Two years after Covid 19 and our minds have changed, and though we may want things to be as they were in pre-pandemic times, according to the IWSR this won’t happen for on-premise sales until 2025. Yet, not all was lost during the pandemic, it’s true the on-premise was hit very hard, but in general, wine and alcohol sales soared, proving once again that wine and spirit marketers can reinvent themselves under the craziest of circumstances! And more importantly some of these pandemic practices are here to stay, such as, online ordering, home delivery of wines and spirits, foods and drinks takeaway, the home on-premise and zoom wine tastings.
At the beginning and when the pandemic started, most people ordered online the brands they knew, most wine stores were closed then, so the only way to buy was online with home delivery. Later, this changed to online with curbside pick up. Bored and with nowhere to go, people started to try new things, like cocktail kits, wine subscriptions and ready to drink items (RTD). RTDs saw their popularity increased across the board. Later, came the premiumisation of both wines and spirits, mostly because buying wines and spirits online was cheaper than at on-premise venues (now closed due to lock down). People started spending more cash and buying better wines, so instead of spending $15 on a bottle of wine, they would spend $40. This phenomenon happened for wines and also spirits, and once consumers tasted the good stuff it was very hard to come back to the plonk. Later premiumisation moved to the ready to drink category, both spirits and wine based, that cater to the younger generations (Millennials and Gen X).
At the same time, Covid 19 made us focus on us, on our well being and the well being of the planet. Sustainable practices have been in fashion for some time, with consumers looking to support wineries that went green, not only in regards to packaging, but also what went inside the bottles. Suddenly, low calorie and low carb products became important, but also because of moderation. Being at home and having alcohol so easily within our reach, was bad for some, so in an effort to cut down a bit, people started to consume non-alcoholic and low alcoholic items. Sales grew and is expected to continue doing so (up to 8% by 2025). In most cases this was due to the abstainers (those that don’t drink any alcohol), but also because of the blenders (those that drink both alcoholic and non-alcoholic products), as well the substituters (those who drink according to the occasion, sometimes low or no-alcoholic wines/ spirits and other times at full strength).
At the beginning and when the pandemic started, most people ordered online the brands they knew, most wine stores were closed then, so the only way to buy was online with home delivery. Later, this changed to online with curbside pick up. Bored and with nowhere to go, people started to try new things, like cocktail kits, wine subscriptions and ready to drink items (RTD). RTDs saw their popularity increased across the board. Later, came the premiumisation of both wines and spirits, mostly because buying wines and spirits online was cheaper than at on-premise venues (now closed due to lock down). People started spending more cash and buying better wines, so instead of spending $15 on a bottle of wine, they would spend $40. This phenomenon happened for wines and also spirits, and once consumers tasted the good stuff it was very hard to come back to the plonk. Later premiumisation moved to the ready to drink category, both spirits and wine based, that cater to the younger generations (Millennials and Gen X).
At the same time, Covid 19 made us focus on us, on our well being and the well being of the planet. Sustainable practices have been in fashion for some time, with consumers looking to support wineries that went green, not only in regards to packaging, but also what went inside the bottles. Suddenly, low calorie and low carb products became important, but also because of moderation. Being at home and having alcohol so easily within our reach, was bad for some, so in an effort to cut down a bit, people started to consume non-alcoholic and low alcoholic items. Sales grew and is expected to continue doing so (up to 8% by 2025). In most cases this was due to the abstainers (those that don’t drink any alcohol), but also because of the blenders (those that drink both alcoholic and non-alcoholic products), as well the substituters (those who drink according to the occasion, sometimes low or no-alcoholic wines/ spirits and other times at full strength).
Staying at home also forced marketers to think outside the box, and to offer the customers a better home experience, this is also known as the “improved home on-premise”. Because most of the consumers were working from home or in hybrid mode, the pandemic also caused an increase in local consumption, which helped local economies and brands.
E-commerce saw an explosion like never before (read my post about this topic from the beginning of the pandemic), with increased sales of 43% in 2020. This is expected to continue increasing up to 66% by 2025 globally. The US saw an annual average growth of 20% and hence, it is expected to become the top market for online beverage alcohol sales. We got used to buying online, and having our wines delivered to our doors. Those that could wait usually used specialty stores like wine.com, while those that wanted items right away, used drizly or minibar to buy wines and spirits and get them delivered in their hands in less than 1 hour. The whole e-commerce movement forced stores to provide better delivery services, and wineries to update their websites to provide information and experiences to the consumer in isolation.
Finally, the return to the on-premise is currently being led by the young generations who are eager to go back to indoor eating and drinking. Millennials and Gen X are key here, and marketers are catering to their demands and tastes.
The industry however has a few challenges ahead, more than being affected by demand and supply, it has to deal with global inflation and its consequences, as well as disruptions in the chain supply, lack of stock of certain items, increased energy costs, war in Ukraine, etc. All of which may translate into higher prices of some or most of our favorite products. Still there’s plenty of opportunities to make money, as long as consumers continue to gratify themselves with wine or/and spirits. As I said in a previous post, "if pandemic life was hard, it would have been much harder without any wine", feel free to quote me on this one. Cheers! Silvina.
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