Confinement measures implemented by the Chilean government to curb COVID-19 infections hit the alcoholic drinks market hard in Chile, bringing to a halt the positive annual growth rates seen in the all the earlier years of the review period. Mandatory quarantine and the closure of non-essential services during a number of months in 2020 saw the on-trade channel, already hit by the social unrest since October 2019, record a strong decline, eliminating consumption occasions and only allowing local businesses to reopen with sanitary measures in place after September 2020.
In March 2020, when the first cases of COVID-19 were reported, the country was facing political and social protests and riots, which had begun in October 2019. The pandemic also affected the 2020 Chilean national plebiscite, which was rescheduled.
The pandemic resulted in further market concentration in the hands of major players CCU and AB InBev, locally represented by Cervecería Chile, which, between them, accounted for more than 70% of alcoholic drinks sales in total volume terms in 2020. Owning a number of brands across the most varied categories, these major players leveraged their structure to better respond to the threats, establishing effectively operating online marketplaces to offset the loss of sales opportunities in physical channels, adapting their pack sizes to multi-serve formats, which offered consumers a better price per litre, and launching new products aimed at satisfying the indulgence sought by consumers stranded at home.
Restrictions such as quarantines, curfews, closures of non-essential businesses and sanitary measures for operating outlets meant that bars and restaurants, responsible for an important share of the alcohol consumption occasions, were closed for several months, seeing these consumption occasions migrating towards people’s homes, with the on-trade channel registering a double-digit percentage decline. With the long lines in supermarkets as well as the fear of infection when visiting physical stores, the e-commerce channel registered strong growth in 2020, benefitting players that were already established in the online environment, and those that had a large portfolio, being able to showcase all of their SKUs on the virtual shelves.
On-trade sales collapsed due to the COVID-19 lockdowns, which saw non-essential businesses closing or operating shorter opening hours. Bars, restaurants and cafés started to shift towards delivery systems, helping the affected companies to survive, but still seeing the on-trade share of sales declining strongly.
With the staggered reopening that began in September 2020, it is expected that the alcoholic drinks market in Chile will start on a path of returning to growth, although rising sales in total volume terms will only be seen again in 2022. Despite the mass vaccination campaign and the reopening of foodservice venues for local consumption, the restrictions that remain in place will continue to affect consumers in 2021, which will see a much smaller decline, but a fall in sales nevertheless.
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