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December 12, 2019

Ross Colbert, head of KPMG’s Beverages Investment Banking business, sees 5 main themes developing in the Beverage industry for 2020.

 

PORTFOLIO OF COMPANIES > SINGLE MALT BRAND

  • Rapidly changing marketplace means beverages companies are no longer ‘one beer ponies’ but rather buy multiple existing and new brands to maintain a portfolio
  • Beer Adjacent = Canned Cocktails, Flavor Malt Beverages (FMBs) and Hard Seltzer
  • Creating a headwind for craft breweries
  • Cow Milk?  Cow Schmilk—plant based milk products (Almond, Oat, etall) are the fastest growing.
  • Traditional milk consumption in Britain is down 50% since the 1950s

 

GREEN, NOT GREED, IS GOOD:

  • Saltwater Brewery’s 100% biodegradable six-pack rings
  • Edible packaging from seaweed
  • 100% recycled Polyethylene Terephthalate (rPET) plastic
  • Both demand and regulation are driving this trend

 

PREMIUM AT A PREMIUM:

  • Premium wine (>$20/bottle) was the fastest growth category in 2019
  • Increase sales by 3 million cases in past 3 years
  • Has been the fastest growth category for 10 YEARS (since 2009)
  • Volume no longer profitabLE
  • Large Alcohol business has divested mainstream products
  • Constellation sold 30 wine and spirit brands to E&J Gallo
  • Campari and Pernod Ricard offering more premium
  • Craft Beer America>Europe>Asia now Craft Tequila, Craft Mezcal and Craft Mixers

 

“DRINK TO FOR YOUR HEALTH”

  • Forget soda, clean ingredients that create mental clarity, more energy, better moods, lower stress
  • Miracle Beverages:  Collagen Water, Kombucha and CBD(!!!)
  • By 2024, this market will reach $208.13 BILLION—a CAGR of 8.66%

 

DRONE DELIVERY DRINKS

  • Its an Amazon world, so online orders to delivery is king
  • U.S. Drizly offers ONE HOUR delivery ($4.99 fee) in major markets
  • They curate alcohol from local stores
  • Amazon (and Winter) are Coming: Tovess Gin: Amazon’s private label line in UK
  • E-commerce is almost passe, firms will have to think broader about distribution
  • RTD moving outside the coffee shop
  • Retail refrigeration space wars
  • Firms must be accessible, always on and packaged correctly

 

He also sees CBD as the biggest potential disruptor to the industry. 

 

For more information, please see Beverage 2020 and to speak with Ross contact me at This email address is being protected from spambots. You need JavaScript enabled to view it. or 917/453-3373.