Big Alcohol Battles COVID-19 Business Downturn
During the global COVID-19 crisis Big Alcohol battles a severe business downturn to protect their profits. While alcohol off-trade sales saw a surge in the beginning of the COVID-19 lockdown period in many countries, this trend is now receding to the usual levels.
Meanwhile, on-trade alcohol sales such as from bars and restaurants as well as travel alcohol retail for example in duty free shops are still at a halt. Big Alcohol is loosing a considerable amount of their usual profits, but they don’t intend to wait it out. The alcohol industry has started deploying various strategies to adapt and use this public health crisis to their advantage.
Consumers rushed stores to stock up alcohol as lockdown laws came into force around the world.
- In Britain sales at liquor stores increased by a third in March.
- In the United States retail alcohol sale increased by 50% in the week after the country entered a state of emergency.
Despite the initial surge in off-trade sales, the trend is receding now and prospects are not looking good for Big Alcohol.
- In the United States, on-trade alcohol sale accounts for about 20% of spirits sales and 25% of beer sales, so off-premise sales would need to keep growing by 25 to 30% to compensate the on-trade losses. However, according to Nielsen data, the rate of growth slowed to 16% in the week to April 18.
- In Europe, on-trade alcohol sale is generally higher than off-trade such as in Spain where on-trade sales account for 60%.
- In many developing countries, including China and Brazil and for beer in Nigeria and Ethiopia, at least half the alcohol sales are on-trade.
Alcohol is also quickly losing its place in society as people are physical distancing and can’t gather more, hence alcohol norms and pressures to consume alcohol at social gatherings are disappearing – if the alcohol industry is not able to replace these through promoting alcohol use in digital gatherings and at earlier times of the day.
As the World Health Organization and public health experts have called on governments to tighten restrictions on availability of alcohol during the pandemic and lockdown measures to reduce the avoidable alcohol burden on healthcare systems, some countries have also started implementing improved alcohol policy solutions and sometimes complete bans on alcohol sale. This way alcohol availability is declining in many places.
Travel bans also mean that alcohol sale through travel such as in duty free shops are at a halt now.
The crisis is also pushing people to choose less expensive alcohol, thereby, ending the Big Alcohol strategy of premiumization and premium brand marketing.
Many major alcohol companies such as Diageo, Pernod Ricard and Carlsberg are already predicting decreasing profits, as sales collapse globally.
If Big Alcohol sales are reducing people must be reducing their alcohol use which would have overall positive health, social and economic effects on countries. However, the alcohol industry has started to use strategic interventions to battle their profit loss, even at a threat to public health.
Big Alcohol battling COVID-19 profit loss at the cost of public health
Early on when lockdown laws began in many countries towards the end of March, Movendi International reported how alcohol and advertising industries are exploiting the current public health crisis to make sure they retain as much profit as possible.
Some of the main strategies of Big Alcohol to drive sales include the following:
- Aggressive online marketing and pushing people to delivery services. For example in Australia, a new report found there is an alcohol ad every 35 seconds on Facebook and Instagram.
- Lobbying to weaken alcohol policies such as by obtaining “essential” status to continue operations during lockdown, which was observed in federal states across the U.S., in Canada and even Kenya and a few other countries. In Thailand, the alcohol lobby pushed the government to lift an ongoing alcohol ban due to the pandemic and are lobbying for delivery permission. In South Africa, the alcohol lobby is pushing against the country’s alcohol sales ban and demanding for online alcohol sales. The case is similar also in India.
- Corporate Social Responsibility (CSR) activity, including producing hand sanitizer or donating food items to those in need. Research has found these CSR initiatives by the alcohol industry do not actually reduce alcohol consumption and only work to build the image of the company or brand.