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Think Spirits panel identifies lasting change in new drinks landscape

Published:  14 October, 2020

The pandemic has had a profound impact on all aspects of the business of drinks, reshaping how trade and consumers interact and behave, while delivering deep economic uncertainty.

This in turn means that now, more than ever, it is critical for those producing, supplying and retailing spirits to be tuned into both the constants and changes surrounding this crisis, to ensure fast adaptation to fluctuating circumstances and a sustainable longer-term recovery.

These themes underpinned the debate at Harpers’ recent Think Spirits opening webinar, Tuning into the Constants & Changes of the New Drinks Landscape, in association with Quintessential Brands. This brought together a cross-discipline panel of experts from the worlds of spirits and beyond, to assess what the future holds and what consumers will now want under the new norm.

The session began with views on the outlook for the beleaguered on-trade. Kate Nicholls, CEO of UK Hospitality, said that while the hospitality sector had received “unprecedented levels of support”, with government understanding the overall importance of the sector to the wider economy, “they don’t seem to realise the holistic nature of hospitality and associated supply”.

Nicholls argued that more targeted and ongoing support, especially for the “many small independent businesses”, was still crucial as the “best way of getting support cascading back up the supply chain”.

From the supplier perspective, Russell Kirkham of Quintessential Brands said support for customers had become an ever more essential part of the supplier/on-trade relationship.

“We have been doing as much work as possible to support our customers, by listening to what consumers are wanting to do, but obviously consumers can only react to latest advice and legislation,” he said.

“We use [consumer research tool] TRKR and did a lot of work with our on-trade customers, trying to give them solutions to help them help their customers feel safe. It’s about how we reacted as a supplier – a key part of this pandemic has been listening and reacting as quickly as possible, being agile.”

All agreed that Eat Out to Help Out (EOTHO) helped rebuild confidence, but the reversal of government advice, to work from home and a 10pm curfew on on-trade venues, had once again dented consumer confidence and knocked back hospitality operators.

Consultant Paul Pavli said EOTHO proved consumers do still want a social life, but added “now the government has taken three steps backwards”.

Pavli also cited the shift from city centre to suburban bars and restaurants as a major ongoing development, as a home-working and safety-conscious public continue to seek out local venues when they do emerge to play.

“There’s so much pent-up demand, people just need tipping over that edge, but they want to go local,” he said. That, in turn, meant that suburban “bars and restaurants will have to up their game, making sure the brands those consumers are used to seeing in town and levels of service are still delivered”.

For Dawn Davies MW of Speciality Drinks there were some positives thrown up by the pandemic, with the sheer scale of adaptation and innovation shown by a resilient trade driving “creativity and opening doors that weren’t open before”.

This, she said, went beyond simply adapting to Covid-related rules and change, with the emergence of differing and imaginative additional revenue streams being matched by opportunities for smaller drinks brands too.

“A lot of smaller brands have made better and more creative efforts than bigger brands… and that can only be good for the consumer – because it’s going to be about quality. People are really engaging with what is right and wrong about brands, so [brand owners and bars] are really upping their game.”

However, having visited “a lot of bars” since the on-trade reopening, the Cocktail Lovers’ Gary Sharpen was concerned, as many bar owners had raised the issue of a lack of operating and procedural consistency between differing venues, which was confusing and ultimately off-putting for consumers concerned by health and safety protocols.

On a different tack, for Kirkham, alcohol – and, more specifically, trusted brands – continued to be a “big driver of sales, even as the situation changed”.

With bars pivoting their model to click and collect or delivery to match a change in drinking occasion, those operators and suppliers that could be agile, working with differing formats such as RTDs and cocktail bundles, backing this up with online engagement, had come out on top, he said.

The impact of such evolution on the on-trade, which generally drives trends, had fed back into the off-trade too, said the Co-op’s Simon Cairns, “making us think as a retailer how we present ourselves, how we can get on board with more of these trends”.

With at-home drinking occasions remaining on a high, this meant tapping more deeply into trending drinks categories, plus alternative formats, but also “having more of a conversation with consumers”, to deliver some of “the excitement and interaction” that they typically expect to find from the on-trade.

“Consumers want that excitement, they want something new, but they also want someone to guide them about what those flavour trends are and what they are looking for,” said Cairns.

Premium offering

One trend that has continued apace through the pandemic is that of premiumisation. As Drink Supermarket MD Ravi Kotecha pointed out: “What we’ve seen is that businesses that are well-equipped to deliver a premium offering and have been able to up their game have seen a big rise and that will continue looking ahead.”

Like Kirkham and Cairns, Kotecha cited the importance of bringing that premium experience into the home, as an extension of the bar brand and its DNA.

The looming Christmas season, coupled with social restrictions, means operators need to double down on getting that right if they are to hope to capture at least some of the all-important trade during a period that can normally deliver up to 20% of annual takings in a month.

“With the new lockdown ‘rule of six’, I don’t think people will stop spending, but it’s up to brand owners and distributors to put together a strong enough premium experience – it’s the most important thing in the next few months,” said Kotecha.

Molzi’s Charlie Merrells, who until relatively recently headed up the BWS division at Amazon, agreed on the importance of “understanding the customer journey, accessing different elements at different stages”, saying those businesses that would continue to thrive would be those that “best addressed the omni-channel challenge”.

He said: “Agility is a key point, how you shift inventory from on to off-trade and balance it in a way that works for everybody. Make adjustments very quickly and offer customers that choice. They want the ability to choose, but while being educated on that journey and using the online environment to provide the education.” Get that right and “you’ll have loyal customers at the end of the process”, Merrells concluded.

The Panel

Simon Cairns, head of Drinks, The Co-operative

Dawn Davies, buyer, Speciality Drinks

Russell Kirkham, Customer Marketing Director UK & EMEA, Quintessential Brands

Ravi Kotecha, MD, Drink Supermarket

Charlie Merrells, chief strategy officer, Molzi (Amazon marketing agency)

Kate Nicholls, CEO, UK Hospitality

Paul Pavli, Paul Pavli Consultancy

Gary Sharpen, director & publisher, The Cocktail Lovers

Andrew Catchpole, chair and editor of Harpers Wine & Spirit

The full webinar can be watched on Harpers YouTube channel here.