People visit the M&M store in Times Square in July in New York City.
Spencer Platt | beautiful pictures
The Covid-19 pandemic has dramatically changed consumer behavior from where they buy to what they buy. That’s already being felt in the snack and spirits industries, and some of those habits already exist, Beam Suntory and Mars Wrigley senior executives said at CNBC’s Global Development Summit.
Jessica Spence, president of the Beam Suntory brand, which makes a variety of spirits, from bourbon whiskeys like Jim Beam and Maker’s Mark to cognac Courvoisier and tequila Sauza, says it’s “surprised that you can’t go to the restaurant you love. If your favorite or the holidays are off balance, spending a little more on that bottle of whiskey or tequila becomes a bigger gift.”
That’s led to more consumers switching to higher-priced or “premium” brands, Spence says, a trend that continues. She also noted a boom in e-commerce sales, particularly in the US, where online shopping for alcoholic beverages has lagged in the past. According to spirits industry market analysis firm IWSR, among people who buy alcohol online in the US, 54% say they are making their first purchase during the pandemic.
Perhaps the biggest boom has come in the form of cocktails and ready-to-drink beverages.
“There were a lot of people experimenting and having time to enjoy cocktails, and a lot of people realizing they weren’t the best bartenders in the world,” says Spence. “When you want that cocktail, you probably don’t want to do all the hard work.”
Mixed cocktails are last year’s fastest growing spirits category with revenue growth of 42% year-on-year to $1.6 billion, compared with 30% growth for tequila and mezcal and 16% for Irish whiskey, according to the Spirits Council of the United States
Ready-to-drink cocktails are second only to vodka in terms of consumption in 2021, and several major spirits companies have invested further in this category with the expectation of further growth. For example, Anheuser-Busch InBev bought Cutwater Spirits, while Diageo features ready-to-drink cocktails using alcohol from its brands such as Ketel One Botanical and Crown Royal.
Beam Suntory has several drink options available, including the On The Rocks cocktail, which uses some of the company’s other spirits such as Effen vodka and Hornitos tequila.
“That is something that will continue and innovation in that space will continue to grow,” Spence said. “It’s a tough category already, but I think there’s still room to push it up a notch.”
Anton Vincent, President of Mars Wrigley North America, said the candy industry has also seen a shift in consumer behavior.
While some of those are high-end as shoppers look for different candies or chocolates, one of the main trends is that people buy larger packages of candy when they’re at home, Vincent said.
Vincent said that as the pandemic has subsided, sales at convenience stores have returned to normal levels, but the company is still seeing the power of e-commerce and other types of sales channels, which it does. he thinks indicates a larger shift in attitudes towards small snacks like candy bars.
“I think people are really getting back in touch with treating themselves … in very small and cheap ways,” he said.