The Impact of Coronavirus on Alcoholic Drinks

April 2020

With COVID-19 developing into an unprecedented and multilayered crisis of historical magnitude, the alcoholic drinks industry will not escape the ripple effects that will reshape social norms and attitudes, macroeconomic fundamentals and drinking rituals and occasions. Nevertheless, and while the impact will be profound and usher in a generational paradigm shift, adaptability, pragmatism and creatively tapping into digital realms will soften the inevitable blow. What does the future hold?

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This report comes in PPT.

Key findings

The situation is unprecedented, global in scale and multilayered

From the immediate yet expanding lockdowns dealing a catastrophic hit to on-trade sales to the ever-deepening ripple effects on the real economy in the mid term and the ultimate seismic long-term shifts in drinking rituals and occasions, the crisis will radically reshape the alcoholic drinks industry.

Beyond stockpiling and short-term statistical noise

While the initial focus has primarily been on knee-jerk, stockpiling-led spikes in consumption, it will be the medium- and long-term shifts that hold the greatest downside risks and glimmers of hope, if any . While the momentum of some of the trends identified in the past (such as online sales) will undoubtedly accelerate further, others (such as the premiumisation narrative) will need to be reassessed in their relevance and positioning .

What shape will the alcoholic drinks industry’s recovery take?

Initial suggestions and expectations regarding a V-shaped industry recovery are already proving to be overoptimistic since the disruption is only expanding further geographically and in terms of timelines. A U-shaped , slow and gradual industry recovery now increasingly appears to be the most likely scenario, with China providing a template for that roadmap. Nevertheless, an L-shaped , recessionary-induced alcoholic drinks sales collapse, followed by a period of stagnation, cannot be ruled out.

A shift from the physical to the virtual

While initiatives embracing virtual tours or tastings, the, admittedly hesitant, rise of hometainment and the slow but steady rise in penetration rates for online and mobile sales of alcoholic drinks were all there before the crisis, circumstances have brought them to the forefront. They will provide the platform needed to maintain equity and a sense of community in the months ahead.

Key findings
Alcoholic drinks and COVID-19
COVID-19 in context
Global GDP is likely to contract in 2020 under the baseline scenario
The COVID-19 pandemic impacts both supply and demand
In our baseline view, the pandemic peaks in June 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecasts for Real GDP growth in 2020 under different scenarios
Financial markets on risk-off mode as COVID-19 entered Italy
China: An early glimpse into the economic cost of the virus
COVID-19 highlights need for supply chain diversification
Fiscal stimulus a challenge with restrictions on expenditure
What could alleviate the economic effects of the pandemic?
What could exacerbate the economic impact of the pandemic?
An explosive cocktail and the inevitable hangover effects
Routes to disruption
Supply chain largely intact but can micro players survive the pressure?
Distribution: A brave new online world
The five-step consumer progression of COVID-19
The shape of things to come
It’s the end of the world (as we know it)
China: A roadmap to the post COVID!9 world?
Italy: Glimmer of hope from a crisis epicentre ?
The US: Sheltering in place and battening down the hatches
Main challenges for alcoholic drinks players
From supporting the community to virtual tours
Key insights: Short, medium and long-term effects
Outlook for alcoholic drinks: A profound paradigm shift
About Euromonitor International’s Macro Model

Alcoholic Drinks

Alcoholic drinks is the aggregation of beer, wine, spirits, cider/perry and RTDs.

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