Bryan Roth — March 8, 2022
What you need to know:
While companies see “innovation” as a new product or package, “experimentation” is the way to view consumer curiosity.
Both these ideas have led to a surge in single-shot cocktails, which sold $15 million in chain retail last year.
It’s another example of how traditional alcohol can evolve in new, playful ways.
Flavor and its ease of understanding have shifted expectations for how we buy beverage alcohol, and that influence is only going to get stronger in coming years. “Traditional” beer, wine, and spirits have given way to other products that can succeed by clear labeling and marketing around flavor and an ambiguous wave at what “occasions” mean. In a world where the pandemic has adjusted what food and beverage we assume pairs with “going out,” “staying in,” or even being a “mixologist,” there’s increasing incremental value in showing a product fits in a feeling rather than specific meal or time of day. Today’s drinkers are supporting these shifts, and as more members of Gen Z move into a pivotal time of life as newly-anointed legal-age drinkers, there’s potential for this trend to get hotter. What’s come with this is an expectation for big, bold flavors and, when possible, in new and exciting ways.
This has created storylines set to intersect. Consumers are generally excited about new products focused on flavor and newer legal-age drinkers are reinforcing the trend for years to come. Consider the setup for our recent series on alcohol consumers who identify as women. One of the key findings was that rather than market to them as one monocultural group, making products that may be enticing to them was also likely to attract drinkers from other demographics. As gender norms have started to fade, so have preferences across generations and demographics. Bud Light Seltzer Hard Soda, leaning on marketing that promises the “loudest flavors,” offers clear, distinct communications of what flavors to expect and the playful intensity of which they’re delivered. Time and time again, these are common denominators that we’ve highlighted on Sightlines+.
Here comes something like Slrrrp, a company that creates individual gelatin shots that come in flavors like Blue Raspberry Smash, Strawberry Slammer, and Orange Vanilla Thrilla. Steven Houck, CEO for the company, admits that younger drinkers are a key part of their sales demographic and sales are about a 60/40 split between women and men, but these cohorts are not the entirety of who they can attract. Some of Slrrrp’s top private, on-premise accounts are VFWs, American Legions, and Elks Lodges. “These places host all different kinds of events, and we’ve found that when people come together and celebrate, they recognize what a Jell-O shot is,” Houck says. Familiarity helps ease discomfort, especially given that a pre-packaged gelatin shot is a new phenomenon to find outside the home. The constant refrain from Houck and his team is about “celebration,” something everyone can understand—he notes that 90% of Americans have heard of a Jell-O shot and it has a direct connection to parties, good times with loved ones, and—of course—celebrating something.
This singular focus not on who we may assume is a customer, but who could be based on mood and occasion, has worked. Slrrrp doubled its sales from 2020 to 2021, in which it sold about 220,000 cases of shots in convenience (25-30% share of volume), grocery (25% share), and independent liquor stores and clubs (45-50% share). Distribution has grown to 44 states for malt-based shots (8% ABV) which can be sold in grocery and convenience stores, and vodka-based versions (13% ABV) in liquor stores. Seasonal pushes are next after success with a cinnamon whiskey variant (15% ABV) with eyes toward something peanut butter flavored. Suggested retail prices for single shots run from $1-$1.50 each, while a jar of 12 malt-based shots run $9.99 or 20 for $19.99. “We’ve barely scratched the surface of our opportunity,” Houck says.
Don't think it's a blip, either. During this month's Wine & Spirits Daily Summit, Britt West, vice president and general manager of spirits at E&J Gallo, specifically called out the company's acquisition of Liqs, a cocktail shot brand. "We're very bullish on the segment," Britt said at the event, per Wine & Spirits Daily, adding "As a company, as a major spirits supplier, wine supplier, we think it's a really important piece of our overall company strategy." Gallo acquired Liqs in the midst of its breakout 2021 in which it grew to $2.4 million in IRI-tracked sales from about $470,000 in 2020.
In chain retail, spirits have shown the most resilience. These single shots have outpaced category growth.
Spirits were +2% last year, while core beer (without FMBs) declined -3.1% and wine was down -3.9%.
Pre-packaged, 1.7oz cocktails have doubled its subcategory worth annually for five straight years, including +123% last year.
These shots sold $15 million in chain retail in 2021, roughly the same as portfolios from Three Floyds or Shipyard, or Firestone Walker’s Mind Haze IPA.
It’s another way consumers are finding new items to fit their needs—whatever that may entail. While there will always be people who prefer beer, wine, or spirits in their traditional form, it's no longer just about what something comes from so much as what it is and when it can fit in. Flavored spirits are helping to drive the category like never before. Coffee has moved from breakfast and morning commutes to dessert and nighttime parties. And while younger consumers may over index for buying RTDs and their variations, millennials and Gen X are primary customers. (And maybe don’t count out Boomers, either.)
According to surveys from Nielsen, the percentage of Americans who exclusively drink beer, wine, or spirits declined 4% from 2019-2020, the most recent years that data was available. This decrease has occurred at the same time new kinds of products in new kinds of formats are flooding the market. There’s a norm of experimentation for everyone these days, and new products are capitalizing on the shifting share of choice once dominated by “traditional” alcohol options.