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BACARDI 2021 TRENDS REPORT

Presented by Limited in association with The Future Laboratory INTRODUCTION

MACRO TREND 1: HOME PREMISE : Domestic Drinks : New Drinking Cultures

MACRO TREND 2: PLEASURE REVOLUTION : Flavor Sensations : Nostalgic Classics : Traditional with a

MACRO TREND 3: REINVENTION : The Drinktelligent Generation : Democratizing the Bar

MACRO TREND 4: POST-PURPOSE BRANDS : Whole Systems Thinking : Hyperlocal Drinks

MACRO TREND 5: MINDFUL CONSUMPTION : Resilience Drinking : Free-from : Functional Elixirs Global premium spirits company Bacardi Limited looks ahead at the key trends impacting cocktail consumption and the spirits business in 2021, in association with The Future Laboratory. This report draws on insights from Bacardi-led consumer and brand ambassador surveys, interviews with the bar and restaurant trade, Nielsen CGA data, and The Future Laboratory’s independent research. MACRO TREND 1: HOME PREMISE

DOMESTIC DRINKS restaurants. With many bars now The global pandemic has had a offering online cocktail classes profound impact on the drinks and carefully concocted drinks industry. It has undoubtedly delivered directly to our doors. expedited the at-home and e-commerce convenience culture New launches from the off-trade – we had already begun to enjoy, from ready-to-drink (RTD), cans, bringing more experiences and pouches to drink delivery apps straight into our homes than we – have been hugely successful. could ever have imagined. Cocktails in cans have proved particularly popular. According The pandemic has made home to research by Bacardi, close to the focal point of our social 30% of consumers claim they lives and changed the eating plan to purchase RTD cocktails and drinking landscape forever. or canned spirit and mixers, Initiatives such as virtual happy with portability and convenience hours and live-streamed gigs cited as key reasons for stocking have allowed people to recreate up on a pre-made drink.1 their favorite elements of bars and

25% 131% 20%

One in four U.S. respondents RTD cocktails show a rise One in five UK consumers say they are now making of 131% in the U.S. are hosting virtual cocktail cocktails at home. off-trade. parties from their homes. (Bacardi Holiday Survey 2020) (Nielsen CGA) (Bacardi Holiday Survey 2020) “Cocktails in a can are a hot trend, and the lockdowns appear to have increased their popularity as a safe and portable drink option. In addition, cocktails-to-go have really taken off, with bars and consumers embracing the trend at a fast rate as a viable choice for social occasions and this is a behavior we expect to see continue in 2021.” Brenda Fiala - Global Vice President, Strategic Insights and Analytics for Bacardi

TOP 5 RTDS IN NORTH AMERICA ARE: 53% 24% 32% 34% 33% SODA & FLAVORS MARGARITA LOW-ABV COCKTAILS & TONIC (up 10% from LY) (up 38% from LY) (up 19% from LY) (up 5% from LY) (up 1% from LY)

TOP 5 RTDS IN WESTERN EUROPE ARE: 56% 35% 31% 27% 23% G&T & TWISTS CLASSIC COCKTAILS OTHER SPRITZES LOW-ABV (up 10% from LY) (up 9% from LY) (up 21% from LY) (down 5% from LY) (up 3% from LY)

(Bacardi Global Brand Ambassador Survey 2020) Popular cocktails for takeaway to the level of personalized include familiar and comforting convenience they can indulge in classics such as the negroni, from the comfort of their sofa.3 WESTERN , old fashioned, EUROPE and strawberry . ‘People Pre-pandemic, e-commerce are looking for security when options failed to catch the they’re ordering food and drinks attention of spirits shoppers, for delivery. You order what you but this channel is now a know you like,’ Robyn Wilkie, widely adopted solution for bar manager of Liquorette consumer purchase behavior. in London, told Imbibe.2 While 2021 will no doubt Research published in the herald the revival of on- European Journal of Social premise consumption – NORTH Psychology shows it takes as consumers flock back to support AMERICA people between 18 and 254 local businesses and with the days to form a new habit – and, vast majority of global bartenders on average, 66 days for a new feeling optimistic about the future – behavior to become automatic. e-commerce has cemented This means that many of these its position as an important shifts are here to stay, with channel for spirits. consumers becoming accustomed

ONLINE SPIRITS SALES GREW exponentially early in the pandemic, with partners such as Drizly experiencing 350% growth according to the IWSR, which also forecasts that the e-commerce alcohol channel will be worth $45.5B across the top 10 markets by 2024.4 40% GLOBAL NEW DRINKING CULTURES in the comfort of their own homes. of consumers in the For consumers, the pandemic has Consumers have also taken up U.S. are interested in ushered in entirely new drinking new hobbies and found outlets cultures, ranging from Japan’s for creativity at home, with many on-nomi (online drinking) to adopting a more adventurous MAKE-AT-HOME walktails (cocktails to drink while approach to cooking.This has also cocktail kits, followed by walking) and making cupboard transferred across to our drinking bottled PRE-MADE and cocktails from reserves at home. habits, with brands stepping up to respond to this desire for originality GRAB-AND-GO Cocktail classes and kits have seen and knowledge. Bacardi created a options (both 37%). huge success via highly visual virtual cocktail-making series for its (Nielsen CGA On-Premise Survey) platforms with vast audience reach, social audience, and its brand homes such as Instagram. The appeal of like Casa BACARDÍ in this DIY approach is echoed in data and Casa MARTINI in Italy continue from Nielsen CGA, which shows that to offer online mixology classes 40% of consumers are interested that guests can sign up for to learn in make-at-home cocktail kits, to create delicious rum cocktails. followed by bottled pre-made and grab-and-go options (both 37%). Cocktail gift packs are set to be big in 2021. Knowing that people With more consumers globally now want easy shopping solutions for making cocktails at home, Bacardi unique gifts this season, and that created a hyper-convenient option they are shopping online more in the UK and Germany, and coming than ever, companies like Bacardi soon to other markets. Only requiring have collaborated with e-commerce the addition of ice and water, Twistails partners such as Cocktail Courier, are innovative pre-mixed cocktail Sourced Craft Cocktails and kits that allow consumers to make ReserveBar to create Bacardi bar-perfect drinks simply and quickly portfolio-specific landing pages. MACRO TREND 2: WESTERN PLEASURE REVOLUTION EUROPE

FLAVOR SENSATIONS smoked flavor profiles. According to When Covid-19 restrictions ease and beverage company Flavorman, drinks social life resumes, consumers will seek that burn, cool, tingle and comfort pleasure, nostalgia, and escapism, will be in high demand in 2021.6 shifting their focus from enhancement to enjoyment. During what some are Bitter taste profiles will continue to be predicting to be ‘the second roaring popular due to our palates becoming 20s’, we will return to bars, seeking accustomed to healthier foods such NORTH quality over quantity and perhaps as kale, which is at the more bitter end AMERICA to celebrate after a tough year. It’s of the flavor scale. In the U.S. amaro a sentiment echoed by the Bacardi is riding high as a bitter ingredient Holiday Survey 2020, with many for cocktails, in line with consumers people planning to treat themselves, embracing Italian aperitivo culture. their friends, and family in 2021.5 This trend is confirmed by A desire for extremes will dictate respondents to the Bacardi Global our drink choices in 2021, with Brand Ambassador Survey for sensorial experiences that range the North American market; bitter from the striking heat of chili through were strongly trending in DESIRE FOR to super-sweet, sour, bitter and the top five spirits for bartenders. EXTREMES CHILLI through to SUPERSWEET, SOUR, BITTER and 33% 13% 26% SMOKED flavor profiles. (Flavorman)

One in three UK consumers Premium-and-above spirits forecasted to More than one in four U.S. plan to treat themselves, increase global volume market share to 13% consumers plan to treat their friends and their family by 2024 as consumers continue to favor themselves, their friends more in 2021. quality over quantity, including cocktails and and their family more in (Bacardi Holiday Survey 2020) high-end sipping spirits.7 2021. (IWSR) (Bacardi Holiday Survey 2020) GLOBALLY POPULAR COCKTAILS NOSTALGIC CLASSICS (Bacardi Global Brand Ambassador Survey 2020) In terms of spirits, various trends Gin, , and rum represent the are emerging among classic best premiumization opportunities GLOBAL LOW-ABV COCKTAILS - 47% categories such as gin, tequila and in many markets, with their role rum, and interesting differentials and importance growing during are arising across markets. uncertain times. After a tough year, classic cocktails can provide OTHER SPRITZES - 45% As staples of classic cocktails a sense of comfort and nostalgia that consumers are replicating at – and none more so than spirit- home, tequila and gin are enjoying forward cocktails. Featuring a base NEGRONI - 41% record growth. The popularity of spirit, a modifier such as , the margarita is surging in North port, or , and often other America, and global interest in the ingredients such as liqueurs, syrups, negroni and remains or bitters, these drinks were first CLASSIC COCKTAILS WITH A TWIST - 39% high. While interest in rum is driven developed in the 1880s and continue by consumers in America and to offer simple, bold flavors. the Caribbean, the popularity of the GIN & TONIC (AND TWISTS) - 31% spirit soared globally in the summer At the other end of the flavor scale, months when, with the relative 2021 will see a return to light- safety of al fresco hospitality, the hearted drinks and flavor-filled piña colada and mojito topped indulgences, inviting us to lose NON-ALCOHOLIC COCKTAILS - 31% the list of desired cocktails. our preconceptions about, and a serious attitude towards, cocktails. The monotony of lockdown life is We will embrace cocktails that driving people to experiment with remind us of easier times, such as HIGHBALL - 29% classics, seeking out fun twists on summer holidays and nights out. staples they know they can rely on. According to bartenders, almost two A desire for comfort and indulgence ESPRESSO MARTINI - 26% in five consumers are interested will see consumers seek nostalgic in classic cocktails with a twist. drinks Flavorman predicts that

OLD FASHIONED - 23% In the UK, more than one in four (28%) consumers would like to VERMOUTH COCKTAILS - 23% incorporate maple syrup or honey into their cocktails, according to the Bacardi Holiday Survey 2020. this will result in innovative and tonic and spritzes among the POPULAR INGREDIENTS takes on comforting classics, majority of the Western Europe (Bacardi Global Brands Ambassador Survey 2020) such as smoky vanilla cold brew market’s top five RTD and ready- GLOBAL and bubble gum seltzer.8 to-serve (RTS) options. Ice-laden drinks are set to satisfy our desire 43% FERMENTS Julian de Féral, an award- for the taste of summer, whether (E.g. /Kefir) winning bartender who is now an we’re traveling abroad or not. international drinks consultant, Evolving from the previous year’s echoed this sentiment in an article frosé and champagne slushies 43% ZERO-WASTE INGREDIENTS for Imbibe, forecasting a return to and frozen fruit , hard tiki and disco drinks that he believes slushies in 2021 will offer fresh are the ‘great survivors’ of the flavor profiles and creative takes. 38% COFFEE modern cocktail landscape. ‘These were styles born of a need for Interestingly, caffeine-laden drinks escapism during times of economic are also growing in popularity. In 33% FLAVORED TONICS depression, so in fact, history would North America, 46% of Bacardi indicate we might indeed see a brand ambassadors noticed continued rebirth of these drinks, increased interest from bartenders 9 31% FLAVORED SODA albeit with some fine-tuning.’ for coffee and ingredients. Bubbles reflect this escapist mood, with sparkling drinks such as gin 30% FRESH FRUIT/BERRIES

30% /HERBAL 38% 60% 51% 36% 27% AROMATIC/FLAVORED BITTERS

26% COCONUT WATER 38% of U.S. consumers The best Gin still dominates In Western Europe, state that they would premiumization global markets (51%), 36% of bartenders be most interested in opportunities in North with bartenders in see gin as a huge reinventing, revisiting America lie in tequila the UK showing 58% opportunity for 23% FERMENTS or creating more (60%), dark rum (32%) interest. Gin and tonics premiumization. margaritas, up and (29%) still riding high as drink (E.g. //Ale) from 11% from the of choice. previous year. 22% TEA (Bacardi Global Brand Ambassador Survey 2020) DARK SPIRITS CONTINUE TEQUILA TRENDING HIGH IN NORTH AMERICA TO RISE GLOBALLY • Tequila interest in North America is the strongest in the world and still growing 45% (up 28%) driven by a resurgence in margaritas (+27%) and other tequila cocktails (21%) VODKA SODA & FLAVORS Rum is very steady compared to last year (26%) – • Tequila continues to premiumize globally, up another 15% from last 7th place globally, strongest in Latin America year. Margaritas are emerging as a strong cocktail and RTD trend 12% GIN IS BOOMING IN EUROPE BOURBON • Globally, gin is the spirit of most interest to bartenders, up 10% from LY Bourbon interest surged 12% in North America

• Western Europe bartenders are among the biggest Gin fans globally (sales growth in UK, France, Italy and Germany) 24% SINGLE MALTS Single Malts is at 24% global interest (+7%), with the highest growth in Latin America (33%) and North America (22%) 51% GIN 46% MEZCAL 12% PREMIUM WHISKY Blended premium whisky interest jumped 45% TEQUILA 12% in Western Europe 38% VERMOUTH TH TOP 5 SPIRITS OF INTEREST 5 SPIRITS TOP 38% BITTER LIQUEURS/AMARO LIQUEURS 7 (Bacardi Global Brand Ambassador Survey 2020) WHISKY HIGHBALL 7th globally trending cocktail with greater excitement in Eastern Europe GLOBAL

TRADITIONAL COCKTAILS world, as restrictions drive WITH A TWIST consumers to seek new ways New and creative ingredients of experiencing international will add a fresh perspective tastes and cultures. Drinks to classic drinks when we’re will offer escapism through back at the bar. As reported flavor and will offer moments in the McCormick Flavor of everyday luxury. Forecast, heat will be key, with cocktails such as the chilitini, Our diets are driving an French chili 75, chili whiskey appreciation of complex sour, chili libre, and chili flavors that we cannot bloody mary. This also replicate at home, and HEAT will be KEY, reflects a wider shift toward cocktails will offer new fresh ingredients, including profiles to meet these with cocktails such as the ginger.10 desires. The 2021 Culinary and Cocktail Trend Forecast, CHILITINI, CHILI WHISKEY produced by Kimpton Hotels Undoubtedly, our palettes will and Restaurants, states SOUR, CHILI LIBRE and expand further as premium that with fewer drinking CHILI BLOODY MARY. This spirits markets develop in occasions available, we’ll Africa, the Middle East, opt for more unusual and also reflects a wider shift and Asia. Cocktails will elaborate cocktails.11 toward FRESH ingredients, become a way to travel the including GINGER.9 20% OF CUSTOMERS NOW GLOBAL MACRO TREND 3: KEEN TO SAMPLE DRINKS THAT THEY WOULD NEVER BAR REINVENTION HAVE TRIED PRE- THE DRINKTELLIGENT GENERATION see venues and bartenders playing LOCKDOWN. Post-lockdown, consumers armed with with menus, offering changing weekly (Bacardi Holiday Survey 2020) newfound knowledge and appreciation options according to stock levels, and of spirits and cocktails will fuel a special drink deals as well as virtual reinvention of the bar. Venues will classes, tastings and happy hours. step up to offer more personalized and unique concepts for this spirits- According to the Bacardi Holiday Survey savvy customer, who will seek out 2020, this new consumer mindset is deeper connections with bartenders already visible, with 20% of customers in order to learn even more. now keen to sample drinks that they would never have tried pre-lockdown. Respondents to the Nielsen CGA This attitude will see consumers On-Premise Survey concur, predicting keen to experience new flavors as that many of the creative solutions they reacquaint themselves with their developed in 2020 – cocktails-to-go, favorite hospitality venues, many of delivery of cocktail and meal kits, and which will have dramatically changed. escalation of e-commerce – will endure when restrictions ease. We could In response, we’ll see cocktails- “Last year saw many people practice the art of mixology at home, using THE SPIRITS BARTENDERS ARE what they had on hand to master some classic cocktails. We think in 2021 SEEING CONSUMERS ORDER FOR that knowledge will lead them to experiment more, upgrading their home THEIR COCKTAILS-TO-GO GLOBALLY bars with premium spirits, seeking out new drinks and flavors, and once ARE GIN (64%), RUM it is safe to do so, heading to their favorite bars with new appreciation and thirst for cocktails created by their local bartender.” (55%), TEQUILA (52%) Jacob Briars - Head of Advocacy for Bacardi AND VODKA (43%) (Bacardi Global Brand Ambassador Survey 2020) “I think home bartending is a good GLOBAL thing for the bar industry. It could be a to-go elevated to premium Bar, and Sydney bars Maybe catalyst to bolster consumer and home products, while personalized Sammy and The Barbershop. experiences will emerge and bartender knowledge, and appreciation become mainstream. Bars will This will help improve flavor make, store, and refine your profiles and free up precious of spirits, cocktails and bars in general.” preferred cocktail batch to ensure time for bartenders. Concepts it’s always ready and waiting. like pre-batched cocktail brand, Owner of renowned Richard Boccato - TAILS, which has pioneered a New York City cocktail bar Dutch Kills.12 Sommeliers will evolve beyond the hassle-free approach to serving confines of the category into pre-made premium cocktails, the premium spirits’ sphere. They will likely rise in popularity as will have a place in the developing bartenders seek ways to serve cocktail markets in Africa and the great-tasting cocktails easily, Middle East, and will introduce quickly, consistently, and at scale. consumers in other parts of the world to new choices: for example, African-distilled gin has already been embraced by London’s The Savoy, The Connaught and Dukes

48% 64%

In the UK, 48% interested The Eastern Europe market focused in ordering drinks from on gin for to-go options, while in Latin , bars and restaurants America the focus was on rum and for delivery.13 tequila for cocktails-to-go choices. (Statista) (Bacardi Global Brand Ambassador Survey 2020) GLOBAL DEMOCRATIZING THE BAR to address issues, including the As an industry, hospitality has gendered stereotypes and tropes been slow to embrace digital that are inherent to cocktail transformation, but the pandemic culture. Inspired by similar has resulted in a multitude of new movements in genderless beauty, digital platforms. Apps now enable alcohol bottles for post-category easy ordering and payment drinks will be redesigned. through a range of methods, Masculine and feminine and bars are being demystified stereotypes will be removed in through better online menus. favor of genderless designs, such as medicine-style bottle shapes. While digital platforms can’t replace human contact, Some clues to this direction can the Bacardi Global Brand already be seen in the huge Ambassador Survey shows that popularity of drinks such as bartenders were exploring digital hard seltzers among men and solutions in late 2020 and will women in the North American continue to do so into 2021. As market, appealing to the health- we move through this decade, conscious and those seeking these solutions, combined with convenience. 53% of U.S. new emerging technologies, will bartenders agree there is interest facilitate a new level of comfort in hard seltzers compared with for customers and make bars 25% globally.14 The trend is yet more accessible to everyone. to take off in Western Europe but did experience a small increase 40 million There will be a more open and of 6% last year, with room for positive bar culture that seeks growth in 2021 and beyond.15 Women in the UK now drink 40 million more glasses of whisky a year than they did in 2010, a rise of 15%, compared with a decline of 6% among men, according to market research firm Kantar.16 GLOBAL

MACRO TREND 4: POST-PURPOSE BRANDS

WHOLE SYSTEMS THINKING production on the environment, Pushing back against purpose- brands are responding. washing and jumping on the Bespoken Spirits has developed bandwagon, spirits brands will technology to precisely tailor embrace imperfection and focus spirits for aroma, color, and taste on improving sustainability in just days without the need and transparency in 2021 for maturation or distilling. This and beyond. As consumers removes the need for traditional become increasingly aware processes, such as barrel of the impact of alcohol aging, and reduces waste.

“We know that people are increasingly thinking about the green credentials of the drinks they choose to enjoy. Doing the right thing by the planet and our customers is incredibly important to us. So from reducing energy and water use during production, to 34% working with online retailers to reduce packaging, to launching the of UK consumers plan to world’s first 100% biodegradable spirits bottle in 2023, we’re doing everything we can to do just that.” be more environmentally Jean-Marc Lambert - Senior Vice President, Global Operations for Bacardi friendly in 2021. (Bacardi Holiday Survey 2020) The very real threat of climate minds as they emerge from change has seen some companies lockdowns, which necessitated pivot in response. Following a reliance on e-commerce. GLOBAL wildfires in their respective regions, the Hoopes Vineyard Spirit brands are responding, and in California and Archie Rose there are notable developments Distillery in Australia turned from premium names. Bacardi their smoke-tainted grapes is paving the way, recently into and vermouth as a announcing the development way to rescue their produce. of a biodegradable bottle – the world’s most sustainable spirits Moving into 2021, plastic bottle – which will be rolled packaging and the environmental out by 2023, replacing 80M impact of home deliveries will plastic bottles every year. be at the forefront of people’s

Nearly 70% of consumers in the U.S. and Canada think it is important that a brand is sustainable or eco-friendly, according to a study by IBM and the National Retail Federation.17 (IBM and the National Retail Federation) GLOBAL HYPERLOCAL DRINKS Austrian company, Print a Drink, has While the move toward local drinks has developed a method of 3D printing been gaining ground in recent years, that suspends micro-flavor droplets driven by a desire for sustainability, in cocktails – thought to be a world- the pandemic has exposed the first in the field of beverages and reliance on global supply chains. liquid foods, as reported by Stir.27

Restaurants and bars heavily reliant In 2021 we will see consumers follow on imports faced grave challenges. through on their desire to support local Andrew Yap of the Old Man Singapore brands and businesses, including bars bar told The Drinks Business that he and restaurants, which they developed experienced longer waiting times for during the Covid-19 crisis. According some spirits and ingredients, such as to a May 2020 survey by ZypMedia18, kaffir lime.26 Such scenarios mean that more than two-thirds (68%) of the 53% of bars and restaurants are accelerating U.S. consumers who bought from local their use of local ingredients and businesses during the pandemic stated creating more agile supply chains. they would continue to do so post-crisis.

New production methods can help to shrink supply chains. An innovative

27% 36%

27% of UK consumers want to 36% of U.S. consumers state support local shops, bars and they will continue to buy from restaurants in 2021, while one local businesses instead in five (20%) want to do more of a national retailer post- for their local communities. pandemic.18 (Bacardi Holiday Survey 2020) (ZypMedia) 58% of brand WESTERN ambassadors in North America EUROPE noticed increased bartender interest in ZERO-WASTE Zero-waste bars are taking available exclusively at some a holistic approach by of the UK’s leading bars for INGREDIENTS, according focusing on the careful use Zero Waste Week 2020. of each ingredient, with During the event, customers to the Bacardi Global Brand less elaborate garnishes were able to order all-new Ambassador Survey 2020. on cocktails, minimizing ‘conscious cocktails’: the packaging and recycling or Super Sustainable, which NORTH reusing. Bars committed repurposes ingredients left AMERICA to the zero-waste practice over from other cocktails, include Bisou in Paris, The was available at the Stratford Perennial in San Francisco, Hotel, while the Problem London’s Sexy Fish, and Solved – a whiskey- Vesper in Amsterdam. based cocktail featuring grapefruit, orange and The Bacardi range of lemon peels – was offered at sustainable cocktails was Edinburgh’s Panda & Sons.

“We look at every ingredient, whether it is a garnish, a distillate or a preparation such as a cordial and ask whether we are getting the most flavor and utility out it.” Rich Wood, - Head bartender Scout, author ‘The Cocktail Guy’ MACRO TREND 5: WESTERN MINDFUL CONSUMPTION EUROPE

RESILIENCE DRINKING to flexitarians, who take a flexible The no- and low-alcohol market approach to vegan and vegetarian shows no signs of slowing down in diets, these people are embracing 2021. Embraced not only by non- the full spectrum of 0-50 alcohol by drinkers but also those looking volume (ABV) content available to for more options, the no-and low- them, adapting their choices to suit alcohol market is set to expand. specific drinking occasions. Low- Sober-curious consumers are ABV are globally the most engaging NORTH emerging as a strong cohort. Similar cocktails to influential bartenders. AMERICA

55% 63% 36%

Globally 22% consumers are In 2020, 63% of U.S. More than a third (36%) of drinking less, while 55% of consumers planned to drink consumers across the UK, mindful drinkers are consuming or offer more no- and low- France and Germany planned on low-ABV drinks. alcohol options. enjoying more no- and low-alcohol (Bacardi Global Brand Ambassador (Bacardi Global Brand Ambassador cocktails in December 2020. “We know people are stepping up their Survey 2020) Survey 2020) (Bacardi Holiday Survey 2020) cocktail game with premium spirits, putting quality over quantity, and at the same time, are intrigued by the explosion of new alcohol- -10 % 24% free spirits available to choose from.” Marine Rozenfeld - Innovation Development Lead for Bacardi for Western Europe, Australia & New Zealand

Overall alcohol consumption was set In Germany, 24% of consumers are to decline by 10% in the UK in 2020, a planning to take part in Dry January. gap that could potentially be filled by Only 6.8% say they have done so before, the no- and low-alcohol market.18 representing a clear increase in interest. (IWSR 2019) (Bacardi Holiday Survey 2020) This flexible approach has led to open to trying 0% options as “What really stands out in our low-ABV cocktails, which provide their usual routines are upended, an alternative daytime drink for more experimental ways of living insights is how huge mindful drinking those who are keen to reduce emerge and new goals are set. GLOBAL their alcohol consumption. We’ve has become in Western Europe this already seen the rise of spritz This market is now in exponential year – it is the NoLo capital of the culture, with people embracing growth. Bacardi forecasts that the low-proof, leisurely drinking the no- and low-alcohol spirits world. As lockdown impacted our afforded by a ST-GERMAIN® category will grow by from $100M Red Zinger Spritz, for instance, to $500M RSV in Western Europe lives and routines, not only did and this looks set to continue. by 202419, while brands such as people begin to seek out lower-ABV Everleaf and Haus are catering Globally, 0% ABV spirits have to a Millennial and Generation Z cocktails, they also enjoyed cocktails received more interest than consumer who is mindful of their any other spirits category – for physical and mental health. a little earlier than usual and started the second year running. And experimenting with longer drinks and despite headlines surrounding Bars are starting to take note of increased alcohol consumption this huge shift, with many bars alcohol-free options. That meant last year, the Bacardi Global beginning to adopt hybrid menus Brand Ambassador Survey 2020 that offer all drinks in both alcoholic mindful drinking really took off and reveals bartenders feel that the and non-alcoholic versions. it’s here to stay.” pandemic has accelerated the 0% trend, with consumers more Brenda Fiala - Global Vice President, Strategic Insights and Analytics for Bacardi

83%

In Eastern Europe, 83% of brand ambassadors stated that bars were offering low-ABV cocktails, compared to 37% globally. (Bacardi Global Brand Ambassador Survey) FREE-FROM an aperitif featuring the taste of A shift towards a more mindful raspberries and rhubarb, avoiding WESTERN approach has seen the same the use of artificial sweeteners, EUROPE care we take when choosing additives, and flavorings. what we eat slowly filter down to encompass what we drink. Other spirits are embracing a Consumers who desire to eat free-from approach too. Mezcal less processed food with fewer is emerging as a strong favorite; artificial additives and reduced the spirit is a cleaner drink as by refined sugar are applying this legal requirement it is made from logic to drinks, with future- 100% agave, and offers small- thinking brands emerging to batch artisan credibility, much like tap into this growing base. the craft beer scene, which has NORTH become an important part of the AMERICA Nordic Spirits Lab produces drinks industry in recent years. a distilled gin with akvavit botanicals (coriander, angelica, lemon peel, or ) and

75%

Almost three quarters of people worldwide plan to eat and drink more consciously as a result of the pandemic.20 (Beneo) FUNCTIONAL ELIXIRS vegetables, and mushrooms as well The pandemic has ushered in a new as lactobacillus – a ‘super probiotic’ focus on mindfulness and wellbeing, that defends the body from unwanted WESTERN with anti-viral diets being favored bacteria, aids digestion, and bolsters EUROPE by many who prioritize a minimum nutrient absorption. Molson Coors’ five-a-day fruit and vegetable intake recent probiotic and non-alcoholic alongside plant and botanical seltzer launch is an important milestone ingredients and superfoods. in this movement going mainstream.

This shift has sparked a wave of Immune-system boosting ingredients cookbooks catering to our desire to have come to the fore, providing a get more use from food - from anti- way for consumers to feel reassured inflammatory to brain-boosting diets. they are doing their best to maintain Healthy gut bacteria has become a their health. “Immunity is one of the NORTH popular area of focus, as it is thought hottest topics out there right now, and AMERICA to multiple aspects of wellbeing. flavors that consumers recognize as immunity-boosting, such as turmeric, Jin Jin cordial offers to bring the elderberry, echinacea, citrus and berry benefits of cultured enzymes to flavors, will perform well with people drinks. The cordial uses a traditional who are looking for a quick fix in their fermentation technique from Japan diet,” says Alex Massumoto, marketing and combines more than 35 fruits, associate at Synergy Flavors.21

“The global functional 23% beverages market size is predicted to have a CAGR of 23% of Britons saying they are eating more fruit and vegetables 8.66% in the period of 2019- since the outbreak of the virus.22 (Mintel) 2024, rising to $208.13 billion by 2024.” 23 (KPMG Insights) 63% of respondents stated there was an WESTERN EUROPE interest in ferments such as KOMBUCHA and KEFIR in Eastern Europe, according The market for functional ingredients is further evidenced by the Bacardi Global Ambassador Survey which reveals to the Bacardi Global Brand that ingredients of interest among bartenders are ferments Ambassador Survey 2020. (such as kombuca and kefir), herbs and fresh berries. In the wine market, alternative vintners are emerging that NORTH offer a way to combine non-alcoholic with health- AMERICA benefiting ingredients. Ambijus, from ’s leading non- alcoholic specialist Leske, is an alcohol-free alternative to wine made with apples, juniper berries, herbs and roots and using fermentation, cold and steeping. Similar innovation is expected to reach the cocktail market soon.

“In the 14 weeks to 6 June, U.S. sales of ginger rose by 94%, while turmeric and garlic sales were up by 68% and 62%, respectively, compared with the same period in 2019.24 (Global Wellness Institute) CITATIONS

1. https://www.bacardilimited.com/media/news-archive/keep-calm-and-soiree-on- thenew-era-of-summer-socializing/ 2. https://imbibe.com/news/the-covid-19-pivot-how-london-bars-are-developing- cocktails-for-delivery/ 3. https://www.healthline.com/health/how-long-does-it-take-to-form-a-habit#it-varies 4. https://www.theiwsr.com/will-current-shifts-in-consumer-behaviour-permanently- disrupt-the-beverage-alcohol-industry/ 5. https://www.bacardilimited.com/media/news-archive/from-virtual-halloween-to- -in-quaranteams-and-fist-bumps-under-the-mistletoe-bacardi-survey- reveals-tis-the-season-to-go-big-and-stay-home/ 6. https://www.fdiforum.net/mag/retail-food-service/functional-flavours-top-drink-trends- for-2021/ 7. https://www.theiwsr.com/covid-19-will-create-far-reaching-impact-on-globalbeverage- alcohol-consumption/ 8. https://www.fdiforum.net/mag/retail-food-service/functional-flavours-top-drink- trendsfor-2021/ 9. https://imbibe.com/news/opinion-what-will-cocktails-look-like-post-coronavirus/ 10. http://www.novotaste.com/flavour-trends-to-stir-into-the-fb-industry-for-2021-food- processing/ 11. https://modernrestaurantmanagement.com/kimptons-2021-culinary-cocktail-trend- forecast-infographic/ 12. https://vinepair.com/articles/home-bartenders-future-drinks-business/ 13. https://www.statista.com/statistics/1107332/covid-19-ordering-drinks-for-delivery- ingreat-britain/ 14. Bacardi Global Brand Ambassador Survey, On-Trade Trends 2021 (North America) 15. Bacardi Global Brand Ambassador Survey, On-Trade Trends 2021 (Western Europe) 16. https://www.theguardian.com/food/2020/jun/13/whisky-is-back-in-favour-and-now- women-are-calling-the-shots 17. https://www.barrons.com/articles/two-thirds-of-north-americans-prefer-eco-friendly- brands-study-finds-51578661728 18. https://www.prnewswire.com/news-releases/consumers-want-to-support-their- local-economy-by-supporting-local-businesses-according-to-a-survey-by- zypmedia-301066610.html 19. https://www.bacardilimited.com/media/news-archive/less-is-more-bacardi- predicts400-growth-in-no-and-low-alcohol-in-next-four-years/ 20. https://www.foodingredientsfirst.com/news/shifts-in-consumption-patterns-amid- pandemic-are-hard-to-ignore-says-beneo.html 21. https://www.ift.org/news-and-publications/food-technology-magazine/issues/2020/ october/columns/ingredients-flavors-of-change-taste-trends-evolve-in-pandemics- wake 22. https://www.mintel.com/press-centre/food-and-drink/pass-the-avocado-on-toast-a- quarter-of-young-millennials-say-covid-19-has-made-a-vegan-diet-more-appealing 23. https://www.alfa-editores.com.mx/top-five-beverage-trends-for-2020-2021/ 24. https://globalwellnessinstitute.org/global-wellness-institute-blog/2020/07/14/ accelerating-wellness-trends/

Specific statistics and examples are referenced and web linked throughout the document.

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