Revenue in the alcoholic drinks market will reach $283.8b this year and is expected to grow at an 5.5% each year between now and 2027.
With the average American throwing back four drinks a week, that’s not surprising.
However, it is surprising that many alcohol brands decreased their ad investments in 2022.
According to MediaRadar’s data, more than 2,000 alcohol advertisers invested nearly $1.7b to promote beers, wines, and spirits in 2022, representing a 17% YoY decrease.
The number of advertisers and brands also declined (down by 8% and 6% YoY).
So, what gives? Why are alcohol advertisers spending less despite the market’s growth?
Our data tells that story.
Alcohol Advertisers Say No Thanks
Advertisers in most industries love the never-ending buzz offered by the advertising world, especially the digital one that allows them to measure campaigns and reach a massive addressable audience.
Despite that potential, many alcohol advertisers who spent in 2021 didn’t return in 2022. Of the nearly 2.4k alcohol advertisers in 2021, almost half (48%) didn’t appear in 2022.
These advertisers were responsible for just 1% of the ad investment in 2021, combining to spend $24.5mm. This could indicate that the alcohol advertisers pulling away are those promoting smaller brands. However, it could also result from more prominent brands dipping their toes into advertising strategies to promote new products that are no longer on the market.
That said, the greater advertising ecosystems didn’t repulse all advertisers.
In 2022, more than 800 new advertisers invested, including those from Apax Partners’ Ole Smoky Distillery, who spent on the heels of its acquisition of a controlling stake in Ole Smoky Distillery from Centerview Capital.
Another Vodka Soda, Please
Advertisers from five alcohol categories accounted for 86% ($1.4b) of the industry’s investment: beer, whiskey, hard seltzer, wine, and vodka.
That said, advertisers promoting vodka were the only ones to increase spending in 2022.
In 2022, advertisers for vodka labels, including Bacardi Limited (Grey Goose), Diageo (Smirnoff, Ketel and others), and Pernod-Ricard (Absolut Vodka), spent nearly $104mm, representing a 5% YoY increase. The three brands above collectively spent $89mm, or 86% of the investment from vodka advertisers.
Part of Absolut Vodka’s investment went to its “The World of Absolut Cocktails. Born to Mix” campaign. The campaign, which launched in June, encouraged people to “vibe and imbibe with different people who have different perspectives.”
“The idea is really rooted in the Absolut brand’s DNA,” said Pam Forbus, CMO of Pernod Ricard North America, which owns Absolut Vodka. “It’s important to be a strong individual, but we create a better world when we mix and come together…That’s a metaphor for what’s going on in the world today.”
Meanwhile, advertisers promoting beer, whiskey, hard seltzer, and wine all reigned in their spending.
Beer, whiskey, and seltzer advertisers are cut off
Beer brands, for example, spent almost $760mm in 2022 (46% of the total alcohol ad investment), representing a decrease of 2% YoY.
While that seems like a modest decrease, it comes despite an ad spending hike of 67% YoY in Q4 during the NFL season, primarily due to advertisers for Constellation Brands boosting their budget by 70% YoY to promote Corona Extra and Modelo.
Meanwhile, whiskey advertisers spent $261mm in 2022, representing a 20% YoY decrease. Much of that decrease comes from Sazerac’s (Fireball Cinnamon Whiskey and Southern Comfort) advertisers nearly eliminating their budget.
For Sazerac, the 99% drop in spending likely centers around the company suing its long-time ex-distributor, which resulted in supply shortages and unpaid bills.
The double-digital decrease from whiskey advertisers would have been greater had it not been for sizable increases from advertisers at Brown-Forman (Jack Daniels and Woodford Reserve), who increased spending by 37% YoY.
Finally, advertisers in the hard seltzer and wine space decreased spending by 41% and 24% YoY, respectively. (Hard seltzer advertisers still accounted for 10% of the total investment from alcohol advertisers.)
Despite the popularity of hard seltzers—the hard seltzer market is expected to grow at a CAGR of 22.9% between 2022 to 2030—spending on Bud Light Seltzer (Anheuser-Busch) decreased by 57%. At the same time, spending on Corona Hard Seltzer (Constellation Brands) dropped by 79% YoY.
The head-scratching reduction from hard seltzer advertisers likely revolves around some combination of two factors: Anheuser-Busch and Constellation Brands are shifting their go-to-market strategies, or advertisers don’t deem it necessary to promote the popular products—word-of-mouth advertising and brand loyalty are enough to drive sales.
Ad Spending Continues to Fall for Some in 2023
Like 2022, most of the dollars in January 2023 came from advertisers promoting beer, whiskey, wine, and vodka. That said, advertisers for tequila made an appearance as well. Advertisers in these categories spent $60.7mm, or 87% of January’s investment.
While nearly $70mm in ad spending is nothing to sniff at, the dollar amount does represent an 18% YoY reduction from January 2022.
Beer and whiskey advertisers contributed to that drop.
In January, advertisers for beer brands decreased spending by 14% YoY. Advertisers for Anheuser-Busch, in particular, reduced spending by 8% YoY—although they did increase their investment significantly to promote Michelob ULTRA (up by 50%) and Bud Light (up by over 1,000%).
Meanwhile, whiskey advertisers decreased spending by 34% YoY, thanks in some part to reductions by Diageo and Suntory to the tune of 23% and 45% YoY, respectively.
Wine and dine
The year didn’t start hot for advertisers in some pockets of the alcohol world, but that didn’t stop those promoting wines from upping their budgets by 21% YoY to $5.2mm.
E & J Gallo (Barefoot label, among others) and Josh Cellars Wines (Deutsch Family Wine & Spirits) played the catalyst role, increasing their investments by more than 1,000% and 900% YoY, respectively.
The four-digital bump in spending from advertisers at E & J Gallo comes following the major announcement in 2022 that it was becoming the official wine sponsor of the NFL.
Stephanie Gallo, a third-generation member of the family business and current CMO, said, “We think this is a great way to insert wine into a new occasion.” said Gallo, who’s focused on making wine more accessible to consumers.
The company’s innovative entrance into the NFL—a league historically dominated by beer advertisers—illustrates the lengths some advertisers will go to gain market share. While only one wine brand can be the NFL’s official sponsor, that won’t stop competing brands from dipping their toes into similar initiatives.
Advertisers for vodka and tequila also used January as a launch pad. Vodka advertisers, for example, increased spending by 72% YoY, while those for tequila did so by 355%. Bacardi’s Patron and Becle (1800 Tequila, Jose Cuervo, etc.) accounted for 92% of the tequila advertising in January, with both increasing more than 1,000% YoY/
Alcohol Advertisers Go Digital
Reserved spending from many alcohol advertisers in 2022 could carry over into the rest of 2023, but they’re still thinking ahead (and digital).
While advertisers spent $49mm on TV ads in January, it was 23% less than they spent in January 2022; spending on print was also down.
Meanwhile, advertisers upped their investment in digital media by 10% YoY to $17.5mm.
Are the digital and TV investments still miles apart?
For more insights, sign up for MediaRadar’s blog here.