What you need to know:

• A third of ‘Genzennials’ – those in their early 20s to early 30s – don’t drink. That’s an “existential” problem for big beverage firms, per Lion Chief growth Officer Anubha Sahasrabuddhe.
• She’s looking to lift trends from the US and Asia to shape product development, replace the pub-centric mindset and offset a beer market in long-term structural decline.
• But she says the teetotal and “sober curious” younger set still need social lubricants, pointing to the growth of “edibles”, i.e. cannabis, in the US.
• For those that do still drink, Sahasrabuddhe hints at new launches to rival recent successes by competitors, such as Suntory’s punchy 6 per cent lemon drink -196.
• Plus, while Asahi’s ‘hard’ Solo now faces the wrath of Teal independents, Sahasrabuddhe thinks beverage firms leveraging existing consumer brands is smart business.
• Overall, she predicts a major backlash against platforms dominating people’s social lives. “In real life” is making a comeback.
• This is the third of a three-part series based on this week’s podcast. Read part one here and part two here. Get the full download download here.

Product roadmap: weed the new beer?

Craft beer aside – Lion bought Stone & Wood in 2021 and larger craft brands are better weathering inflation versus independents now under input cost pressure – Sahasrabuddhe acknowledges the broader beer category has been in “structural decline for three decades”. She says that’s “an existential thing” for a company for whom brewing makes up the lion’s share of business.

After buying up Four Pillars Gin and striking deals with spirits firm Vanguard as well as a distribution deal for White Claw hard seltzer, what’s Lion going to do next? In the US, some of its contemporaries, including Constellation Brands, are pushing into weed-infused drinks.

Others are entering the market from the opposite end: Cannabis firm Tilray Brands this week became the fifth largest craft brewer in the US after buying eight beer brands from Anheuser-Busch InBev for $85m. Per CEO Irwin D. Simon: “Upon federal cannabis legislation, we expect to leverage our … wide distribution network and portfolio of beloved beverage and wellness brands to include THC-based products and maximise all commercial opportunities.”

More broadly, Sahasrabuddhe is thinking “US-back in terms of where our market opportunities lie”, i.e. lift US trends and apply them locally. She said the firm must think laterally product-wise, given a big chunk of Lion’s future market does not even drink booze, let alone beer.

“If my job is to think about future-proofing the business through the lens of growth, then that's the biggest obvious thing: We have to reshape what the business looks like, based on where the consumers are going,” she says.

“They're still highly ‘sober curious’ to the tune of 30 to 35 per cent of Genzennials [those born between 1991 and 2001] don't drink, period. So when you project that forward in terms of what your total addressable alcohol market into the world, that is what is happening,” per Sahasrabuddhe.

“But here's the interesting thing, everyone knows people use alcohol as a social lubricant. Now they're just using other things, so it's not like the need has been replaced. What's been replaced is how they fulfil that need, whether it's edibles as the US becomes more open [to legalising cannabis] state by state … they just shift in terms of the vehicle for delivery of that need.”

… or maybe tea

Another big consumer trend both locally and globally is ‘Asian discovery’ – and its influence is filtering across from non-alcoholic drinks, says Sahasrabuddhe.

“You see it already with bubble teas and things like that, people are looking for experience and texture and novelty. So we can see a progression of how that is playing out in terms of what types of things people want to drink, and how they want to drink them.”

The overriding change that Lion – and rivals – must address is that “the pub is not the only expression of how sociability comes to life, when you when you gather with friends”, suggests Sahasrabuddhe, especially for the under-35s.

She cites the rise of “cool little tea shops and coffee shops” locally and in the US by way of example. “Where they're socialising is looking and feeling quite different. So how do we ensure we're there, wherever there's a social moment? That becomes a very different route to market, it becomes a different channel strategy.”

…Or hard Solo-style mash-ups

That said, the 65-70 per cent of ‘Genzennials’ that are still drinking are shaping new product development – and some are happy to go harder then most beers. Sales of Suntory’s -196, a 6 per cent ABV lemon drink, are powering. Meanwhile Asahi, which owns CUB, recently launched an alcoholic version of Solo (but must now face the wrath of Teal independents).

“That is a very, very successful product,” says Sahasrabuddhe of Suntory’s -196. But she suggests Lion is planning countermeasures. “Stay tuned. I think a tonne is about to hit the market now and in the lead up to summer.”

More brand partnerships

Further partnerships may be on the table. Sahasrabuddhe suggests brands themselves may mirror the identity shifts playing out most prominently within younger generations.

“We talk about identity is fluid, so are categories. This idea that ‘that's a soft drink, that's alcohol, that's a food’… it is the mash up of all of that,” she says. “Because at its most clinical and business-like, it's just smart to leverage the strength of a master brand, if it can extend relevantly somewhere else rather than launching a new brand. So I think every brand needs to understand the limits of its credibility in order to make sure it can leverage maximum opportunities. But they have to be defined, you have to find the edges of your brand.”

Digital backlash ahead?

Whatever replaces the pub and whatever people drink, Sahasrabuddhe predicts digital fallout: ‘In real life’, she suggests, is the unifying trend.

“We're going to see a whole digital backlash in terms of people wanting real experiences, real humans. We're seeing that because the anxiety and tension that the digital world is creating,” she said, noting the “toxicity” of social media platforms. “Inevitably, there's a backlash, this is where these connective moments become really important,” per Sahasrabuddhe.

“As an overarching cultural theme, agnostic of geographies, inclusivity is enormous. So we need to make sure, given that the heart of our category is people coming together to have a good time, [and that we understand] what that looks like both at a product level and an experience social level – and not just have the one-dimensional view we all grew up with,” she adds. “Because it's just not cutting it with younger people. And don't I know that from my own bloody kids…”

This is the third of a three-part series based on this week’s podcast. Read part one here and part two here. Get the full download download here.