With inflationary pressures still impacting inventory cycles, brands will need to focus on core offerings and distinguish themselves by sharing more about their values in 2024, according to predictions from executives from MHW, a beverage alcohol importer and service provider, shared during a webinar.
The forecast on trends and regulatory updates impacting the BevAlc industry was moderated by Deborah Brenner, CEO of Women of the Vine & Spirits and included Ryan O’Hara, CEO of MHW; Scott Saul, executive vice president of MHW; MaryAnn Pisani, CRO of MHW, and Ian Perez, brand execution manager of MHW. The group expects trends such as the rise of RTDs and adult non-alc beverages to continue, but the top takeaways focus on how brands may stand out at a time of saturation and how to prepare for regulatory issues coming down the pipeline.
Values-Based Brands Could Build Back Lost Loyalty
With wholesale inventory relative to dollar sales reaching a high last year, O’Hara expects retailers to continue to think critically about their inventories.
“I do think the inventory cycle and the pressures that we’re seeing from inflation are going to continue in 2024,” he said.
For suppliers that means the opportunity lies in communication between tiers (avoiding being out of stock and missing depletions, for example), being focused on the brand’s core value proposition, thinking about total SKUs, and being thoughtful around demand forecasting, he said.
With saturation in areas like agave spirits and ready-to-drink also reaching a high, panelists agreed on the heightened importance of storytelling in connecting with values-driven younger consumers. Brenner, who recently launched Diverse Powered Brands, a centralized B2B digital catalog of diverse brands, emphasized that entrepreneurs can tap into supplier diversity programs too.
“When it comes to climate change and sustainability and diversity and the values of companies, this generation is really scrutinizing companies’ brands, where they come from, and how they’re made,” she said.
Perez agreed that in a time of saturation, consumers may be more enticed to champion brands who are making a positive impact.
“With blurred lines and category crossing, it’s been very hard to retain folks, especially with all the innovation, so I think this is definitely an area that people should be trying to get involved in as best as they can,” he said.
Regulatory Changes: Organic Certification, California Bottling
While the RTD battle for the coldbox is expected to continue via state level policy advocacy, Saul warned of other regulatory changes in store for 2024.
On the federal level, the USDA has now mandated that importers who import organic products must be certified organic as well, which is going into effect March 19th.
On the state level, the California Beverage Container Recycling Program (also known as the “Bottle Bill”) will change the labeling requirements for products entering into the state. Beginning July 1, 2025, wine and spirits containers will be required to be labeled with California Redemption Value (CRV) indicia, but product filled and labeled from now on should include that CRV on it.
Requests for federal oversight of ocean freight surcharges being levied on U.S. shippers is a continued issue O’Hara is tracking as well.
“You want to make sure that you’re in the loop with whoever you’re using for your shipping to understand what that looks like, because it can impact your overall shipping costs,” he said.
Apart from that fee, however, O’Hara expects shipping expenses to go up as well after prices have hit bottom compared to the pandemic surges.