The COVID-19 pandemic had a major impact on the global beer market and enforced some of the trends which were already present before.
Last year, global volume beer sales have declined due to the impact of the COVID-19 pandemic by 10.2%, according to an estimate by GlobalData. As Kevin Baker, Global Research Director Beer & Cider at GlobalData outlined during a presentation at this year’s RMI Analytics’Swiss Virtual Summit, beer volumes sold worldwide in 2020 fell to 1.78 billion hl, the same level as 2007. Enforced closures and social distancing measures have seen on-premise values fall by 24%. E-Commerce on the other hand saw a 21% increase in volumes globally.
The COVID-19 pandemic has effected beer market trends in a number of ways, some relatively short-term, while others are longer term. These trends were almost all already present but they have been modified by the pandemic. Some of the key themes were:
- Covid saw an increased awareness of health with a focus on health-aligned products such as low/no-alcohol, CBD cannabis and gluten-free beers. But on the negative side, many customers were looking to reduce intake of unhealthy substances, including alcohol.
- Enforced shut down of on-premise in many countries during the pandemic saw growth in consumers drinking at home. This, however, raises potential issues with problem drinking which could create negative perceception, particulary for budget brands.
- The COVID-19 pandemic provided an opportunity for brands to engage with local or national communities. The use of production facilities to produce hand sanitizers is a strong example. But costs may be high with recognition low and engagement needs to be handled carefully. It must be seen as genuine aid rather than a simple cynical marketing opportunity.
- E-commerce has grown rapidly as a result of COVID-19. Many beer companies have made their own platforms – this is a strong means of reducing reliance on distributors. However, it is important to understand there will always be a subset of consumers who cannot or refuse to use e-commerce and indeed e-commerce is still outlawed for alcohol in a number of markets.
- Pent up demand resulting from long lockdowns will see a resurgence of growth in the on-trade. What is important to understand is whether this will be a long-term trend or whether it is going to be a very short trend followed by a dipping of volumes again.
- Lock-down restrictions have seen people become more involved in their local communities. This has resulted in growing demand for locally sourced and produced products and ingredients which provides an opportunity for niche, hyper local craft beer brands.
- The COVID-19 pandemic has created a more holistic view of the environment amongst consumers. Brands not seen to be taking action to be more green and sustainable may face a public backlash.
- Brands making donations, or taking action to aid people affected by the pandemic engages socially aware consumers. But there are potential negative connotations if brands are seen to be profiteering from misfortune.
- Pop-up bars, innovative tech in bars, and other novelties engage consumer interests as the on-trade gradually reopens. Smart bars which limit physical contact will engage well with lingering consumer anxiety around public spaces.
- COVID-19 has increased consumer interest in smart, unmanned retail outlets due to the lack of social and physical interaction. However, these outlets can be costly, difficult to implement, rely on high-end tech not widely available, and may have unforeseen drawbacks.
GlobalData predicts a strong “bounceback” in 2021 with volumes growing by almost 3%. So far government interventions have meant that large scale company failures have been averted and company results have in some cases been better than expected. Latest results of major brewers have been mixed but overall the sentiment seems to be positive going forward. However, the next few years will be challenging for everyone, expects GlobalData.