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"Hammer blow" to on-trade from Covid-19, report predicts

Published:  03 June, 2020

Drinking occasions have "been dealt a hammer blow” a new report into the impact of the Covid-19 crisis on consumer markets has concluded. 

While physical food-and-drink outlets will survive, they will need to work harder to justify consumer visits, the report from market-research consultancy Euromonitor concludes.

Consumers will be both more jaded and significantly more risk-averse than they were, with that impacting both product innovation, where their appetite for experimentation will be diminished, and their approach to social activities.

They will be less inclined to share their drinking experiences on social media, the report suggests, and will be seeking experiences with a more sedate, solitary aspect.

The lockdown emphasis on both home-working and ‘hometainment’ - cooking, eating and socialising at home – are here to stay. Consumers will remain wary of heavily populated spaces, whether major outdoor events or busy restaurants and bars.

The focus on alternative, home-based consumer channels will be complemented by the development of gadgets to create beverages at home.

Craft brands will be under pressure, both because of consumer resistance to innovation and the weakening of consumers’ financial positions. Producers will need to reposition around maintaining value sales in a recessionary era that could equal the Great Depression of the 1930s.

The spending of consumers’ limited discretionary income will be prioritised around health, with happiness taking a back seat.

Consumers will respond best to innovation driven by demand for immunity- and health-boosting ingredients, for which they will pay a premium. Issues such as packaging sustainability and sustainable sourcing will take a back seat to health, certainly in the short term.

The trend away from alcohol and tobacco and towards more responsible stimulants - which the report defines as cannabis, caffeine and botanicals - will gather pace.

Businesses that are seen to support local communities with a holistic approach to social, environmental and economic value, will be best placed to take advantage of the new normal.

Per capita consumer spend will fall 5.2% in real terms in 2020 globally and won’t return to 2019 level until 2022, Euromonitor is predicting. It will remain far below what it would have been without the crisis.