Bacardi CMO John Burke discusses how the pandemic reshaped alcohol consumption, accelerating the shift to at-home drinking and surging e-commerce sales. Learn how Bacardi rapidly adapted its product strategy with ready-to-drink and zero-alcohol options to capitalize on these new market dynamics, setting a precedent for permanent industry change.
Key takeaways
E-commerce in the alcohol industry saw two years of growth in three months due to the pandemic, creating a permanent shift in consumer purchasing habits for liquor. Brands must invest in their online channels now.
Consumer demand for lower and no-alcohol options is massively amplifying. Brands should innovate with products like zero-alcohol aperitifs and ready-to-drink beverages to meet this growing trend.
Anticipate and quickly adapt to market shifts by converting existing product lines into formats that align with new consumer behaviors, such as pivoting to ready-to-drink packaging for at-home consumption.
Utilize predictive insights to identify emerging trends early, as Bacardi did with increased at-home drinking, allowing for proactive adjustments in production and marketing strategies.
Traditional industries can experience rapid digital transformation. Be prepared to scale e-commerce operations swiftly and effectively when unprecedented events disrupt established retail channels.
Closed spaces, mingling strangers and loud music to shout over -- bars seem purpose-built for spreading the coronavirus.
According to Bacardi CMO John Burke, that means people will be doing their drinking, and less of it, at home.
"This summer there'll be a lot more drinking out of home because people feel much more comfortable social distancing at home," Burke said on the Modern Retail Podcast. "We predicted that trend back in early April, and we've switched to producing quite a lot of our brands into ready-to-drink packaging."
The only bright spot in a recent report by IWSR is indeed in the ready-to-drink category (like last summer's hit, White Claw) which the market analyst estimates will grow by more than a fifth this year in the U.S.
Alcohol's popularity was on a downward trajectory even before the pandemic, and globally may not return to pre-coronavirus levels until 2024, according to the report. The latest slump only sharpens, according to Burke, a trend that Bacardi is prepared for: "the desire to drink less spirits and seek lower alcohol or no alcohol solutions. That's a trend that we expect to see massively amplified."
Given how that expectation combined with the pandemic, Bacardi expanded the launch of a zero alcohol aperitif under its Martini label. "Despite disruption in the industry we'll deliver ahead of target for this year on that innovation," Burke said.
Another silver lining is the growth of e-commerce for Bacardi's spirits, starting from an "abnormally low level" compared to other sectors. "In the last three months we've probably seen two years' development take place," Burke said. "The number of people who've had their first ecomm experience of buying liquor online is huge. That creates a permanent change in our industry structure."
E-commerce in the alcohol industry saw two years of growth in three months due to the pandemic, creating a permanent shift in consumer purchasing habits for liquor. Brands must invest in their online channels now.
What does this episode say about product & merchandising?
Consumer demand for lower and no-alcohol options is massively amplifying. Brands should innovate with products like zero-alcohol aperitifs and ready-to-drink beverages to meet this growing trend.
What does this episode say about supply chain & operations?
Anticipate and quickly adapt to market shifts by converting existing product lines into formats that align with new consumer behaviors, such as pivoting to ready-to-drink packaging for at-home consumption.
What does this episode say about brand & content?
Utilize predictive insights to identify emerging trends early, as Bacardi did with increased at-home drinking, allowing for proactive adjustments in production and marketing strategies.
What does this episode say about dtc strategy?
Traditional industries can experience rapid digital transformation. Be prepared to scale e-commerce operations swiftly and effectively when unprecedented events disrupt established retail channels.
