Proving Profitable with Adult Beverages

Squeezable pouches, which have been the preferred packaging on children’s products for many years, are emerging as a big hit for alcohol marketers.

By Howard Riell, Associate Editor.

Retail dollar sales of alcoholic beverages in pouches were only $12 million for the 12-month period ending August 2010, according to Nielsen. For the same period ending on Aug. 18, 2012, sales were near $200 million. Did someone say opportunity?

From wine to premixed cocktails and flavored malt beverages, consumers—many of them younger—are finding the ease of use, greater convenience, flavor variety, and more an idea whose time has come.

Research bears it out: according to the American Psychological Association’s (APA) 2010 Stress in America survey, nearly half (44%) of Americans said they have become more stressed over the past five years. The most common reason given by adults for not doing more to manage their stress was being too busy or not having enough time, APA noted.

Pouches are most definitely in, and not just for spirits and beer. As CSD reported in September, a drop in soup consumption has moved the makers of the iconic Campbell Soup Co. to consider closing plants in California and New Jersey, lay off more than 700 employees, ditch its steel cans and start packaging its soups and sauces in pouches—the line has been christened Campbell’s Go—which executives feel are more suited to active lifestyles. Similarly, Gerber has begun marketing its baby food in pouches as a way of helping infants “self-feed.”

Following suit, Universal Lubricants recently said it would start selling its Eco Ultra brand of recycled oil in pouches, which they lauded as being more environmentally friendly than the standard HDPE bottles used and, since they fold flat, take up less landfill space. The pouches are also said to show printing more clearly, and to be easier to pour without a funnel.

Purchasing Pouches
Danny Brager, vice president, beverage/alcohol practice for Nielsen, confirmed the pouch trend shows no signs of abating. “Twelve-percent of alcoholic-beverage buyers purchased a pouch product in the last 12 months, which is twice the number of people who tried it the previous year. The growth in popularity of this relatively new segment is attracting new product entries, flavors and brands, including many of the biggest supplier names in the alcoholic beverage business.”

Nielsen identifies pouch buyers as largely 35-54 year olds, key Gen X and Baby Boomer age groups. “African-Americans and females are also buying pouches in above-average quantities,” Brager said.

While the amount of alcohol in the pouch varies with the contents, from malts and wines to spirits, they are all convenient. It’s this convenience factor that may be the package’s single most important consumer benefit because it leads to faster chilling time, easy pouring, environmentally-friendly packaging and the replacement of the blender with instructions to simply “freeze, squeeze and serve.”

Nielsen research found that there are, at present, approximately 100 pouch items on the firm’s radar, and more are on the way.

“As fall and winter approach, look for efforts to broaden pouch season, Brager predicted. “Already, new spiced sangria and hard cider pouch varieties have been launched, marketed to be enjoyed warm, chilled or frozen.”

Portable and Cost-Effective
Most children can tell you that juice pouches are fun to drink and easy to transport, which is also helping spur interest with adult beverage companies.

“Alcoholic beverages in pouches are growing in demand because they are convenient, portable, require no clean up and offer a certain level of customization,” said Gary Hemphill, vice president of Beverage Marketing Corp. in New York City. “People can each enjoy the preferred beverage of their choice and everyone doesn’t have to drink the same thing.”

As an aside, Hemphill took note of the fact that the overall trend toward beverage customization is growing. “Some other examples include single-cup coffee brewers like Keurig, soft drink dispensing systems like Sodastream and soft drink vending systems, such as Coca-Cola’s Freestyle.

But not everyone is as impressed. Watts Wacker, a beverage trends consultant and CEO of FirstMatter in Westport, Conn., said he doesn’t think much of the pouch trend. “Sounds gimmicky to me.” Others worried about hold times and freshness.

“Let’s face facts: alcoholic drinks served in pouches are being marketed for immediate, or at least near-immediate, consumption,” said Ryan Mathews, founder and CEO of Detroit-based Black Monk Consulting. “This may or may not be true of other products containing alcohol.”

While it is true that one could buy a six-pack of beer and drink it in one’s car, Mathews pointed out, one could also take that six pack home or to a social function or wherever else it might be consumed outside of a car. “Ditto for a bottle of wine,” Mathews said. “Of course, the customer could take it out and chug it down in the parking lot or in their car, but they could also take it as a housewarming present or take it home and cook with it.”

Sales Concerns
When it comes to pouched beverages, however, in Mathews’ mind, the intent is clear. “It is consumption in close proximity to purchase. So, do we really want customers jumping behind the wheel, straw in mouth, pouch in hand and plunging out into traffic?” he said. Do we really want a parking lot full of people sucking down some rum-based cocktail in a pouch and scaring away the more traditional, sober customers?”

The answer, Mathews suggested, is clear. “It seems to me that the convenience store industry, whether it’s with tobacco or some other controversial product, is constantly engaged in an a PR battle connected to some of the merchandise it sells. Why stock anything that makes that issue potentially worse?” he said.

Part of the growth in alcoholic pouch drinks is simply the number of players piling into a popular new segment. Whenever new brands enter a segment, that segment will boom, at least temporarily.

• One of the players helping to generate buzz is a company called Cordina, which makes premixed cocktails like frozen margaritas in pouches. Consumers like the fact that the drinks freeze more quickly, and stay colder longer in portable coolers when in pouches.
• In June, Chicago-based Phusion Projects, maker of Four Loko, introduced Island Squeeze, a line of frozen pouch cocktails that the company terms a “malt-based, progressive adult beverage.” It comes in four flavors: Pink Lemonade Light, Pina Colada, Margarita, and Strawberry Daiquiri.
• Island Squeeze is trumpeting what it said is the first “light” entry into the category: Pink Lemonade Light, which contains almost a third fewer calories than other pouch products. The drinks are available in 6% alcohol by volume in 12 packs of 10-ounce single serve pouches with a suggested retail price of $1.99.
• Diageo kicked off its national distribution of Parrot Bay Smirnoff pouches this summer. The malt beverages come in 10-ounce single-serve pouches, and are priced at $1.99.
• Constellation Brands’ Arbor Mist has introduced frozen wine cocktails in pouches.
• Pernod Ricard began putting its Malibu rum in pouches two years ago, but they are not single serve. Instead, each 1.75-liter package contains enough product for 10 cocktails.
• Daily’s Cocktails, an American Beverage Corp. brand, offers seven flavors inside of pouches.
• Seagram’s introduced four flavors in its Escapes line this year. Two more are schedu
led for 2013, according to company officials.

While any product will sell better when placed in close proximity to the cash register counter, the pouches stand erect, creating a natural and, given the often lively colors, attractive de facto display. For now at least, the consumers will do the rest.

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