Lockdown has fast-tracked macro trends within the alcohol category, says Blake Gladman
As many businesses throughout the UK begin to open their doors to customers once more and the economy fires up, it’s important to take stock. In terms of consumer trends, it will be interesting to see which of those that have developed through lockdown are likely to continue into the future and which will fade away.
A macro-impact of lockdown, though, is that many underlying trends, which have been bubbling under the surface way before Covid-19, have been given a fast-track to the mainstream. Delivery and subscription services, remote working and online socialising are just some that have been slowly increasing in prevalence over the last few years, but now appear set to become part of our ‘new normal’ everyday way of life.
Focussing on the alcohol category for now, there are two specific macro-trends which, again, have been slowly filtering into consumer behaviour but have seen their popularity spike as a direct result of lockdown. One is a significant rise in alcohol-free consumption and the other is an increase in demand for ‘premium’.
In a short space of time, the value of the low and no alcohol category has grown rapidly. In the on-trade, sales of low and no alcohol beer is up around 28%, with non-alcoholic sprits up by 400%. In the off0trade in the past year, £43m was spent on low and no-alcohol beers. Since lockdown, we’ve also seen some alcohol-free brands reporting upwards of 400% growth. Increase in quality, awareness and a rising in importance of the health & wellness trend are all factors which are fuelling the current success of AF.
These are long-term trends, which are unlikely to go away – so it’s fair to assume that low and no will be a mainstay for hospitality and grocery operators, and we’d expect to see ranges and demand increase as a result.
Many wholesalers have doubled-down on craft beer and gin in recent years and should be looking at low and no as the next big opportunity. Beer is the biggest category in both awareness and demand, but growth in spirits and wine is also strong – and we’ve not even mentioned hard and soft seltzers yet. The other USP for alcohol-free is that customer demand will span all outlet types, from traditional on-trade venues, through to retail outlets and cafés, coffee shops, even work canteens, etc. Everywhere you could sell soft drinks essentially. So, wholesalers need to consider ranges that will meet all customer needs.
The other macro trend is premiumisation, more specifically, the trend for an increase in premium beer consumption. With pubs closing their doors and traditional purchasing channels temporarily becoming more challenging, beer-enthusiasts were quick to seek alternatives routes. The biggest shift in behaviour has been that these consumers are drinking on a higher number of occasions but are having less drinks in each session. In essence, we have seen a premiumisation of the drinking experience.
Beer consumption has become a little and often treat as they upgrade their choices and, as a consequence, are seeking out more variety in their beer ranges and subsequent variety in where they are buying it from. IPAs have seen the biggest increase in consumption by these drinkers (28% saying they’ve drunk more) during lockdown. Pale Ales (21% more) and lagers (21% more) are also seeing significant consumption increases. Local, independent breweries being one of the biggest winners from an operator perspective – but the more traditional channels (pubs, off-licenses, convenience stores) will be looking at their own ranges to ensure they are still fit for purpose. This is where wholesaler support is critical to ensure that they have the diversity and breadth of range to be able to offer consumers something unique and different. The changing dynamics in terms of what matters most to beer enthusiasts shows that the industry must evolve with them in order to continue to satisfy their particular needs.
It is often during our darkest moments that we must focus to see the light. There are opportunities aplenty from which the fast-tracking of these trends has presented. The key now, is to grab the opportunity and ensure that as an industry we don’t waste this gift that we’ve been given. All businesses need to pivot from survive mode into thrive mode quickly and seamlessly, in order to get ahead of these trends or risk getting left behind.
Blake Gladman is the strategy and insight director at KAM Media