Big Alcohol Sees Sales Collapse Due To COVID-19
Lockdown measures to reduce the spread of COVID-19 have led to halt on-trade alcohol sales with the closure of bars and restaurants. Now, Big Alcohol sees their sales collapse due to this situation.
According to analysis by Investec,
- Sales at Diageo could fall up to 10%,
- Sales at Pernod Ricard could fall up to 15%, and
- Sales could fall as much as a quarter if lockdown restrictions extend to 6 months.
Meanwhile, Carlsberg – the world’s third biggest beer producer – has faced a 7% loss in the first quarter of 2020. This was mostly driven by a 6% drop in on-trade sales in bars and restaurants.
For instance, in China alcohol sales have declined significantly.
- Diageo is expecting a £225 million to £325m million drop in sales as a result of the lockdown in China which is one of the liquor giant’s largest markets worldwide.
- For Carlsberg volume sales fell by 20% in China.
Carlsberg is trying to sell its more premium brands to safeguard some of its profits. However, this strategy is not proving effective as people are not spending much on alcohol and even when they do they buy lower priced options.
According to week 5 of GlobalData’s Covid-19 tracker consumer survey, 63% of global respondents have stopped buying, or are only buying mid- to lower-priced alcoholic beverages.
Usually, the on-trade is more profitable for the alcohol industry, compared to the off-trade. But in retail settings, all brands are usually shelved together which allows consumers to compare more easily unlike in bars, clubs and restaurants. But Big Alcohol is attempting to respond with unethical price promotions in countries around the world.
Another reason for the falling sales is that global travelling has come to a halt and Big Alcohol is losing out on their profits gained from alcohol retail in travel and tourism.
Those who are currently buying alcohol are also sticking to the brands they are familiar with.
- 52% of global respondents of GlobalData’s Covid-19 tracker consumer survey have said they are only buying the brands of alcohol they are used to.
- This is probably why Big Alcohol is trying to keep up brand loyalty even during the pandemic with heavy social media marketing.
Troubling developments
While alcohol sales may be taking a hit, one emerging problem is increased retail sales. Easy availability of cheap alcohol for retail sale can increase alcohol harm specifically with heavy alcohol users.Â
Reduced alcohol sales are positive specifically during the current COVID-19 pandemic because alcohol harm burdens healthcare systems further and threatens the psychical and mental well-being of people and communities.
However, Big Alcohol has adopted several strategies to adapt and safeguard their profits even during the current public health crisis. These include, online marketing and sales, home delivery, and brand image building such as through CSR activity.
Considering the specific harm alcohol can cause during this pandemic such as by increasing injuries, violence, addictions and mental health issues, it is important to stay aware of the strategies of the alcohol industry, counter these and restrict availability of alcohol to safeguard all people and specifically, women and children who are often faced with the worst of alcohol harm.
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For further reading:
Sources:
The Telegraph: “Sales falls of up to 15pc predicted at Diageo and Pernod Ricard“
The Telegraph: “Diageo warns of £200m hit from coronavirus outbreak“
The New York Times: “Carlsberg Sees Worse to Come as Lockdown Hits Beer Sales“
Drinks Insight Network: “Value consciousness could seriously limit spending on alcoholic beverages“
