The alcohol industry has improved its profitability during the pandemic. As Movendi International previously reported, Big Alcohol turned the COVID-19 pandemic into the world’s biggest marketing campaign to increase sales and maximize profits. In addition, alcohol industry lobbying led to the weakening of alcohol laws in many countries, specifically around online alcohol sales and on-demand delivery.
Now data shows that this pandemic strategy paid off for Big Alcohol.
Big Alcohol is profiting more now than even before the pandemic:
- Data from Kantar show that alcohol sales were worth £3.3 billion in the 12 weeks to April 17, 2022.
- This is an increase of 14.5% compared to the same time period in 2019 when sales were worth £2.9 billion.
- This is a decrease of 14% compared to the same time period in 2021 and a decrease of 2.6% when compared to 2020. This means the alcohol industry actually earned more during the pandemic than in pre-pandemic 2019.
- The IMARC group reports that the global alcoholic beverages market reached a value of US$ 1,516.5 billion in 2021.
- The market is expected to reach US$ 1,756.3 billion by 2027, exhibiting a compound annual growth rate (CAGR) of 2.7% from 2022 to 2027.
The increasing sales trend is seen in almost all segments of the alcohol industry.
As per Kantar figures:
- Sales of sparkling wine increased to £182 million during the most recent 12-week period in 2022 from £157.7 million in 2019 and £151 million in 2020.
- Wine sales had increased in both pandemic years to £1.34 billion in 2020 and £1.47 billion in 2021 compared to £1.2 billion in 2019.
- So far, 2022 sales of wine, while being less than in the pandemic years is still higher than pre-pandemic sales at £1.31 billion.
- For liquor, sales in 2022 are higher at £933.6 million than in pre-pandemic 2019 and 2020 but lower than in 2021.
A market study reported by Scoop estimates that champagne sales will continue to rise around the world.
- The champagne market is expected to have a compound annual growth rate (CAGR) of 5.08% and reach a value of US$ 11.7 billion by 2032.
- In Europe alone champagne is expected to have a CAGR of 5.3% and reach US$ 1.6 billion.
- All other parts of the world are also expected to have an increase in CAGR for champagne.
- North America: 5.1% by 2032.
- Latin America and Oceania: 4.5% and 4% respectively by 2032.
Beer sales have also continued to increase through the pandemic and are expected to increase even more. One example is Heineken’s sales in recent years.
- In the first quarter of 2022, Heineken sales increased more than a third compared to the previous year, to just under €7 billion.
- Heineken beer sales increased by 5.2% in 2022 compared to the previous year and 2.8% compared to pre-pandemic 2019.
- In Europe, Heineken increased their sales even more. Heineken increased sales in the Netherlands by 30%, in the UK by 40%, and in France and Italy by 20%.
- Heineken has increased their sales in Asia as well by 3.81 % leading to a rise in profit to €417 million.
How did the alcohol industry increase its profitability during the pandemic?
The pandemic led to lockdowns and other restrictions resulting in the closure of bars, pubs, and restaurants. Despite this, the alcohol industry has actually managed to not just break even but increase its profitability.
The alcohol industry’s strategy during the pandemic was to exploit the situation to their advantage. Big Alcohol did this by marketing heavily and also pushing to weaken alcohol laws. The United States are a case study of how the alcohol industry weakened state alcohol laws to increase alcohol availability and drive higher consumption.
A direct result of Big Alcohol lobbying pressure is that almost every U.S. federal state has weakened alcohol laws in 2020, according to Boston University researchers. As Movendi International previously reported,
- In the beginning of the pandemic, 31 states included cocktails-to-go as a temporary measure.
- In 15 states the measure was extended by two to five years.
- Another 16 states made cocktails-to-go a permanent law.
- At least nine states passed laws allowing direct home delivery of alcohol.
All but three of the 50 federal states gave liquor stores a lockdown exemption, many classifying the businesses – along with grocery stores and pharmacies – as a COVID-19 essential service.
Weakened laws on alcohol delivery and open containers have made alcohol products more available in communities.
This same strategy was replicated across the globe by the alcohol industry to drive higher sales, and consumption and ultimately generate bigger profit. The alcohol industry was even able to turn the African region into a region where consuming alcohol at home is now more common. Before the pandemic at-home alcohol use was not popular or common.
Since people in the African region did not readily shift to at-home use, Big Alcohol aggressively boosted marketing and online sale and delivery through lobbying and policy interference. For example, Diageo, the world’s largest liquor producer, used influencer marketing to create an artificial trend of at-home alcohol use in the African region.
This Big Alcohol strategy achieved results in the African region. As IWSR reports before the pandemic only about a third of alcohol sales in the African continent came from off-premise sales, but that has grown to around 66% after the pandemic.
Big Alcohol profits while impeding economic growth and productivity around the world
Big Alcohol has continued to profit even during the pandemic and after as well. Alcohol profits are expected to continue increasing shareholders and business executives. But people, communities, and societies at large are paying the price for these private profits.
Apart from the massive health and societal harms caused by the products and practices of the alcohol industry, a Movendi International special feature revealed how Big Alcohol is impeding economic growth and productivity in the world.
For example, the Organization for Economic Cooperation and Development (OECD) reports the following costs from alcohol products:
Alcohol harm disproportionately affects low and middle-income countries (LMICs) in the world. Even with lower levels of consumption compared to high-income countries, LMICs suffer more.
In Sri Lanka, a 2018 study estimated the present value of current and future economic costs due to alcohol harm for Sri Lanka in 2015 to be at US$885.86 million, 1.07% of the GDP of that year.
In India, a 2019 study reported that the burden of alcohol in India cost the economy more than what the government spends on health.
The study has found that after adjusting for tax receipts from alcohol sale, the economic loss from adverse effects of alcohol consumption would reach about 1.45% of the gross domestic product (GDP). For comparison, the Indian government’s annual expenditure on health is only about 1.1% of the GDP.
The products and practices of the alcohol industry drain precious resources from countries around the world. While doing so the alcohol industry increases its private profits. These heavy health, social, and economic costs are even more harmful now since governments need more resources to recover and build back better from the ongoing COVID-19 pandemic.
Sources
Harpers.co.uk: “Alcohol improves on pre-pandemic growth in multiples“
Scoop Independent News: “Champagne Market Recent Industry Developments And Growth Strategies, Forecast To 2032“
Retail Detail: “Heineken passes price rises on to thirsty Europeans“
Digital Journal: “Alcoholic Beverages Market to Reach US$ 1,756.3 Billion by 2027 | CAGR of 2.7%“
