The pandemic has presented businesses with a number of challenges. Consumption occasions have been lost during shutdowns, while on-trade sales remain under pressure. Logistics have become more complicated, as have traditional routes to market. In brief: the ability to adapt is key.
“Through these difficult times, companies have shown surprising resiliency and creativity in reacting to these challenges. We identified five different types of strategic responses that have shown some level of success, and have explored some examples of each,” says Stephen Rannekleiv, Global Strategist, Beverages at Rabobank.
1) Recreate the on-premise at home
Lockdowns decimated the on-trade industry over several weeks; but also left a longer-term change with more and more consumers now working from home and entertaining at home as well.
“With the on-premise being closed, beverage companies have found numerous innovative ways to recreate the on-premise experience into the consumer’s living room," observes Rabobank. "These range from novel product combinations, to new product innovations, and digital experiences.”
Some of these initatives include:
- Signature Brew: the London-based taproom offered a ‘Pub in a box’ to consumer, with the kit including a case of beer, glassware, bar snacks, a music quiz and a bespoke Spotify playlist – recreating the pub experience at home.
- Countertop cocktail machine Bartesian – launched in 2017 – became a ‘hot item’ during the pandemic with online retailers frequently running out of stock.
2) Re-tool the on-premise
Beverage operators have been improving safety measures in line with regulations – sometime completely overhauling their store formats. They’ve also been introducing more mobile order and pay platforms, and moving into self-pouring solutions.
- Coffee shops such as Starbucks and Joe Coffee are seeing a rise in mobile order and contactless purchases, upping their game in this area with new initatives.
- Coca-Cola European Partners has taken a stake in PourMyBeer, a self-pour beverage solution.
3) Provide support for on-premise partners
As beverage companies recognize that on-premise operators are important partners in their long-term success –they have made numerous efforts to help them during this difficult time by offering payment terms, helping them navigate government support mechanisms, buying back unused kegs, supporting with safety measures, providing guidance for reopening, and providing incentives to bring back consumers.
- AB InBev launched its Academia de Meseros Modelo in Mexico, providing safety training to bar staff
- Heineken launched ‘Back to the Bars’ commercials, reminding consumers about responsible behaviour in the on-trade
- Diageo launched its ‘Raising the Bar’ initiative, providing physical equipment such as hygiene kits.
4) Expand e-commerce investments
E-commerce has been the ‘big winner’ during the pandemic, says Rabobank, and companies are actively stepping up their efforts in this area. US online grocery sales grew by around 250% in May, but some categories – like alcohol – likely saw growth rates that were twice as large.
5) Connect with Covid-19 moments
While many companies are reducing ad spend during these challenging times, others are using the crisis as an opportunity to connect with the consumer in a shared moment. While companies are rightly concerned about conserving cash, history shows that investing in brands during downturns pays long-term results, notes Rabobank.
- The Coors Light Clone Machine ad tapped into fatigue with video conferencing by offering a machine that allows people to create a clone of themselves for work calls
- Guinness launched a unifying ‘we’ll march again’ ad after St Patrick’s Day celebrations were cancelled.