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Thirsty Brits send booze sales soaring

Trying to forecast accurately during the COVID-19 pandemic, has put even the most robust supply chains under pressure. Many have seen upsurges in some areas and declines in others. None more so than the beer, wines and spirits (BWS) category, which is enduring a rollercoaster ride through lockdown.

Since the pubs, bars and restaurants trade has ground to a complete halt, drinks suppliers are relying heavily upon the supermarkets and convenience channels to keep their business running during this challenging period. As well as the typical lockdown-driven demand swings that have affected most categories, the key question for drinks suppliers has been; how much of the on trade demand for booze (pubs, bars, restaurants) will filter into the off trade (supermarkets, convenience)?

The grocery sector has seen booze sales soar, as thirsty Brits seem to be drinking their way through lockdown. If we look at the latest Kantar data, sales for spirits have grown by +20% YOY in the 4 w/e to 19th April, declining slightly from +25.7% YOY in the previous four weeks. In the same period, still wine has shown a steady demand increase of between 21% and 21.9%. Beer, however, has jumped from +21% (4 w/e to 22nd March) to a whopping +56.5% vs. LY (4 w/e to 19th April). It certainly seems like the beer drinkers amongst us are missing their pints at the pub during lockdown.

The Kantar data also shows the % of Brits buying alcohol online has also jumped from 2.9% at the start of March to 5.8% for w/c 19th April.

But it is not just the overall demand the supply chains have to consider. If we delve into world of beer, sales of smaller packs have demonstrated relatively modest growth, whereas bulk packs have grown astronomically as consumers try to get more bang for their buck. Some suppliers are reporting sales growth of bulk-packs well into triple-digit growth. One supplier’s mid-pack of lager was up over +200% for the last 4 weeks, and that was a well-established pack in 2019.

So how do drinks suppliers succeed in this volatile market where half their typical demand has dried up, and the other half is one fire? After speaking with suppliers there are two key factors that have determined success during this period; Data and Stockholding.

1. Data- An absolutely invaluable tool for supply chains during this challenging period has been good use of reliable sales and stockholding data. Being able to distil quality and robust data into meaningful and visually appealing insight, is absolutely critical. It allows account managers to support retailer supply chains, to highlight the best-selling (and therefore low availability) products. As a result, supply chains can order more stock where required, and have therefore recovered their availability % more quickly.

2. Stockholding- So many suppliers have been caught out in this area. If an unexpected sales increase happens, supply chains can usually dig into their buffer stocks. This isn't a problem for a one-off hit of increase, say for example a sunny weekend, or a planned increase like Christmas, which takes months of preparation and stock building. However, this is an unprecedented situation, and suppliers and retailers have had to basically cope with Christmas demand in March and April, with little preparation. Therefore, the winners over the last 8 weeks, have been the drinks suppliers who were already sat on good stockholding, or have been able to react and produce lots of stock quickly.

All things considered, I expect the grocery sector demand for BWS to remain at between +20% to +30% vs. LY, until the lockdown ends. Even then it will take a long time for things to return to ‘normal’, if that ever happens. The lockdown may have driven a permanent shift in consumption and socialising habits, and both suppliers and retailers will have to adapt quickly if they want to succeed in this new world.

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