience play a significant role in purchasing drinks away from the home, and consumers with a real or perceived lack of time who are shopping to a limited budget will actively search for products that save them money or effort.
Canadean has identified five challenges to out-of-home consumption, including the growth of on-the-go consumption, cocooning inciting consumers’ desire to stay at home, increased cost-consciousness, increased concern with health, and a backlash to current fads in CPG as the hipster trend reaches its peak. If drinks brands successfully position themselves as the solution to one of these challenges the out-of-home trend can be used to grow sales.
Value for money
There are a number of qualities that make out-of-home drinks desirable for consumers. However, while these products are noted for their convenience, they are often associated with a high price point, which may leave consumers questioning whether they are sacrificing quality and experience for convenience. In order for brands to successfully target busy lifestyles, they must work to alleviate the compromise as much as possible by adding experience and quality to products that are equally suited to on-the-go use.
Targeting cost-conscious consumers can be achieved in more than one way. Firstly, there is the option to tempt consumers to put aside their value concerns and trade up for a real, enjoyable treat which they simply cannot replicate at home. During treating occasions, consumers are more likely to compromise on their usual priority concerns such as value and health. Encouraging such occasions with on-trend, irresistible offerings in an exciting setting not replicable at home is key to achieving this.
In post recessionary times many consumers have adopted a 'savvy shopper' mentality. The recession forced them to be more cost conscious, and even though perhaps their budgets aren't now so restricting, they still find themselves keen on the idea of cost saving as they simply cannot justify spending more on 'the same thing' or a close comparison. Granted, such strategies as appealing to the cost-conscious can prove difficult, especially in an industry where margins can already be tight. However, the attitudes and behaviours expressed by these consumers is not likely to change in any recent time, and being able to attract such a large number of consumers can quickly bring scale and volume to a concept, and with that, healthy profit levels.
The ‘third space’ consumption occasion
For busy consumers who are always on-the-move, out of home drinks need to offer an incentive that encourages consumers to stop, slow down and enjoy their product. Although most consumers will be aware that they need to seek respite in order to maintain their energy and enthusiasm levels, to justify parting with money that could be spent elsewhere, the product must offer an element that cannot be recreated on-the-go or at home.
Changing attitudes towards alcohol consumption, health trends and the increasing variety of media and entertainment available to consumers in the home has led to the rise of do-it-yourself options. To counter this trend, brands need to create a ‘third space’ which offers an experience that can’t be recreated at home will provide consumers with an incentive to treat themselves.
Out-of-home is a vital trend in Non-Alcoholic Drinks as much of their consumption is attributable to on-trade occasions. The reliance on out-of-home consumption occasions is largely driven by the desire to socialise with many consumers valuing the experience of being out as much as they beverage they drink.
The social atmosphere of these on-trade consumption occasions has been a significant channel for out of home drinks, however, Canadean reports that growing concerns about the cost and health risks associated with alcohol have caused significant shifts in drinking habits, particularly in young adults. Traditionally a key audience for alcoholic beverage consumption, the change in priority for young adults is effectively leading to them drinking less than previous generations.
Similar to the alcoholic drinks sector, on-trade occasions also makes up a significant portion of out-of-home consumption levels for non alcoholic beverages, such as water, carbonates and hot drinks. This is, in part, due to the fact that non-alcoholic beverages are regularly used to accompany a meal as well as providing a central component in a variety of other out-of-home driven occasions. Consumption occasions where beverages are used to compliment a meal present ample opportunity for brands to promote premium non-alcoholic drinks as a high-quality indulgence and encourage consumers to trade up and pay more for the experience.
In addition to traditional meal times, non-alcoholic drinks can form the centrepiece for a number of out-of-home drinking occasions, for instance at coffee shops or juice bars. Encouraging trading up with indulgent treats that are difficult to replicate at home, alongside a setting suited to both relaxation and socialising are all important to encourage continued consumption. However, brands need to be aware of growing concerns, such as health and value, opening an opportunity to target these differing needs.
According to Canadean, changing attitudes and shifting cultural trends present a significant challenge for non-alcoholic drinks brands. In addition to consumers opting to stay in for value reasons, beverages that are seen as healthier or better value present a potential target, as consumers may seek out these products when out. As these changes to consumption patterns begin to take shape in the market, Canadean reports that the market will shift to favour healthier options, most notably to date, the transition of many from carbonates to bottled water.
To read more reports from Canadean, view the report store.