Neither past success nor quality can guarantee future results. Those who endure will be the ones able to reinvent themselves before the market forces them to do so.
The global alcoholic beverages industry is undergoing a profound transformation, facing a structural challenge alongside short-term factors that are forcing it to redefine its production, commercial and consumption strategies.
During Covid, alcohol consumption increased worldwide, and many wineries and spirits companies significantly ramped up production. When the pandemic ended, a pendulum effect occurred: taking care of oneself and adopting a healthier lifestyle became fashionable. Consumers became more aware of the impact of alcohol consumption on health and began to drink less.
Added to this is the fact that Generation Z, today made up of people under the age of 30, drinks much less than previous generations. Interestingly, these generations seem to rely less on alcohol as a tool for validating their social status. In other words, they feel less pressure from their social environment to consume alcohol. Not drinking can also be cool. The new concept gaining ground among Gen Z and, more broadly, among consumers is NOLO, meaning No or Low Alcohol.
The alcohol industry has reacted quickly by uprooting vineyards, reducing production and stocks, and laying off part of its workforce, among other measures adopted to contain costs. From a commercial perspective, it has also diversified its offering by introducing organic wines, strengthening premium wines and spirits, and launching alcohol-free or lower-alcohol wines, such as rosé. Today, people are even starting to talk about non-alcoholic whisky. Oh Lord!
At the same time, the Chilean cherry industry is closing a second season with modest results. Some voices are mistakenly describing this as a structural problem. But the truth is that, although both sectors, alcohol and cherries, are facing challenges, the causes are very different.
In the global alcohol industry, the change is undoubtedly structural: consumption is declining, driven by greater health awareness. There is not much that can be done: it is the consumer saying “I want less” or “I don’t want any”. By contrast, as Hernán Garcés, the world’s largest cherry producer, argues in this edition, the cherry industry is facing a turning point. After years of extraordinary growth, the challenges do not stem from changes in consumption habits, but from external factors: a slower Chinese economy, market saturation and a much more demanding consumer. “Today I cannot afford it” or “I can afford it, but I want better quality”. Not the same!
The Chilean cherry remains a premium product, highly sought after and with room for expansion, but it will require more refined strategies in terms of quality, consistency and brand building in order to maintain its leadership. There is, however, one lesson shared by both industries: neither past success nor quality can guarantee future results. Those who endure will be the ones able to reinvent themselves before the market forces them to do so.
Gustavo Yentzen Wilson
Director of Vision Magazine
Image source: Vision Magazine
30 Jun 2023
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