The Beverage Industry Is Thriving Because of (Not Despite) the Pandemic

alcohol

While the global impact of the pandemic will no doubt be felt long after the first half of 2020, the disruptions have made opportunities for some companies. As recent economic models predict that about 11% of all gross domestic product in the U.S. will decrease twelve months from March 2020, there are industries that are enjoying growth.

Some Industries Are Thriving

As more and more people are going online because of stay-at-home orders, an indicator of how their online habits have changed may give us a glimpse of what people want these days. It boils down to everyone going back down to the basics.

In recent months, according to digital marketing authority Neil Patel, the following industries have seen significant gains in online traffic:

  • Finance
  • Food
  • Health care
  • Media
  • Pharmaceuticals

This information shows that people at home are most preoccupied now by four things: money, food, health, and entertainment. But if we dive into these industries, will we also see people sticking to the essentials? The food and beverage industry, for example, has had many disruptions, from the supply chain of their ingredients to the disruption of companies that produce components such as bottling and liquid filling equipment. Is there any growth there, and where would it be coming from?

Online Alcohol Sales Have Skyrocketed

Alcohol

Alcohol is a recession-resistant business, historically speaking. Even during periods of economic difficulty, the demand for (and subsequent sale of) wine and beer remain high.

Alcohol sales online have gone up by 243%, according to market research firm Nielsen. As on-premises alcohol consumption has bottomed out with bars and restaurants closed, people have had to order their drinks online to drink at home. In 2018, off-premises liquor sales were at about $113 billion, which amounted to about 47% of all sales of alcohol. This year, the beverage industry will see those figures heavily favor online sales, even when movement restrictions are lifted and things start getting back to normal.

For example, online wine club Winc, which sends wines for tasting directly to members, saw their new member signups go up by 578%. These consumer behaviors observed during the lockdowns will likely continue in the near future.

This is not just a trend in the U.S. Even in Asia, beer sales have surged online, with Heineken and Tiger reporting that their online trade has more than made up for the losses inflicted by plummeting on-premises drinking.

Health Drinks Sales Are Also Surging

As the ongoing health crisis has highlighted the need to stay healthy, the average consumer has been more willing to pay a premium for wellness products. Kombucha, a fermented tea drink, for example, was already enjoying growth pre-pandemic as a market worth 1.67 billion globally, according to a report by Grand View Research.

If we look into online traffic again as an indicator of consumer behavior, we will see the general trend to health and wellness month on month, as reported by Foodnavigator.com. The following health-related search terms were tracked:

  • Kombucha (+73%)
  • Elderberry (+108%)
  • Rosemary (+114%)
  • Melon (+28%)
  • Chamomile (+81.5%)

Kombucha and other healthy drinks have seen sales increases by as much as 25.9% during the pandemic, amid an overall retail drop of 8.7% across the board from February to March.

These and other data points confirm that the beverage industry is resistant to recessions, apparently even at a scale caused by the pandemic. Whether these gains will hold or increase, especially in the longer term, remains to be seen. But for now, it seems like beverages are one of the islands of stability in a sea of economic disruption.

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