Alcohol ad spend to hit $6bn by 2023
Money spent on alcohol advertising is expected to return to pre-pandemic levels by 2023, following a double-digit drop last year.
Zenith’s Business Intelligence – Alcohol: Beer and Spirits report looked at 12 key markets: Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK and the US, which combined account for 73% of total global ad spend. The report covers beer and spirits advertising in these markets.
According to the report, alcohol ad spend fell from £5.9 billion (US$8.3bn) in 2019 to £5.2bn (US$7.3bn) in 2020. Zenith said alcohol advertising dropped nearly twice as fast as the overall ad market in 2020, falling by 11.6% compared to 6.4% of the total market.
Zenith forecasts alcohol ad spend will still be 8% below the 2019 level by the end of this year, up 5.3% to £5.5bn (US$7.7bn). Zenith expects alcohol advertising spend to reach £6bn (US$8.5bn) by 2023, surpassing its 2019 figure.
Alcohol advertising is expected to increase in line with the ad market as a whole (4.9%), up 4% in 2022 and 5% in 2023.
Zenith said brands cut their marketing budgets to protect their bottom lines, as consumers drank less alcohol and purchased more in the off-trade where prices are lower.
“The alcohol industry has suffered more from the pandemic than most, and that was reflected in the steep drop in ad spend last year,” said Jonathan Barnard, head of forecasting, Zenith. “The recovery won’t be as dramatic as the downturn, but investment in digital communication will drive steady growth in alcohol advertising for the next few years.”
Alcohol companies devoted half (49%) of their budgets to television last year, compared to 24% for the average brand, and 19% to out-of-home advertising, compared to 5%.
The pandemic forced alcohol brands to move online as TV and out-of-home became ‘less effective’ with consumers shifting to digital media, the report noted.
Zenith said alcohol brands have typically been slow when it comes to digital advertising, with companies spending less than half of their budgets than the average brand in 2020.
However, the closure of bars due to the pandemic saw this change rapidly. Alcohol brands increased their spending on digital media from 21% of their budgets in 2019 to 24% last year.
Spirits surpass beer
Zenith noted the prominence of spirits brands in advertising, which made use of influencers and trade partners to show consumers how to make cocktails.
“Spirits brands have surpassed beer brands in terms of sales value by offering more premium experiences and rituals around their product and serve,” said Ben Lukawski, global chief strategy officer, Zenith.
“With the pandemic taking audiences away from the on-trade we have seen a greater emphasis on bringing these premium experiences in home through owned digital content.”
Zenith predicts that brands will boost their digital advertising to support alcohol e-commerce even as the on-trade reopens due to increased consumer awareness of online alcohol purchasing.
Zenith estimates a 9.2% annual growth in digital ad spend between 2019 and 2023, when online advertising will account for 30% of alcohol brands’ marketing budgets. The report also notes a 2.4% annual reduction in TV advertising by 2023.
Out-of-home ad spend is predicted to grow by 1.1% annually as the channel becomes more valuable due to TV’s decline.
Certain markets across Western Europe witnessed huge drops in ad spend last year, however Zenith expects they will return to 2019 levels by 2023.
Zenith forecasts Spain, the UK, Germany and France to be the top growth markets for alcohol ad spend, with annual growth rates between 2020 and 2023 of 28%, 21%, 10% and 8% respectively. The growth is due to the markets’ focus on the on-trade when drinking in bars is normalised.
During 2020, alcohol advertising declined by 52% in Spain, 48% in the UK, 22% in Germany and 23% in France.