We take a look at how COVID-19 has brands in the alcohol category...
The COVID-19 pandemic has been a major cause of stress for most of us, and many have responded to this stress by relaxing with a glass of wine, a pint, or a cheeky cocktail. As the pandemic was at its height, UK alcohol retailers reported a 31.4% surge in sales, in spite of the overall economic slowdown. In America, online alcohol sales increased by 243%, with retail sales increasing by over 55% this Spring. But as restrictions on social distancing are eased, particularly with the re-opening of pubs and restaurants, how can alcohol focused brands and retailers consolidate their gains? Let’s take a look at industry trends as people cautiously return to the pub, and the ways brands can build off the lockdown related sales boom.
Your average drinker is thirsty for the companionship, a lively atmosphere, and the reliable distractions that can be found in a pub, but also cautious about exposing themselves to the risks of virus transmission in enclosed, crowded environments. Nielsen studies have noted that “consumers are transferring money they might have spent on alcohol in a restaurant, bar or tasting room to something they are buying at lower mark-ups from stores or online, or from those on-premise establishments that are offering alcohol to go at much reduced prices.”
Nielsen also found that American consumers were ambivalent about the return to public alcohol consumption. Their survey found 28% of consumers said they’d return to restaurants and pubs when their hosts proved they could facilitate social distancing, 23% said they’d return when the rate of cases decreased, and 22% who said they’d be seated at the bar as soon as premises re-opened. 50% of consumers said they planned to spend as much or more time at licensed establishments after re-opening occurred. Meanwhile in the UK, 82% of respondents to a survey conducted in late June said emphatically that they would not return to re-opened pubs, citing costs, strict social distancing guidelines, and the risk of virus transmission as reasons they’d avoid their locals.
In spite of reports of increased alcohol consumption during quarantine, industry watchers predict a long, slow recovery for global alcohol sales. A recent study by Fortune found that the primary drivers of alcohol consumption, which include pubs, bars, restaurants, large outdoor events, international travel, and young people with disposable income were all dramatically slowed by the current crisis. The experts they consulted with felt that a full recovery for the industry would take at least five years!
If you’re developing a marketing strategy to keep your brand or retail chain above water, it would be wise to focus on driving sales of drinks intended for consumption at home, in the park, or on a friend’s patio. Consumers who worry about catching COVID-19 are going to stay out of the pubs, and many of those who stubbornly refuse to heed the recommendations of health authorities are likely to avoid establishments which force them to wear masks, sign a register of guests, and carefully maintain social distancing guidelines. It will be difficult to break even without these segments of the marketplace, and with many pubs and eateries already going bust, companies selling alcohol will need to appeal to those drinking at home.
Our first recommendation for them would be to aggressively explore new methods of delivering booze to the thirsty. Contactless delivery, curbside pickup, and digital sales have shown their mettle during the pandemic, with a recent survey from Medallia Zingle finding that 77% of American consumers said they take the need for in-person contact into account when determining whether or not to patronize a business.
Whether you are a brand or retailer, finding a way to safely deliver your product is an absolute must, and brewers, wineries, and distillers need to start looking into a DTC model to ensure that they can quickly provide the public with the tipple of their choice. Forbes magazine notes that “Direct-to-consumer sales are going to become a critical lifeline for liquor producers. Across 16 liquor verticals tracked by IWSR, all alcohol beverage categories grew in value faster online versus all other distribution channels in 2019. That trajectory is expected to continue.” With the pandemic driving consumers away from watering holes, that could be the understatement of the year.
Most people drink alcohol because they’re looking to have a good time. Make sure you accentuate the benefits of having drinks at home, rather than trying to scare them away from drinking establishments. Beyond limiting their exposure to the virus, they’ll also be saving a great deal of money, as the hospitality industry generally marks up the price of a drink, from 200-600%! You can use this to persuade consumers in two different ways: with a long recession looming, many households will be anxious to save their pennies; meanwhile consumers with stable jobs can enjoy a markedly better glass of wine or spirits for the same price.
Another thing we’ve noticed during the pandemic is a surge in sales for pre-mixed cocktails. Industry expert Robin Robinson claims that “it’s the perfect storm of the drinks being on trend, generally low in carbs, easily obtainable, easily consumed, light in alcohol and they take a minimal effort.” As the situation drags on, and consumers pine for their favourite cocktail bars, forward thinking brands should look to using social media and renowned mixologists to offer shoppable cocktail recipes which will lend the air of sophistication, and the Instagram ready photos, that the public is going to crave.
The alcohol industry is certainly suffering, but by responding creatively to the new normal, your brand can weather this storm. If you’d like to explore shoppable recipes, data-driven social campaigns, and DTC strategies with experts in eCommerce, get in touch with Adimo today!