By: Doug Resh – Director, Commercial Marketing at T. Hasegawa USA
The alcoholic beverage industry has evolved in many ways in recent years, adapting to drastic changes in what consumers are looking for in their drink choices and the role that alcoholic beverages play in their lives. After years of the pandemic disrupting and influencing their relationship with alcohol, such as the growth of RTD beverages, at-home mixology and even a ‘drysolation’ low-ABV movement, consumers are cautious in their purchase decisions due to perceived economic challenges – yet still seek excitement and experience from beverages. As consumers tighten their discretionary spending on restaurant dining and drinking, they are looking for the most value possible in their alcoholic beverage choices. The role of the flavor industry is evolving and becoming more critical than ever in encouraging product trial and experimentation through exceptional taste.
According to Mintel research1, 80 percent of U.S. consumers feel that financial challenges would affect their alcohol purchase behavior, with more than a third of consumers citing reduced alcohol consumption in general and more than a quarter citing less alcohol purchase in foodservice. Decreasing patronage of bars and restaurants in favor of at-home mixology and drinking is a natural reaction to economic uncertainty, and North Americans are likely to continue increasing their consumption of beers, RTD cocktails, mixes and spirits at home in the future. To retain or grow their user base, brands need to continually explore creative new ways to demonstrate value to alcohol consumers, in the form of new flavors and products.
Premiumization Through Exciting Flavors
One of the biggest shifts in alcoholic beverages resulting from economic concerns is that consumers have heightened expectations for the experience and flavor of their beverages and demand more from the category, especially when dining out.
In response to this shift, the prevailing trend within the alcohol industry is premiumization. Consumers are opting for ‘less, but better’ spirits, wines, beers and RTDs, and focusing on quality – buying fewer beverages to save money, but splurging for more expensive, premium brands and flavors. To many consumers, high-quality cocktails and RTDs are seen as ‘affordable luxury’ and an accessible way to treat themselves.
One area that continually defines premiumization is compelling flavors, especially among cocktails, hard seltzers and RTD beverages. Consumer interest has never been greater in adventurous flavors, many of which focus on delivering maximum flavor with minimum sugar. Foodservice mixologists are the forerunners of this trend, offering a broad range of sophisticated cocktails that go beyond the traditional citrus, berry and stone fruit flavors, exploring the exotic taste of botanical and floral notes and seasonal ingredients, spices and fresh herbs. Savory flavors have also grown in popularity, including chili pepper, basil and turmeric, since they help balance the sweet nature of many fruit-flavored beverages. Flavor manufacturers are focusing technology and resources on finely crafting these unconventional ingredients to produce great-tasting spirits that deliver the excitement that consumers are thirsty for in beers, RTD retail beverages or foodservice cocktails.
Beyond adventurous ingredients, both packaged beverage brands and foodservice operators are leveraging the power of nostalgia and fun in new flavor development. Indulgent ‘dessert’ cocktail flavors that tap-into nostalgia are growing increasingly popular, including s’mores, apple pie, churro, chocolate brownie and orange vanilla milkshake. Coffee has also experienced a major shift in demand over the last few years and is growing directionally in new product launches, including RTD “hard coffee” beverages, a fast-growing segment that is primed to appeal to younger adult consumers. Gen Z and Millennials are already decreasing their away-from-home coffee purchases and limiting alcohol intake, plus they are influenced by the influx of espresso-flavored martinis in bars and restaurants in recent years, which creates an ideal opportunity for brands to capitalize on with alcoholic RTD coffee products.
While it’s no surprise that fruit flavors are popular across all beverage categories, the growth potential for fruity alcoholic beverages is in exotic varietals. To appeal to consumers who are seeking premium beverages, brands are going beyond traditional citrus and berry ingredients and tapping into the potential of international fruits in alcoholic product launches, such as Asian-inspired mango, papaya or dragon fruit. These unexpected ingredients encourage exploration and trial among consumers and brands are eagerly incorporating these tropical fruits in RTD spritzers, coolers and cocktails and specifically marketing these products for use in social occasions.
Leveraging Flavor Science to Deliver Value in Alcoholic Beverages
The path to premiumization is paved by flavor enhancement technology, which is especially pronounced within the alcoholic beverage category. In recent years, several new technologies have advanced the science of beverage flavors, producing alcohol concepts with complex, intriguing flavor profiles. California-based T. Hasegawa USA, a subsidiary of one of the world’s top food and beverage flavor manufacturers, is leading the industry in technology designed to optimize the way that alcoholic beverages taste, and even replicate the complex flavors of nature itself.
Recently, T. Hasegawa introduced HASEAROMATM to the North American market. HASEAROMA is a proprietary novel technology that creates authentic sweet and savory flavors that reproduce the ‘first bite’ sensation of experiencing a food for the first time, packed with intricacy and nuances of flavor.
“One of the many benefits of this technology is that it enables a higher level of specificity than other compounded flavors,” said Toshifumi Nozawa, associate director, sweet technology at T. Hasegawa USA. “While many brands in the past may have opted for a simple mango or peach flavor in product development, HASEAROMA can reproduce the specific flavor profile of an Alphonso mango or Ataulfo mango, or accurately reproduce the distinct taste of a white peach or Golden Jubilee peach. The expertise of our flavor chemists creating HASEAROMA allows us to refine flavors on a molecular level and develop products that stand out within the market and deliver value to consumers.”
Development of HASEAROMA flavors includes an extensive sensory analysis process which isolates specific flavor molecules within food and beverages. Chemists then assemble these molecules to add depth of flavor, long-lasting mouthfeel and authentic aroma.
Lighter Libations: A Healthier Approach to Drinking
Another major outcome of the pandemic was a notable increase in alcohol consumption for some consumers, juxtaposed with the complete opposite for others. According to a 2023 Mintel report, 17 percent of U.S. consumers are aware of and interested in a sober curious lifestyle, up four points from last year2. More than 43 percent of U.S. consumers cited “a personal lifestyle change” as their reason for drinking less spirits, even above saving money (40 percent) or physical health (32 percent)3.
While many of these consumers still partake in alcoholic beverages, lifestyle changes resulting from the pandemic have created lasting changes in their consumption patterns and tastes. Despite impressive growth of non-alcoholic beverages – with more than 149 percent growth in mocktails on menus between 2020 and 2023, according to Mintel data4 – non-alcoholic beverages are not taking over. Consumers are simply taking a lighter approach to drinking by choosing low-ABV beverages that offer the intense flavor of favorite cocktails, wine and beer with less alcohol content. These options encourage moderation while still delivering enjoyment and refreshment, especially among younger consumers. Mintel research5 indicates that nearly 31 percent of adults who buy alcohol in the U.S. aged 22-44 seek out ‘healthier’ alcohol options, such as low-calorie and light beer, hard seltzer and lighter cocktails. The appeal in these products is a robust beverage flavor, often with lowered alcohol levels, for consumers who want to moderate their alcohol consumption or products with reduced sugar and carbohydrates.
This renewed interest in health and wellness has boosted demand for BFY (better-for-you) products, across all food and beverage categories – including alcoholic drinks in the form of low-calorie and light beer, hard seltzer and lighter cocktails. The appeal in these products is a robust beverage flavor, with lowered alcohol levels, for consumers who want to moderate their alcohol consumption while also reducing sugar and carbohydrates. In addition to limiting sugar and carbohydrate intake, many consumers are interested in alcoholic beverages that offer functional ingredients with some type of health benefit. For example, numerous beer brands are exploring the use of adaptogenic mushroom ingredients, which claim to have anti-inflammatory benefits, while many RTD cocktails are leveraging green tea, berries and other superfoods that provide antioxidants and other tangible benefits.
A key result of the moderation trend and shift toward healthier options is that consumers are more selective in their alcoholic beverages than ever before, which puts emphasis on delivering a heightened experience. When consumers are reducing their intake of alcohol, flavor becomes the key differentiator that leads to trial and continued purchase. The challenge that many brands face is creating clean-label alcoholic beverages that taste great with minimal sugar content while still masking the burning astringency of alcohol. Flavor manufacturers are leveraging innovative technologies and unique development processes to balance the requirements of a low-ABV and often low-calorie beverage.
“When you remove an ingredient such as sugar or other sweeteners, the other flavors in a beverage become more pronounced or even modified,” explained Briana Tran, beverage applications technologist at T. Hasegawa USA. “Our task is to reformulate the beverage to recover the optimal flavor profile, using technologies that either mask certain unwanted notes, or amplify desirable flavors that are already in the beverage.”
One such innovation that is being leveraged in the production of alcoholic beverages is T. Hasegawa’s BOOSTRACT®, which is a proprietary flavor modulation technology that recovers the kokumi mouthfeel and full-bodied richness. This rich mouthfeel is often lost in the filtration and distillation processes necessary to produce low-calorie fermented alcoholic beverages such as beer, wine, hard kombucha and malted liquor.
“With this new technology, we’re able to isolate the most desirable flavors in a beverage and produce the ideal representation of that flavor,” said Tran. “For example, if we’re working on a strawberry profile, we can amplify the natural flavor that’s already there and produce a much bolder, true-to-life strawberry taste – even with low-sugar alcoholic beverages.”
RTDs and Hard Seltzers – the Epicenter of Flavor Innovation
RTD alcoholic beverages have been on a growth trajectory since early in the pandemic, as consumers at home were looking for convenient variety and were willing to explore new products withing the RTD cocktail and hard seltzer categories. While many RTDs do focus on reduced sugar and other tangible health benefits, these products are typically outliers within the trend of reduced ABV beverages. Hard seltzers are one of the fastest-growing segments in the alcoholic RTD category, and the combination of flavored sparkling waters with fermented alcohol has grown enormously popular among younger consumers in recent years as a BFY option that still offers a convenient way to add variety to at-home drinking.
RTDs are a prime source for flavor innovation. Since they are seen as “lower stakes” in price and offer ultra convenience, consumers are willing to explore flavors in the RTD alcoholic beverages category. Flavor innovation is especially welcome within this category, including bold profiles and special offerings. Nearly half of all U.S. consumers in a 2023 Mintel survey cited limited time seasonal flavors as the motivating reason for new flavor trial in RTD alcoholic beverages, including premixed cocktails, alcoholic teas, flavored malt beverages and hard seltzers4. More than a third of participants cited bold internationally inspired flavors such as horchata or mango lassi as their motivation for trying a new alcoholic beverage within these same RTD categories.
Regardless of changing consumer patterns, alcoholic beverages need to deliver excitement and refreshment. As consumers seek more from their cocktails, wine, beer and spirits, the flavor industry continues to innovate and meet this demand – helping brands adapt to shifting consumer preferences with attention-grabbing flavors which deliver an immersive taste experience.
