People are buying a lot of booze, but it’s not enough to prevent an overall downturn that will take the industry several years to recover.
IWSR Drinks Market Analysis, a global firm that tracks alcohol sales, said Tuesday that it expects “double-digit declines” this year because of the strict global shutdown of travel, restaurants, bars and live events to prevent the spread of Covid-19. The firm said global sales will decline by 12% this year, compared with the modest growth of 0.1% it had last year.
Mark Meek, CEO of IWSR, said the downturn following the 2008 financial crisis was “less severe than what we are seeing now” and 2019 was the “last ‘normal’ year” for the industry for a while. The firm expects it will take until at least 2024 to reach pre-pandemic sales levels, Meek said.
The coronavirus has been a boon to certain parts of the alcohol industry. The marketing research firm Nielsen said last week that total alcohol sales from stores in the United States have grown 26.5% between mid-March and mid-May compared to the same time period a year earlier. However, that’s not enough to offset the losses the industry is experiencing because of closed restaurants, bars and events such as sports and festivals.
Travel retail, a roughly $10 billion part of the industry that consists of alcohol sales during flights, on cruises and at duty-free shops, have also been particularly hard because of travel restrictions and cancellations, IWSR said.
“Like many other industries, it’s incredible how a few months of lockdown will result in several years of recovery, but beverage alcohol has proven to be remarkably resilient in previous downturns, and this should be no different,” Meek said.
In particular, beer will bounce back quicker than spirits and wine because of its more affordable price point. Globally, however, the IWSR said beer sales will be buoyed by no-alcohol beers (i.e. products like Heineken 0.0) as people turn toward healthy alternatives without the hangover.
Ready-to-drink canned cocktails, notably hard seltzer, will likely grow by 7% over the next five years across the world. Much of the growth is coming from the US, where spiked seltzer brands like White Claw and Truly continue to be hot sellers partly because of their low calorie count.
Another bright spot is e-commerce, as people develop a new habit of getting their alcohol delivered while limiting human contact. IWSR said the $21 billion part of industry should be “welcome news to brands battling current challenges.”
