Picture someone ordering a drink. You’ve probably imagined something alcoholic served in a glass at a restaurant or bar. But for the new generation of consumers that has entered the scene since COVID began to recede in the rear-view mirror, none of these is a given, and the dominant trends of the pre-pandemic years are no longer an accurate barometer of consumer desires. Now, the beverage of choice may be non-alcoholic, it may come in a can, and it may be consumed in a park or at home on the sofa.
“It’s a brand-new world; everything that we thought we knew, we didn’t know,” says CJ Hélie, president of Beer Canada. “Very few of those trends are anywhere to be seen, and there are new factors at play.”
“There’s a lot of pent-up demand, but also the pressures of inflation,” says Asad Amin, head of Syndicated Solutions for Canada at market-research firm Ipsos. Normally, 20 cents of every dining dollar go towards alcohol, he notes, but during COVID closures, that ratio “took a massive dip because foodservice was gone,” and alcohol spending is still comparatively low.
“We’re seeing big shifts,” Amin says. “Wine and beer both have taken a hit. All other types, from cider to coolers, have been growing. Historically, the older cohorts are the ones that skew towards alcohol consumption; younger cohorts have a high repertoire of beverages.”
On the heels of tougher drinking-and-driving laws that dampened alcohol sales in many provinces, along with minimum-wage increases that put pressure on payrolls, COVID hastened the introduction of a range of new measures with the potential to help or hinder various sectors the foodservice industry. Permitting takeout and delivery of alcohol with meals helped many outlets survive COVID lockdowns, but has presumably habituated many consumers to staying in rather than dining out.
Beer Canada has tracked more than 20 municipalities across Canada that now allow alcohol consumption in certain outdoor areas: typically parks. Meanwhile, convenience-store chain 7-11 now serves alcohol in some outlets with foodservice seating, and some regions that did not previously permit alcohol sales in corner stores are re-examining the issue.
While supply outlets are expanding, demand is actually dwindling, Hélie says. “Per-capita consumption is on the decline; drinking and driving, binge drinking numbers are down. Lighter alcohol has accelerated; in the last two-and-a-half years, it’s been 20 per cent to 25 per cent growth.”
The Canadian Centre on Substance Use and Addiction’s revised guidelines for safe levels of alcohol, released in January, surprised many consumers and industry stakeholders alike; they essentially urged adults to limit their alcohol consumption to two drinks per week or less. However, they are in step with a general post-COVID movement towards healthier lifestyle choices, and the trend cannot be ignored. For instance, in May, the Spring/Summer 2023 LG Trends Report from LG Electronics Canada showed a 220-per-cent rise in global searches on Pinterest for “fancy non-alcoholic drinks.”
Ready and Waiting
Along with the surge in takeout and home-delivery meals, the Ready to Drink (RTD) category has grown enormously, and shows no signs of subsiding. At music venues, festivals, craft breweries and takeout picnics, young consumers are continuing to reach for a drink in a can. For venues, it’s a convenient alternative to glasses or bottles, and for producers, creative labelling offers a chance to stand out in a crowded market.
“When it comes to RTD products, seltzer is still king, representing the largest share of sales. However, the growing interest in canned cocktails, hard teas and even some more traditional coolers, demonstrates that the category has much wider appeal and continues to recruit new customers,” says a spokesperson for Ontario’s Liquor Control Board (LCBO), who notes that vodka is the dominant RTD base, but also notes customers are also exploring drinks made with gin, rum, whisky and especially tequila-based RTDs.
The category has seen an enormous explosion of new lines and flavours from Canadian and international producers. In March, for example, Seagram’s added Island Time Botanical Lychee Spritz to its existing line of Island Time coolers, which already included Island Time Anytime and Island Time Coconut Lime.
April saw the Canadian introduction of premium canned cocktails from Mexico’s Tequila CAZADORES, including Paloma and Margarita cocktails. In May, San Francisco-based Cutwater canned cocktails launched in Canada under the auspices of Labatt Breweries. The top-selling U.S. craft-spirits brand offers Rum Mint Mojito (5.9 per cent ABV), Tequila Grapefruit Paloma (seven per cent ABV) and Tequila Lime Margarita (12.5 per cent ABV).
The category is so popular, in fact, that Beerlicious, Toronto’s 25-year-old festival of beer (which runs from July 28 to 30 this year), is creating a dedicated space called “Beyond Beer” to accommodate it.
“Ready-to-Drink being a significant growth player in the category, we are carving out a piece of the site to allow for these non-beer products to be showcased,” says Beerlicious’ president Les Murray, adding that many of Ontario’s traditional craft brewers (Great Lakes, Steam Whistle, Flying Monkey, Collective Arts) are entering the RTD arena with flavoured beers and canned cocktails.
“Negronis, margaritas, Manhattans, bourbon sours: they’re all coming in that RTD format and having a lot of success,” he says. “The adage is that it’s not my dad’s beer any more. There has been a bit of a shift in consumer choice coming in with the people who are coming of legal age. At the same time there’s that younger group of sober-curious people who are enjoying products that are made with low to no alcohol.”
In Pursuit of Value
According to the latest figures from Statistics Canada, which cover April 2021 to March 2022, Canadians are still buying more beer than any other alcoholic beverage; it represents 34.9 per cent of total sales, with wine close behind, at 31.3 per cent, followed by spirits (25.8 per cent) and the mixed category of “ciders and coolers” (eight per cent). But beyond the question of which drink to choose, consumers are looking for inflation-beating value, which is lessening their appetite for premium products. An exception may be wine, where LCBO figures suggest that customers are buying less overall, but spending more on premium products, with strong interest in sparkling wines, California wines and rosé and a returning enthusiasm for Ontario icewine, which saw more than 52 per cent growth over 2022.
Instead, says Asad Amin, younger consumers are looking for brands that demonstrate support for local communities, sustainability and Fair-Trade practices. “That’s what allows you to have a connection to your frequent patrons,” he says.
Glass Half Empty
Although, as Statistics Canada notes, beer remains Canada’s drink of choice, “there’s no doubt that the last three years have been incredibly challenging for the brewery sector,” says CJ Hélie of Beer Canada. In 2021, “54 per cent of brewers selling less than $5 million were not profitable, and things got worse in 2022.”
In early March, Carlsberg Canada Inc. acquired Waterloo Brewing Ltd. of Kitchener, Ont. Founded in 1984, Waterloo was Ontario’s oldest and largest Canadian-owned craft brewery; the sale is emblematic of a climate that is seeing breweries entering into new business partnerships to survive.
“In 2022, sales were still down 20 to 25 per cent, and we’re still 15 per cent below pre-pandemic numbers,” says Hélie. “The one thing that has not changed is focusing on local; 88 per cent of the beer consumed in Canada is made here, which is almost unique in the foodservice sector and certainly in the beverage-alcohol sector.”
Trend Watch
Grant Sceney is the Creative Beverage director at Fairmont Pacific Rim in Vancouver. Among the bar spaces he oversees is Botanist Bar, winner of Michter’s Art of Hospitality Award 2023 and number 19 on North America’s 50 Best Bars 2023 rankings.
“Batch cocktails and RTDs will continue to grow,” he predicts. “At our establishment people still try one of the cocktails, but they want less shots.”
Instead, they’ll opt for fresh creations, such as the Botanist’s Martini ($20), “served with an oyster leaf on top — it tastes exactly like an oyster. With that we do a vegan caviar, a compressed cucumber in a tight ball. It looks like a very elegant garnish,” Sceney says.
Fermentation can be the mixologist’s friend, too. “Kombucha and fermentations are going to continue to grow and be huge because obviously fermented foods are good for your stomach. We’re seeing a lot of bars playing with their own fermentations,” he says, naming Mother Cocktail Bar in Toronto and Noma in Copenhagen.
But Sceney believes that above all other strategies to survive and thrive in the beverage-alcohol arena, from canny pricing to clever marketing, the most important quality is authenticity. “If you want to stand out, be authentic to yourself.”
For instance, “if you want to take the sustainable approach, you can cut out straws, you can recycle and compost, and you can tell your suppliers not to ship in plastic any more — as long as you make it part of your company’s DNA,” he says. “But if you’re doing it for your customer’s attention and you’re not doing it for the right reasons, then customers will notice eventually. You can tell if someone’s doing something because they think someone else will like it. Be true to yourself.”
By Sarah B. Hood
