How Alcobev brands rode the COVID waves

The pandemic has indeed given rise to some very interesting trends while accelerating few others which were already there even before the pandemic. Driven by lockdowns and safety concerns, we saw a shift in consumption from on-premise (bars, pubs, restaurants) to in-home consumption. People felt more comfortable and safer in consuming their favourite tipple, with friends and family at home.  However, with the number of cases coming down significantly and high vaccination rates, we have seen on premise consumption come back strongly, in some cases even surpassing pre-Covid levels.

Sitting indoors also gave rise to shift in consumption on weekdays vs a heavy skew of consumption around weekends post Covid. People wanted opportunities to break from work from home monotony, relax and have a good time on weekdays, especially in the light of other restrictions. Another key trend that has accelerated with Covid is premiumisation. Consumers today are adopting and upgrading to superior quality and more premium brands. This trend is visible in other categories as well outside Alcobev. People are also spending more time on digital and social media for entertainment, information and connecting with their loved ones. This has created more opportunities for brands to engage with consumers online.

There has also been a tremendous increase in the cocktail culture and mixology. Trying out cocktails made with whiskies, in some cases even making these at home, which is supported by easy availability of mixers and cocktail recipes online. There are a lot of craft cocktail bars that have come up which have become extremely popular beers. American Whiskies are seeing a renaissance globally, including in India. The increased vaccination coverage and improved vaccine availability will certainly help in stabilising the new normal.

There have been quite a few reasons for this optimism, which include:

• On-premises recovery continues to normalise
• Upbeat domestic tourism
• Enhanced consumer repertoire towards flavoured whiskeys and low alcoholic beverages (Ready to drink formats)
• Encouraging consumer behaviour to try premium & quality brands
• Improved affordability of premium brands in certain key states leading to better accessibility and a lot more.

Challenges faced during the pandemic by the Alcobev industry

Speaking to Adgully, Heineken’s spokesperson said, “Heineken has been working through supply chain changes due to COVID-19 over the past two years to ensure we can meet consumer demand. We are working closely with local governments to ensure we can deliver products and allow beer fans to consume it safely. We have also looked to support our partners during lockdowns around the world through our ‘Back the Bars‘ campaign, a voucher system where people could buy a drinks voucher for their favourite bar or restaurant and redeem it when the venue reopened, and bar owners received the monetary value of the voucher immediately.”

The spokesperson further said, “We have seen great traction in many of our markets shown by the Heineken N.V. 2021 half year results, most notably in Brazil, China, Vietnam, Nigeria, South Africa, Italy, Poland, Columbia and Mexico. However, Heineken does not share specific global sales and spending figures outside reporting periods.”

Prem Dewan, Managing Director, Devans Modern Breweries, noted, “Liquor and beer consumption has taken the maximum hit during the pandemic. The pandemic was at its peak during the summer of ‘20 and even thereafter, which is the main period for beer consumption and as such beer consumption fell drastically. Breweries suffered huge losses due to expiries and also due to beer which was under processing as manufacturing units were forced to shut down without warning. Our sales during FY plummeted by about 40%! Things were expected to get better in 2021 but the pandemic raised its head again on May 21, that is, right in the middle of the beer season resulting in a huge fall in sales.”

“However, consumption of liquor, including beer, has since picked up and sales have been quite robust since then. Even with the third wave, sales are bound to again suffer badly. Despite this we see a limited impact on our overall revenues during the current year and hope to match our FY20 revenues this year. Ad spends during FY21 were given a complete go by due to this as we shifted our focus to digital advertising,” Dewan added.

“Beer consumption in India considerably reduced during the peak pandemic period, and the overall industry saw a volume decline of almost 40% in 2020. However, the latter half of 2021 was optimistic for the industry, showing signs of recovery, owing to the steady rate of vaccinations, ease of restrictions across the country and general positive sentiment of consumers ahead of the festive season. Moreover, legalisation of online sales are expected to lead to a paradigm shift in the way consumers discover and shop for beer, leading to rise in at-home consumption,” said Bira 91’s Founder & CEO Ankur Jain.

He further said, “For us at Bira 91, we have grown more than 2.5x compared to the pre-COVID levels. Our national market share saw an increase of 3X in comparison to pre-Covid Levels. With over seven pints of Bira 19 enjoyed every second, we are now amongst the largest consumer brands to emerge from India in the last decade. This unprecedented love from our consumers also gave us the impetus to launch our first ever 360-degree campaign – Make Play With Flavors. This campaign stood as a call to action to consumers to be more experimental, creative, and playful – and to explore more flavors in everything, including the beers that they drink.”

Premium alcobev sector industry body ISWAI (International Spirits & Wines Association of India) had written to state governments to reduce taxes in upcoming excise policies citing ‘unsustainable’ inflation and allow companies to restart home delivery of alcohol and make the delivery models sustainable with immediate effect and proactively.

Speaking on the government allowing sale of liquor via online, Dewan said, “There has been very limited impact of online sale of liquor in the country despite the pandemic. Most of the states do not promote online sales. This is mostly due to the system which we follow for opening of retail vends in many states, where the contractors bid huge amounts for the right to sell liquor in their specific areas. Online sales would intrude on their area of operation for which they have big huge sums. As such, I see limited utility of this model in the majority of states. I would also stress here that the online model would favour the big players at the cost of the smaller local manufacturers due to their better marketing operations and being more digitally prepared.”

Heiniken’s spokesperson added here that very few states in India allowed the sale of alcohol through e-commerce during the pandemic period. “We welcome policy initiatives by the government that are synchronous with consumer purchase behaviour. Meanwhile, we stay focused on building our share on these channels,” he added.

The OOH factor

For the Alcobev industry, OOH has been one of the few media platforms available for communication. The campaign strategy applied by big brands of alcohol has always been different than any other industry. With the disruption due to pandemic, brands had lost their connection with the audiences to promote their campaigns in 2020. At the same time, 2021 showed a ray of hope for all the brands in Alcobev industry to advertise and onboard ambassadors for their campaigns – Alia Bhatt for Blenders Pride, and Chef Ashish Bhasin for Glenfiddich.

Dewan pointed out, “OOH media is limited to retail branding and promotions in bars and hotels due to advertisement restrictions on liquor. Liquor is a controlled commodity and operates under the licensing system. As such, liquor shops were the easiest to monitor and suffered the most due to shutdowns and lockdowns. Substantial liquor is consumed in bars and hotels, which remained under extended lockdowns last year due to travel and operation restrictions. This has happened again now with the start of the third wave with Delhi shutting down all its bars and restaurants. However, OOH would very much remain in the marketing portfolio of companies due to limited availability of other avenues.”

Heniken’s spokesperson remarked, “Like many companies during the COVID-19 pandemic, we looked to pivot and innovate; allowing us to continue supporting our on-trade partners and customers. OOH is an area we saw as an opportunity to support partners, through our global campaign ‘Shutters’ initiative, which involved investing in OOH placed on the facades, windows and shutters of bars, generating additional revenue for them when they most needed it. The shutters featured a combination of ads from socialising responsibly to local brand campaigns.”

“The global initiative has been rolled out in Italy, Argentina and Spain, with additional markets exploring the opportunity to incorporate Shutters into their local efforts to support the hospitality industry. The campaign was extremely well received by partners and customers winning an Outdoor Grand Prix at Cannes Lions 2021”, added further.

Growth projections for 2022

Bira 91’s Jain commented, “As we look at 2022, the pandemic accelerated in the beginning of the year, leading to changes in consumer preferences. Beer drinkers are discovering more flavors than ever before. We know this as the share of craft and microbreweries – the share of flavor in premium has expanded significantly. Some drinking occasions have moved to at-home permanently. When the consumers do go out - they want the experience to be big and unique – they want to go out for experiences that they can’t easily replicate at home – like a concert, live sport or a range of flavors freshly poured on tap.”

Dewan said, “We operate mostly in the North and East, with our main markets being Delhi, UP, Jharkhand and Arunachal. We have picked up substantial sales in UP and Jharkhand during this period. We have also now tied up for contract bottling of our beer brands in the states of Arunachal Pradesh and Jharkhand, which would see a quantum jump in our volumes. We had launched two new products this year – our Godfather Super 8, which is India’s only beer with 8% ABV, and Six Fields Cult, a strong white Belgian Style wheat beer, again the only strong beer in its category. We plan to launch our premium products in all the states where we operate and are pretty confident on the results keeping in view the fact that our brands have been coming right on top in their categories in all the beer competitions. Our Kotsberg Pils recently won the silver medal at the Brussels Beer Challenge 2021, which is one of the most recognized and prestigious beer competitions in the world, a matter of huge pride for our company. Keeping in view all the above facts, we hope to sell between 6 million to 7 million cases of our beers in FY 23. Of course, subject to the fact that the pandemic does not raise its ugly head again.”

“Beer is an under-penetrated category in India, a hot country with a median age below 30. The country is witnessing growing prosperity and rising urbanisation, and therefore the long-term growth prospects of the beer industry remain buoyant. We continue our focus on increasing market penetration and driving premiumisation in the category. With Heineken’s majority stake in United Breweries, we have a broad portfolio of consumer and product propositions available to us in India. We are currently evaluating which of those have the best potential to unlock the premiumisation opportunity and delight consumers here,” said Heineken’s spokesperson.