Where Consumers Shop for Alcoholic Drinks

August 2022

Both on- and off-trade alcoholic drinks recorded a volume increase in 2021. Underlying on-trade demand remains strong. Yet, bars, pubs and restaurants are under extreme pressure as inflation combines with existing challenges to undermine still fragile recovery progress. On the retail side, there will be a greater emphasis on affordability as the cost-of-living crisis intensifies. E-commerce is a core strategic focus now its lasting significance has been established.

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Key findings

Retail performance remains strong

Alcoholic drinks saw an impressive resurgence in 2021. Although this was led by on-trade recovery, off-trade volumes also continued to rise. COVID-19 restrictions lingered on into 2021 and some of the behaviours established during lockdowns are proving long-lasting. In store-based retailing, modern grocery holds a narrow lead over traditional channels, although the latter remain key in many emerging and developing markets.

E-commerce evolves

Now that e-commerce has established its lasting significance, companies are exploring the range of online opportunities available. On-demand apps and direct-to-consumer strategies are rapidly expanding. Early exploration of nascent digital advances - virtual reality, the metaverse and NFTs - is underway. The long-term potential of some of these developments is still debatable, but cautious experimentation in line with broader brand strategy could help to extend future reach and relevance.

Opposing forces  are at work in the on-trade

Consumers returned enthusiastically to bars, pubs and restaurants as pandemic restrictions ended; the desire for out-of-home socialising is, in many ways, stronger than ever. Yet, financial considerations are accelerating the shift to home consumption. Staffing issues, soaring input costs, and consumer moderation trends are adding to the on-trade’s substantial challenges, and further permanent closures seem inevitable. In this environment, an experiential offer is more important than ever.

Affordability will gain greater prominence 

Severe inflationary pressures are disrupting distribution patterns, and the effects will be increasingly pronounced. Higher on-trade prices are expected to become off-putting for many, while value-focused retailers will gain appeal. In the medium term, pricing strategies may need to include discounting given the worsening economic outlook, led by retailers at first. The strength and range of branded offers means private label is unlikely to be a major beneficiary of consumers’ economising efforts. 

Scope
Key findings
Resurgence in 2021 demonstrates industry resilience…
…although the three main categories are yet to return to pre-pandemic levels
Strength in US spirits, while recovery timeline is pushed back in Southeast Asia
The significance of e-commerce outweighs its low share
Upturn in online sales is geographically widespread
On-demand platforms gain traction across cities
Narrow global lead for modern grocery retailing
Infection concerns boost convenience stores, but will it last?
Varied factors drive the important of specialists around the world
Traditional retailing is highly fragmented by nature
Tackling the growing need for affordability
Walmart’s US strength drives significant global lead over rivals
Private label plays only a minor role
Western Europe leads private label sales due to extensive modern grocery landscape
Limited private label potential despite economic pressures
Access to data tops list of direct-to-consumer advantages
Moderation in growth does not detract from long-term importance of online channels
Easy access to information boosts e-commerce in wine
Mobile sales play a central role in emerging market e-commerce progress
Online retailers do not escape the headwinds facing the industry
Temporary measures reshape the US landscape for the long term
Drinks brands enter the metaverse
NFTs: An added attraction for luxury wine and spirits?
Impressive resurgence for the on-trade…so far
Converging trends create a challenging backdrop for bars and restaurants
Broader horizons for the on-trade?
Nightclubs fight for survival
Inflationary environment brings the future of premiumisation into question
Extreme pressure for the on-trade, although underlying demand remains strong
Key takeaways

Alcoholic Drinks

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

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