It’s Enough to Drive the Alcohol Industry to Drink
Until more people are comfortable doing this again, the alcoholic beverage industry is likely to remain in the doldrums.
Just kidding. And yet, a new market forecast paints a dim future for the alcoholic beverage industry, saying it might be five years before the sector recovers from the impact of COVID-19. This might be a bit of a surprise, considering liquor stores were declared an “essential service” in many places. But it seems that all those “quarantinis” won’t be enough to save the sector’s bottom line.
“While we’re still assessing the full impact of the current COVID-19 situation, it’s very clear that the pandemic is set to cause a deeper and more long-lasting aftereffect to the global drinks industry than anything we’ve experienced before,” says Mark Meek, CEO of IWSR Drinks Market Analysis. “Even the downturn following the 2008 financial crisis was less severe than what we are seeing now. In many ways, 2019 was perhaps the last ‘normal’ year for the drinks industry.”
Total global alcohol consumption increased by 0.1 percent in volume and 3.6 percent in value in 2019, IWSR reported. But in 2020, retail sales online or at brick-and-mortar stores have not been enough to offset sales lost to the unprecedented shutdown of bars and restaurants around the world. IWSR expects this to lead to double-digit declines in 2020, with sales not returning to pre-pandemic levels until after 2024 in the United States.
Among IWSR’s predictions:
- Beer sales will rebound sooner than those of wine or spirits.
- Although a small segment of the alcohol market, ready-to-drink products are “poised for continued growth.”
- E-commerce will continue to grow in importance.
“As restrictions ease, long-term recovery is expected to be slower than the initial bounce-back — driving a ‘Nike Swoosh’ rebound shape,” Meek 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. A strong focus on innovation, ‘premiumization’ and new routes to market such as e-commerce, are all factors which will help contribute to the industry’s rebound and future growth.”