Competitor Strategies in Alcoholic Drinks

November 2020

Alcoholic drinks companies have had to rapidly adapt to on-trade closures and the changing nature of consumption occasions driven by the pandemic. As well as traditional e-commerce channels, direct-to-consumer sales have been embraced to help navigate this shift. While premiumisation is facing setbacks, opportunities in higher end products remain, and the moderation trend continues to influence innovation.

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Key Findings

Expansion strategies differ by category

The three major alcoholic drinks categories all require different strategies, primarily due to their different modes of operation. Beer relies on producing large volumes close to the point of sale, while wine and spirits are the opposite. Even in wine and spirits there are differences, for example branding is far weaker in wine than spirits.

Setbacks for premiumisation?

Economic pressures will affect consumer choices in the short to medium term resulting in polarisation, with a focus on the highest and lowest priced products. There are still premium opportunities; brands should look to build strong emotional connections through a focus on genuine authenticity, taking a visible stance on sustainability, and embracing a luxury positioning while avoiding ostentation.

Embracing e-commerce and hometainment

With Coronavirus accelerating the existing shift towards home socialising, companies have been redirecting the focus of engagement and experience efforts into consumers’ own homes. Major corporations and micro producers have both been embracing direct-to-consumer sales. Standard online channels and third-party platforms have also been playing a key role, with the rise of e-commerce expected to be a lasting trend.

Conditions favour larger players over micro producers

In general, the resources available to major companies are likely to provide greater resilience and place them at an advantage compared to their micro rivals.

Blurring category lines: Diversification for growth

The lines between different drinks categories, and the companies operating within them, are becoming increasingly less distinct. With consumers reducing their alcohol intake in many key markets - and showing little category loyalty - diversification is an essential feature of many alcoholic drinks companies’ growth strategies. Non-alcoholic beverages and cannabis are two particular areas of focus.

Introduction

Scope
Key findings
Coronavirus (COVID-19) impact summary
The timeline of drinking in a post-pandemic world

Overview

Unsurprisingly, brewers dominate the alcoholic drinks leader board
Consolidation in beer, fragmentation in wine
Molson Coors, Asahi and Kirin rely heavily on developed markets
Strategic divestments help streamlining efforts
Limited role for private label, but opportunities as consumers trade down

Growth Strategies and Priorities

Different categories require different expansion strategies
Blurring category lines: diversifying for growth
Alcoholic drinks players see opportunities in cannabis
Innovation and incubation units
Premiumisation peaks?
The end of an era for craft?
Adapting to the accelerating rise of e-commerce and hometainment
Growing demand for environmental responsibility

A Closer Look at: Beer

AB InBev retains its dominance but Heineken achieves higher growth
Despite lower prices, emerging markets hold value for brewers
Top brands each rely on one or two core markets
China: premium focus remains key
Brazil: increasing importance of local production

A Closer Look at: Spirits

Spirits: second-placed Pernod Ricard gains on leader Diageo
Top three brands play a major role for all leading distillers
Diageo and Pernod Ricard reflect the race to premiumisation
Increasing importance of an economy offer

A Closer Look at: Other Categories

Cider/Perry: top brewers hold leading positions in cider too
Cider offers a logical diversification step for brewers
RTDs: hard seltzer success boosts Mark Anthony Brands and Boston Beer
Blurring lines and effervescent hard seltzers
Wine: leader E&J Gallo gains in core US market
Limited brand consciousness in wine as “local” remains key
E&J Gallo expands price coverage through Constellation acquisition

Conclusion

Conclusions: resilience and adaptation

Appendix

Projected company sales: FAQs (1)
Projected company sales: FAQs (2)
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