Significant shift in alcohol channels to change pubs and bars industry for years to come

As the UK lockdown continues into its fifth week, and both the start and end-dates of the quarantine seem to get further away, the impact on the UK’s pubs and nightlife sector is having to be continually reassessed. In terms of local currency units (LCU) value, when adjusting for COVID-19, GlobalData’s projections for thegrowth of theUK alcoholic beverages market have been cut. Beer and cider has dropped from a baseline value growth of +1.7% to a COVID-19-adjusted forecast of -6.7%. Similarly, wine has dropped from +2.7% to -8.5%, and spirits has gone from +5.1% to -6.9%*.

Fred Diamond, Consumer Analyst at GlobalData, commented: “The projections for the UK alcohol industry have been reduced as a result of the price of a pint being significantly more than the price of the same beer in a can from a shop. Although there has been a drop in all three categories, the types of companies selling alcohol has shifted. Pubs sales have plummeted, so the onus is on other channels, which are having to greatly expand their sales capacity to meet the spike in demand.”

GlobalData’s COVID-19 consumer survey shows that 28% of 35-44 year olds are buying more beer than before, while 24% are buying less, with similar occurring for wine and spirits**.

Diamond continues: ‘‘The Gen X age group is particularly interesting, as these people are likely to visit pubs and bars as frequently as younger people, but typically have more money and are willing to spend it on more premium products in the form of craft-ales and up-market wines and spirits.”

Subscription services such as Beer52, Flavourly and BeerBods are cashing in on the portion of the population who are working from home and have extra money to spend on luxury and premium products. As for those on 80% of their wage, local off-licences have taken the initiative and are offering delivery services.

Diamond adds: “Those who are buying less are likely social drinkers. After the lockdown, it is not certain if these people will return to the pubs and bars they once frequented as they may have adjusted to a lower-alcohol lifestyle. As for those buying more, there is a chance that the value for money and personalized choice they get from online shops and premium subscription services will result in less frequent alcohol-based outings. The end result may see consumers prefer the easily accessible subscriptions they’ve become accustomed to over a pricey bar – the difference will be how operators market the ‘experience’ over the product.”

* – GlobalData’s Coronavirus (COVID-19) Tracker Consumer Survey – Week 4 – UK

** – GlobalData’s COVID-19: COVID-19 Impact Market Model – Consumer Goods – LCU value

– data is adjusted weekly following COVID-19 developments, therefore subject to change

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