Global drinks trends in 2020

A recent Euromonitor International webinar discussed global drinks trends amid Covid-19, particularly the collapse of on trade, both alcoholic and non-alcoholic, and new ways to reach consumers in the home. The webinar focused on three key trends: the collapse of on trade, home as an entertainment hub and premiumisation reimagined.

Howard Telford, the head of soft drinks for Euromonitor, one of presenters, said the decline in on trade sales began in March for most countries, sharing that across beverages, between 20-40% on-trade volume declines are expected in most markets in 2020.

The timeline for the recovery, according to Euromonitor’s analysts, is uncertain for on trade (both alcoholic and non-alcoholic). Furthermore, they said that in some markets, on-trade beverage volume may not recover to 2019 levels over the next five years.

Bars, restaurants, coffeehouses, and away-from-home events (AFH) are a vital consumer discovery and marketing platform for alcohol and non-alcoholic brands. Per the analysts, the importance of social occasions for beverages in general cannot be overstated (for both alcoholic and non-alcoholic drinks), so how can future innovation strategies adjust?

As AFH occasions have been almost non-existent during the pandemic, home entertaining has been the only option for many. Thus, bringing social occasions into the home is key.

“Virtual realms/virtual worlds and virtual tasting/tours, is essentially the transition from the physical to digital, and can provide some, if not all, of the answers in the new normal that we are entering now,” said Spiros Malandrakis, head of alcoholic drinks for Euromonitor.

But reaching consumers with physical products to test is vital. Since on trade and retail samplings were not possible, Telford said that during the pandemic, Costa Coffee (via parent company Coca-Cola) experimented by 50,000 new coffee samples direct to consumers homes in the UK.

Michael Schaefer, Euromonitor’s global lead, food & beverage, explained that it is important for companies to look at new opportunities to sell products either online or by direct to consumer sales.

Premiumisation was key to pre Covid-19 value growth. However, the pandemic and economic crisis have put the brakes on premiumisation as on trade has collapsed and economic concerns have changed consumer habits so brands must look for new selling strategies.

“One of the primary growth strategies in developed markets was the prioritization of top line value growth and premiumization and getting consumers to pay more per unit,” said Schaefer. “Covid-19 lead to collapse to entry-level channel, a lot of that experiential traffic has gone away, and consumer mobility and consumer spending have been [negatively] impacted. It’s a double whammy with less traffic and an economic crisis leading to consumers spending less.”

In coffee, this has translated to cutting back on premium items including fresh coffee beans, while there has been a growth in RTD, coffee pods, and instant coffee. “With coffee pods, this is not a new trend — we saw a rise in single serve machines/pods during last recession as consumers shifted away from on trade/coffee shop purchases. [Telford noted that sales of Keurig and Nespresso machines have been growing during the pandemic as consumers turned away from on trade purchases and increased their home brewing.]

The analysts agree that while the pandemic and economic crisis pose a huge challenge, there is money to be made, as “some consumer spending has to go somewhere — new indulgences while at the same time looking to economize wherever we can.”

Euromonitor’s analysts noted that while the economic downturn is driving the new search for value, the need for special occasions remains. For example, finding new experiences through home entertainment phenomenon such as capturing more occasions at home through machines (by offering more customization and more information) as well as finding new products for health conscious, home-bound consumers will be a big part of this process.

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