By not tapping into the nuance of modern consumer preference, beverage producers are missing out on enormous profit and growth potential. It’s time to change that. Here’s how…
It seems like ages ago that hard seltzers took the world by storm. People were consumed by the innovative entrance of a totally new product into the beverage market. White Claw, the hard seltzer mainstay, quadrupled sales in 2019 alone. Whispers claiming ‘It’s just a fad’ and ‘There’s no way this stuff will last’ circled the market.
And yet, White Claw, among countless other seltzer brands, have solidified their position in today’s modern market. Since the emergence of the hard seltzer category, the market has taken a hard turn toward innovative proliferation that’s rattled the beverage supply chain from top to bottom. People want more options, flavors, concoctions, and styles than ever before.
The RTD (ready-to-drink) category is on a notable upward trend, contributing a wealth of options to a bottomless list of new flavors, new brands, new packages… new, new, new. According to data from Bump Williams Consulting, spirits-based RTDs have seen a +37.8% YoY sales increase due in part to rising popularity among flavor-focused Gen Z consumers.
FMBs (flavor-based malt beverages), a subcategory of RTD, have been dominating the C-store scene. According to a report from NIQ, RTD sales are up 14.6% at convenience stores. FMBs account for over half of RTD sales at c-stores, up 24.3% YTD in October 2023.
The smartest producers are coming up with ways to insert themselves into growing categories. And the technology they use to get there is a key component of their success in multi-segment production.
In today’s beverage market, it’s impossible to talk about the future without talking about product innovation.
Producers must diversify their product offerings to keep their heads above water
Did you know…
- 6% of the US population is gluten-free or gluten intolerant
- Almost 4 million babies are born in the US each year… meaning 4 million preceding pregnancies
- 60 to 70 million people in the US are affected by digestive diseases
Imagine a gluten-free person walks into your taproom, and scours the menu, only to find they can’t safely drink anything because you haven’t invested in the technology, equipment, and your brewery’s future by producing new product segments. That exclusion will cause them to turn around and find a new establishment that can cater to their dietary restrictions. And it’s not just them either… the ripple affect happens immediately in this kind of scenario. This person’s friends will likely join them elsewhere because they want everyone to have a good time. And just like that… you’re losing business.
Pregnant women visit your establishment, too. How do they feel when the only non-alc option you have is water? That could be a real buzz kill. But an NA beer in the cooler or on tap gives her the option to sip a risk-free beer. It might just be the ticket to keeping her at the bar and feeling social.
Digestive diseases and drinking habits are rangey and complex… but luckily, so are beverages. If you can offer more than just beer, chances are, that even those affected with digestive illness will be excited to enjoy your products. Appeal to this segment of future drinkers and embrace them with options before they walk through the door (and hopefully not immediately walk out).
And that’s only the beginning. In the brewing world, we joke around that 80% of revenue comes from the same 20% of people. Imagine how much more money you could make from happy customers if you were to focus more time and energy on creating new product lines in different segments so you’re hitting the 80/20 of cocktail, gluten-free, non-alcoholic, coffee, kombucha, and other beverage drinkers.
The point is that today, we have access to data that tells us more about consumers than ever before and vice versa. Consumers know what they want when they want it, and they’re telling us by how they are spending their money. Are you listening?
The challenge is figuring out how and what to produce
The modern beverage makers who are future-proofing their breweries have asked themselves the same questions that you’re likely thinking: Where do you begin as a long-time producer of beer? What does the price tag look like to grow into new segments? To build a new brand from scratch? To open a new facility? It’s daunting. Luckily, resources exist to help you uncover the answers to these questions. (Check out the Encompass guide to becoming a multi-segment producer. Lots of producers have used it as a jumping-off point to explore new segments).
Here are three necessary assets that are absolutely essential to expanding or breaking into multi-segment production and connecting with new consumers:
- Data: To determine what you’re going to make, you first need to understand what consumers like and dislike. Data exists within your establishment to make calculated decisions about what new product segment to produce. Data can be a powerful way to uncover truths about your production processes. For example, identifying gaps in efficiency or production scheduling can help you uncover unused or underutilized tank space. That space could be used to brew a hard seltzer or cider.
- A reliable tech stack: So many breweries are still heavily reliant on spreadsheets, and in a lot of cases, pen and paper to handle day-to-day processes. This can mean fumbling around double entry of data, endless hours spent on manual process, and a bored or frustrated workforce. Having reliable technology that helps your team connect across all aspects of your business in a single platform can change the way people approach work, enhance the integrity of your data, and save huge amounts of time and money. Hmm… where to spend that time and money… How about producing a new product segment? RTDs are all the rage right now. Why not buy some new equipment and create a line of canned cocktails?
- People: Having a team of people who give a damn is an important key to success in multi-segment production. When you leverage technology and data to bring your brewery to peak efficiency, people will have a better time with their jobs and have more time to focus on career progression. When employees are focused on building their career and the business rather than monotonous manual processes, creativity and innovation can creep to the forefront of employee mentality at your brewery. The power of happy employees is second to none. This could be a way to stimulate the best possible outcomes for entering new product segments successfully, and in some cases, failing forward.
Making a decision about what technology you use to optimize your operation as you expand or break into multi-segment production is tough. There are a lot of good options out there, but if you want to learn how breweries like Martin House, Yards Brewing Co., Rhinegeist, and more brought their operations to peak efficiency and launched more than a few new product lines in varying segments, check out Encompass Production Cloud, built to support your business no matter what direction you decide to take it.
Modern producers know that multi-segment production is the way of the future. It might take a few steps to get to where you want to be, but don’t be afraid to use technology to help you get there.
There has never been a more critical time to invest in multi-segment production. Learn more about the tactics and technology that can help you achieve your goals.
Visit the Multi-Segment Production HUB
