The Covid-19 crisis has presented a wide array of challenges for the beverage industry this year. Consumption occasions were lost, logistics were complicated, and traditional routes to market were compromised. However, companies are rapidly responding to the situation with smart strategies.
For beverage companies around the globe, Covid-19 has created massive disruptions to established consumption patterns and to traditional consumption channels – most notably, the severe disruption of on-premise sales. With consumers cutting back on consumption, shifting on-premise occasions to home, and cutting back on celebrations, beverage companies have found it necessary to swiftly adjust their strategies.
Stephen Rannekleiv, global strategist, beverages, Rabobank, said, “Through these difficult times, companies have shown surprising resiliency and creativity in reacting to these challenges. We identified five different types of strategic responses that have shown some level of success, and have explored some examples of each.”
These five responses include:
• Recreating the on-premise at home: With the on-premise being closed, beverage companies have found numerous innovative ways to recreate the on-premise experience into the consumer’s living room. These range from novel product combinations, to new product innovations, and digital experiences.
• Retooling the on-premise: Where beverage operators own their stores, there have been common moves to improve safety measures but also some complete overhauls of store formats, expansion of mobile order and pay platforms, and even moves into self-pouring solutions.
• Providing support for on-premise partners: As beverage companies recognise that on-premise operators are important partners in their long-term success – they have made numerous efforts to help them during this difficult time by offering payment terms, helping them navigate government support mechanisms, buying back unused kegs, supporting with safety measures, providing guidance for reopening, and providing incentives to bring back consumers.
• Expanding e-commerce investments: E-commerce has been the big winner during the pandemic, and companies are actively stepping up their efforts in this area. Many major beverage companies have highlighted the ecommerce opportunity in their recent earnings calls – and the company expects to see more in the future.
• Connecting with Covid-19 fatigue: While many companies are reducing ad spend during these challenging times, others are using the crisis as an opportunity to connect with the consumer in a difficult moment.
“While companies are rightly concerned about conserving cash, history shows that investing in brands during downturns pays long-term results,” explains Rannekleiv.