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.
This report comes in PPT.
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.
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.
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.
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.
Alcoholic drinks is the aggregation of beer, wine, spirits, cider/perry and RTDs.See All of Our Definitions
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