Lockdown causes £11.1bn drinks sales loss in on-trade

5th November, 2020 by Nicola Carruthers

The first UK lockdown led to a loss of £11.1 billion (US$14.5bn) in on-trade drinks sales, according to a new report from mixer producer Fentimans.

Pubs and drinking-out occasions will continue to fare better than food-led visits, the report said

The Fentimans Market Report 2020, which uses data from CGA, noted the impact of the first coronavirus lockdown on drinks sales in the UK’s on-trade. From 22 March to 8 August 2020, drinks sales in pubs, bars and restaurants dropped by £11.1bn, compared to the same period in 2019.

During the period, soft drinks sales declined by £1.71 billion (US$2.2bn), with premium soft drink offerings falling by £198 million (US$259m).

The value of Britain’s long drinks, spirits, wine, soft drinks and mixer market in the 12 months to February 2020 rose 1.8% to £31bn (US$40.5bn).

During the 12-month period to February, drinks sales in the drinks-led pub sector were up 1.9% to £13.7bn (US$17.9bn). Drinks sales in bars and clubs grew 0.9% to £5.5bn (US$7.2bn).

The Fentimans report also detailed five key post-coronavirus trends for the on-trade. In the coming months, the report said pubs and drinking-out occasions will continue to fare better than food-led visits. Pubs opened at a faster rate than restaurants, according to CGA data from August that said nine in 10 pubs in Britain were trading again after the lockdown.

The report also noted the ongoing premiumisation trend, with consumers making fewer trips to drink out but spending more on higher-priced products when going out.

There has also been a move towards localised drinking and eating as consumers spend more time working and shopping near their homes. This would benefit on-trade venues in residential and suburban areas but become more challenging for city centre sites, the report added.

Another trend is the move towards different occasions as consumers might switch to drinking during the daytime instead of the evening or favour relaxed catch ups over high-tempo drinking occasions.

Fentimans also noted that on-trade venues have reduced their drinks ranges across various categories since restrictions were lifted. The report warned that with so many brands on the market with a premium price point, there may be a need to reduce ranges in the long term. Designing and adapting ranges to fit the local consumer will also be crucial, the report said.

Drinks trends

When it comes to drinks trends, Fentimans predicts a rising interest in low- and no-alcohol ‘beer’, ‘wine’ and ‘spirits’. The no- and low-alcohol category has increased by 48% in the last year, and is now a £60m-a-year category, according to CGA figures.

The report also tipped rum to follow gin’s meteoric rise. Fentimans said the “versatility of the rum category positions it well for growth in the months ahead, and commands an entirely different mixer proposition to tonic waters”.

The growing interest in low-sugar options is also a trend expected to grow in 2021 and beyond in line with consumers seeking healthier choices in soft drinks. The report also noted the rise of products that have “added health benefits” such as kombucha with its antioxidants.

Furthermore, the issue of plastic use has become more important to consumers and companies. A plastic packaging tax is due to be introduced in April 2022, while the Scottish government plans to introduce a bottle deposit return scheme by July 2022.

The challenges surrounding Brexit could also impact the soft drinks market. The report said trade body the Wine and Spirit Trade Association (WSTA) raised awareness of the issue in May 2020 with a new campaign to highlight the key priorities for the alcohol industry at the end of the Brexit transition period.

The report said: “Leaving the EU’s single market and customs union will mean a new set of trading regulations for UK businesses that import or export their goods from European countries. The WSTA wants information relating to any changes to be shared sooner rather than later so that brands and operators can prepare for the new trading environment in good time.”

Bars in England were forced to shut from today under new lockdown measures.

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