MUMBAI: Alcohol ad spend in 12 key markets, including India will grow by 5.3 per cent in 2021, ahead of the 4.9per cent growth of the ad market as a whole, as brands recover from a much steeper drop last year, according to a report by media agency Zenith published on Monday. Alcohol advertising will then grow roughly in line with the market, with 4-5 per cent annual growth in 2022 and 2023.
Pandemic forced the alcohol ad spend to move online
Alcohol brands have historically been slow to commit to digital advertising, devoting less than half as much of their budgets to it than the average brand in 2020. This is changing rapidly now. The closure of hospitality venues meant that brands needed a new route to market. Breweries, distilleries, bars, and restaurants diversified into direct-to-consumer shipping and takeaway drinks, facilitated by e-commerce, and advertised heavily on digital media, particularly social media. Alcohol brands increased their spending on digital media from 21per cent of budgets in 2019 to 24per cent in 2020. Seeking to create compelling brand experiences at home instead of at the bar, drinks companies invested in owned assets such as brand websites and educational content. Spirits brands were particularly prominent, using influencers and trade partners to teach consumers to mix their cocktails, for example.
“Spirit brands have surpassed beer brands in terms of sales value by offering more premium experiences and rituals around their product and serve,” said Zenith global chief strategy officer Ben Lukawski. “With the pandemic taking audiences away from the on-trade we have seen a greater emphasis on bringing these premium experiences in the home through owned digital content.”
Consumers are now much more aware of the available options for buying alcohol online, and alcohol brands now have distribution networks in place to supply them. Zenith expects brands to expand their digital advertising to support alcohol eCommerce even after pubs and restaurants are fully open, fueling 9.2per cent annual growth in digital ad spend between 2019 and 2023 when digital advertising will account for 30per cent of alcohol advertising budgets.
Adspend on Television & OOH less effective
Alcohol brands traditionally rely heavily on television and out-of-home advertising, spending twice as much on television as the average brand and nearly four times as much on out-of-home. Alcohol brands devoted 49 per cent of their budgets to television in 2020, compared to 24 per cent for the average brand, and 19per cent to out-of-home advertising, compared to 5per cent. This tactic has become less effective as audiences shift to digital media, though, particularly the young consumers most likely to visit a new bar and try out a new drink.
Zenith predicts alcohol brands will reduce their expenditure on television by 2.4per cent a year to 2023, compared to the 2019 baseline, as traditional broadcast audiences continue to shrink. Out-of-home advertising, by contrast, will grow by 1.1per cent a year, even taking into account the pandemic-induced reduction in foot and road traffic. Television’s declining reach makes out-of-home ubiquity even more valuable.
Alcohol advertising to recover from 2020 decline by 2023
Alcohol advertising shrank nearly twice as fast as the overall ad market in 2020, falling by 11.6per cent compared to 6.4per cent of the market as a whole, Brand finances were squeezed by reductions in consumption volume, the average price per drink, and profit margins. With bars, pubs, and restaurants closed, consumers drank less alcohol and bought the drinks they did consume from shops where they cost less, with a much lower mark-up. Brands cut back their marketing sharply to protect their bottom lines, and their combined ad spend fell from $7.6bn in 2019 to $6.7bn in 2020.
Brands are now bringing money back into the market as vaccine programmes have consumers socialising in person again, and the hospitality industry has begun to reopen. But the return to normality will be slow, and alcohol ad spend will still be 8per cent below the 2019 level by the end of 2021, at $7.0bn. Zenith does not expect alcohol advertising to exceed the pre-pandemic peak until 2023 when it will reach $7.7bn.
“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.”
