The beverage alcohol industry has seen unprecedented volatility in the last few weeks due to the shutdown of on-premise services, as well as the rise of stockpile buying and e-commerce. IWSR has identified six key trends that have emerged amid the disruption and assessed their potential for long-term relevance.
- E-commerce: Online retail is now business critical and brands that prioritized it in recent years have been big winners. ISWR expects the pandemic will accelerate the growth of ecommerce, as many consumers are exploring home delivery services for the first time.
- Mainstreamization: Consumers tend to turn to familiar value brands in a time of crisis. The long-term shift will depend on the length of the economic recovery.
- At-Home Consumption: This trend has led to soaring sales of ready-to-drink cocktails in the US, but it likely will not be permanent as it is due to temporary forced restrictions.
- Shifting Away from Moderation: As consumers prioritize comfort, they are leaving behind low-abv options for tried and true favorites. IWSR expects consumers to prioritize health and wellness again as social distancing and lockdowns phase out.
- Supply Chain Challenges: Bottling lines and factories are working well below full capacity, presenting potential opportunities for local suppliers in the short-term. Ultimately, the crisis may serve to clear out bloated inventories in markets where there is additional stock in the supply chain.
- Travel Retail: Several global spirits brands depend on travel retail for 5% to 10% of sales, according to IWSR Data. Current travel restrictions may put several airlines out of business, force others to trim fleets, and lead to consumer shifts that will require long-term adjustments from alcohol beverage brands.
Source: IWSR, April 2020