What do you do when a government official makes a very public statement about your product being a leading cause of cancer?
It turns out, just offering an alternative may not be enough.
Heineken, Molson Coors and Diageo are among the top alcohol brands who have generated plenty of positive press in the last few years about the expansion of their respective low- and no-alcohol ranges.
However, CARMA research shows this only slightly mitigated the impact of the US Surgeon General recommending alcoholic products be slapped with a prominent cancer warning. These brands, alongside major players Pernod Ricard, Anheuser-Busch and others, all saw a surge in negative media coverage and a hit to their stock value to boot, directly following Dr Vivek Murthy’s recommendation.
The issue at the heart of this is that the official’s statement is far from the only storm hitting alcohol brands.
Firstly, weight loss drugs are doing more than kicking off relentless tabloid speculation about celebrities’ waistlines – it has also been suggested that it could be a silver bullet to help those struggling with alcohol use disorder. The impact of this was brought firmly to the public eye after the UK’s widely respected investor Terry Smith, who runs the Fundsmith Equity Fund, announced he would be dumping the top 30 stake in Diageo he had held since the fund’s inception in 2010. He cited the company’s management and a prolonged post-Covid sales slump in the decision – but also, the impact of weight loss drugs, of which Ozempic is the most notable. Smith suggested these drugs could damage the “entire drinks sector”.
And they are coming at a time when social attitudes to alcohol are shifting. Murthy’s announcement is the next step in a growing trend of consecutive generations becoming increasingly aware of the harmful effects of alcohol. 62% of adults under the age of 35 say they drink, an August 2023 Gallup poll found – a fall from 72% two decades ago. But while this has led to a surge in non-alcoholic products, alcohol brands cannot afford to be complacent.
The thing is, it’s not clear that low-alcohol substitutes are the answer in the long-term.
The industry is certainly growing. Volumes in this category are expected to grow by 25% between 2022 and 2026, the IWSR reports – while Anheuser-Busch InBev intends for its no and low-alcohol beers to make up one-fifth of its sales in 2025.
But the perceived risk of being laughed at for ordering a zero-alcohol beer at the pub still holds considerable social sway, research from Heineken showed just a day before Murthy’s recommendation was made public. The stigma surrounding low-alcohol drinks, for now, limits how much such products can alleviate the brand damage a cancer label will do. That’s a label that will stick forever – and the science shows that frankly, it should.
Furthermore, while low-alcohol beverages are taking off, IWSR data indicates that 82% of non-alcoholic drinkers also consume alcohol. This means the products are working for those looking for a softer evening tipple than their usual – but not necessarily for the swelling ranks of the younger generations who wouldn’t touch the stuff in the first place.
All this means two things.
Firstly, this represents a golden opportunity for new and existing brands who have no association with alcohol to shine. To many consumers, these are not just drinks brands, they are specifically alcohol brands. Here, new competitors have an advantage. Rather than having to reverse-engineer their brand to be inclusive of non-alcohol products, they can emerge with non-alcohol products at the heart of their offer. This is an open goal for new non-alcoholic drinks that can fulfill the same role of indulgent socialising – they need only take the shot.
Secondly, alcohol brands themselves must master the narratives that surround them. The extensive work needed to create tasty non-alcohol equivalents of existing drinks is worth nothing if it is not paired with a media strategy capable of navigating ever-shifting social attitudes and a volatile media. For spirit-focused brands like Diageo and Pernod Ricard, the narrative jump from luxury, high-strength alcohol to no/low could prove even more sticky. Both these companies saw the more significant hits to their stock value since Murthy’s recommendation was made public, and their low-alcohol equivalents have yet to see the same cultural recognition of products such as Beck’s Blue.
Adapting to the needs of a new audience, many of whom are biased against the central premise of alcohol brands’ products – while also navigating the increasing public awareness of their associated health risks – is not possible without a careful and considered media strategy. For these brands the road ahead is difficult, but not impossible, and the only way through is with clear guidance.
To explore these insights further or discuss any details from the report, feel free to connect at sales@carma.com.
Check out the full media overview below.
Commentary
Alcohol Thought Leadership
The Impact of Warnings and Weight Loss on Alcohol's Bottom Line
What do you do when a government official makes a very public statement about your product being a leading cause of cancer?
It turns out, just offering an alternative may not be enough.
Heineken, Molson Coors and Diageo are among the top alcohol brands who have generated plenty of positive press in the last few years about the expansion of their respective low- and no-alcohol ranges.
However, CARMA research shows this only slightly mitigated the impact of the US Surgeon General recommending alcoholic products be slapped with a prominent cancer warning. These brands, alongside major players Pernod Ricard, Anheuser-Busch and others, all saw a surge in negative media coverage and a hit to their stock value to boot, directly following Dr Vivek Murthy’s recommendation.
The issue at the heart of this is that the official’s statement is far from the only storm hitting alcohol brands.
Firstly, weight loss drugs are doing more than kicking off relentless tabloid speculation about celebrities’ waistlines – it has also been suggested that it could be a silver bullet to help those struggling with alcohol use disorder. The impact of this was brought firmly to the public eye after the UK’s widely respected investor Terry Smith, who runs the Fundsmith Equity Fund, announced he would be dumping the top 30 stake in Diageo he had held since the fund’s inception in 2010. He cited the company’s management and a prolonged post-Covid sales slump in the decision – but also, the impact of weight loss drugs, of which Ozempic is the most notable. Smith suggested these drugs could damage the “entire drinks sector”.
And they are coming at a time when social attitudes to alcohol are shifting. Murthy’s announcement is the next step in a growing trend of consecutive generations becoming increasingly aware of the harmful effects of alcohol. 62% of adults under the age of 35 say they drink, an August 2023 Gallup poll found – a fall from 72% two decades ago. But while this has led to a surge in non-alcoholic products, alcohol brands cannot afford to be complacent.
The thing is, it’s not clear that low-alcohol substitutes are the answer in the long-term.
The industry is certainly growing. Volumes in this category are expected to grow by 25% between 2022 and 2026, the IWSR reports – while Anheuser-Busch InBev intends for its no and low-alcohol beers to make up one-fifth of its sales in 2025.
But the perceived risk of being laughed at for ordering a zero-alcohol beer at the pub still holds considerable social sway, research from Heineken showed just a day before Murthy’s recommendation was made public. The stigma surrounding low-alcohol drinks, for now, limits how much such products can alleviate the brand damage a cancer label will do. That’s a label that will stick forever – and the science shows that frankly, it should.
Furthermore, while low-alcohol beverages are taking off, IWSR data indicates that 82% of non-alcoholic drinkers also consume alcohol. This means the products are working for those looking for a softer evening tipple than their usual – but not necessarily for the swelling ranks of the younger generations who wouldn’t touch the stuff in the first place.
All this means two things.
Firstly, this represents a golden opportunity for new and existing brands who have no association with alcohol to shine. To many consumers, these are not just drinks brands, they are specifically alcohol brands. Here, new competitors have an advantage. Rather than having to reverse-engineer their brand to be inclusive of non-alcohol products, they can emerge with non-alcohol products at the heart of their offer. This is an open goal for new non-alcoholic drinks that can fulfill the same role of indulgent socialising – they need only take the shot.
Secondly, alcohol brands themselves must master the narratives that surround them. The extensive work needed to create tasty non-alcohol equivalents of existing drinks is worth nothing if it is not paired with a media strategy capable of navigating ever-shifting social attitudes and a volatile media. For spirit-focused brands like Diageo and Pernod Ricard, the narrative jump from luxury, high-strength alcohol to no/low could prove even more sticky. Both these companies saw the more significant hits to their stock value since Murthy’s recommendation was made public, and their low-alcohol equivalents have yet to see the same cultural recognition of products such as Beck’s Blue.
Adapting to the needs of a new audience, many of whom are biased against the central premise of alcohol brands’ products – while also navigating the increasing public awareness of their associated health risks – is not possible without a careful and considered media strategy. For these brands the road ahead is difficult, but not impossible, and the only way through is with clear guidance.
To explore these insights further or discuss any details from the report, feel free to connect at sales@carma.com.
Check out the full media overview below.
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