The COVID-19 pandemic is poised to transform the ways in which beverage companies activate and communicate their brands, with a shift away from the on-trade and towards retail and, in particular, e-commerce and social media.
“The key questions brand owners will be asking themselves as they create their medium- and long-term plans are: what will be the impact of COVID-19 on (a) longer-term trends around premiumisation, environmental concerns, moderation and increased trade tensions between major markets – to name a few – and (b) on beverage alcohol consumption across the globe?” says Mark Meek, CEO of the IWSR. Meek adds: “The one-, three- and five-year plans that brand owners put together in the autumn of 2019 will now seem mostly irrelevant in our new world and, as such, will now need to be reassessed in light of how consumer behaviors are changing due to the pandemic.”
“As companies revisit their brand strategies, the on-premise will continue to play a key role. However, the balance between the importance of the on-premise in relation to the off-premise and e-commerce channels will become a lot more nuanced in the coming years,” notes Meek.
Brand owners understand this importance, and venues that are re-opening can access a great deal of strategic support and resources from brand owners.
The long-term consequences of the short-term transformation of trading patterns brought on by the pandemic are, however, beginning to be felt.
Until now, many brand owners viewed online storefronts primarily as an extension of their marketing departments. But they now recognize a far greater opportunity to build stronger relationships with consumers and drive purchases, as well as being able to access valuable data on who their consumers are, what they are buying, and how they are buying it.
Some brand owners have been surprised by the surge in online sales since the onset of the pandemic – but are now adapting their strategies to further exploit the channel. 40% of online spirits buyers in the US are new to the process, exposing “a whole other audience” to e-commerce.
The new balance between the on-premise, off-premise and ecommerce channels will force brand owners to think more creatively about their product strategies and how they diversify their sales channels. The brands that relied primarily on the on-trade and travel retail channel to drive brand visibility and consumer uptake in the past were often considered the more innovative and successful brands. “We could even see a role reversal in terms of which brands and companies are successful in the new world we find ourselves in,” comments Meek. “The more staid off-premise-focused brands and companies might be the ones that do well, at least in the short to medium term. Greater visibility and marketing in the off-trade and ecommerce, versus in the on-trade, could shake up which brands are considered successful and also in many cases leaders in innovation.”
