The spending habits of Australian shoppers during 2020 hold powerful insights for liquor growth in 2021, according to a new white paper released by IRI – Collaborating in a Brave New World: 2021 FMCG Outlook.
“Challenging as it has been, 2020 fostered widespread resilience and a sense of community that has changed our behaviours,
society and nation forever,” IRI notes.
“We fought for each other, we fought for our environment, fought for our producers and suppliers – and we came through. Pride in provenance, commitment to making our products safer and easier to obtain and innovating to ensure delivery, availability, connection and entertainment all came to the fore. And they will carry through 2021.”
The drinks Aussies loved in 2020
As lockdown curbed on-premise visits consumers moved their money to retail liquor, spending more than $20 billion as our homes became our entertainment hub, restaurant and bar
The $4.7 billion glass spirits category topped off-premise peaking at 31.3% growth, with gin the primary driver.
“We treated ourselves to speciality cheeses and Champagne – the latter popping the cork by 32.5%,” IRI adds.
“We also got crafty with cocktails by experimenting with spiced rums and single malt Scotch, while pre-mixes surged RTD sales by over 19%.
“And no longer a niche, Aussie craft beers soared by 41.9% as we barbequed in our backyards and saluted the return of the footy on TV. Our desire to reconnect and savour the summer will help ensure 2020 stands out as an outlier year for off-premise sales with breakthrough product innovations like hard seltzers well placed to capitalise in the key festive summer trading period.”
How retail & FMCG must respond in 2021
The data analytics and market research company predicts brand purpose will be front and centre for consumers as the shadow of COVID-19 recedes and focus returns to sustainability
IRI says the “catastrophic bushfires delivered an unprecedented wake-up call-to-action for the nation at large”.
“Brands, manufacturers and retailers must view sustainability as a strategic core pillar underpinning widespread opportunities to generate commercial growth beyond market averages,” IRI advised.
“To that end, stakeholders must ensure that pandemic-induced operational challenges do not compromise sustainability goals and outcomes. Actual market dynamics prove that sustainably marketed products outperform conventional products. Retailers and brands will be held to account and must adopt a multi-faceted approach to sustainability for relevant and meaningful action.”
Online is the new frontier in liquor growth
Ensuring e-commerce shopper loyalty and market share is key to liquor growth in 2021 according to IRI.
More than eight in 10 Australians shopped online in March at the outset of the pandemic meaning most of us are now familiar with – and at relative ease of – buying many more products online.
“The opportunity to capture e-commerce shopper loyalty and market share is now the new frontier of competition between the key retailers,” IRI said.
The pull power of private label
IRI predicts the ongoing economic slowdown will not only impact the performance of various consumer categories but is likely to encourage greater consumption of private label offerings by valueconscious Australians.
“During the GFC, private label outperformed branded products by 10.8% in the second quarter of 2008 alone – and the range, quality and proliferation of private label has changed significantly over the last 12 years.”
“Private label risk to brands is high when differentiation and loyalty are low and financial incentive is strong. To overcome these challenges, it’s critical to understand price elasticity within specific segments – you can’t price effectively without it. Manufacturers must boost value beyond price to give shoppers a reason to purchase brands with a genuine connection that they feel cannot be replaced by a store branded product.”
To retain market share, IRI suggests manufacturers focus on:
• building connection with authentic, specific and credible claims around the unique aspects of your product
• using price to develop and strengthen brands – price wars only devalue brands and force a longer recovery
• expanding price range architecture to smaller affordable packs or cost-per-serve saving packs.
“We are living in the most uncertain of economic times and facing a new financial crisis, but the fair-go attitude of Australians driving resilience and adaptability to change, and sense of community and purpose will hold us in good stead,” IRI concludes.
“Manufacturers and retailers that take the same approach with a digital and sustainable lens will lead in the brave new world. To win, collaborating along every link in our supply chain and investing in the understanding and delivery of the needs of every Australian shopper will be the lynchpin of success.”