When bars and restaurants nationwide shuttered in March because of the pandemic, the repercussions across several industries have been myriad.
For bars and restaurants, the shutdowns have been devastating. Many may never reopen. Millions of jobs were put on hold or lost altogether. And those that do reopen are facing a difficult journey back to whatever constitutes the new normal.
For beverage makers of all stripes — from big brewers to craft, from sparkling water to soda — the virtual overnight shuttering of the on-premise caused a massive shift in consumer demand patterns.
For brewers, the keg business all but disappeared and demand for bottles — a package that sells well in bars and restaurants — slowed as homebound drinkers stocked up on large packs of cans. It's presented an unforeseen hurdle, with consequences rippling across the industry, including a global shortage of cans and the paperboard used to package them.
Amid this fraught environment, they are concurrently facing another challenge: how to plan for the safe reopening of the on premise, an endeavor in which they must navigate heightened safety concerns, a raft of new guidelines and regulations and a consumer whose needs have undergone seismic changes in a matter of just a few months.
Here's a rundown of insights from research compiled and analyzed by Molson Coors Beverage Co. on what re-opening the on-premise may look like across the country:
After spending months sheltering in place under stay-at-home orders because of the pandemic, many drinkers are eager to get back to dining out or catching a cold beer with close family and friends at their favored watering hole.
And as they come back, they’re doing so with different expectations. Top of mind? Unsurprisingly, safety.
The lesson? Restaurants and bars with clear and visible health and safety measures will help bring drinkers back to the channel and back into their own accounts, says Mike Schouten, shopper insights manager for Molson Coors.
“It’s huge,” Schouten says. “About two-thirds of consumers say (enhanced safety and physical distancing measures) are a requirement for them to come back to the on-premise. It’s what consumers are looking for, and it’s going to be so important to drawing people in and getting them to return.”
Venues that start with local guidelines as a baseline and go beyond them with additional safety measures – and communicate them on their websites and social media channels -- will have the most success, Schouten says.
So safety is table stakes.
Drinkers want information before they show up
During the pandemic, the migration to digital has accelerated, with consumers relying on retailers’ websites and social media sites more than before. They want to know whether and when they’re open, what’s on offer, whether they can order takeout or delivery. That’s a trend that’s expected to stick beyond the coronavirus, Schouten says, with more than 70% of consumers saying they plan to use digital media more often to plan their on-premise visits.
Consumers coming back now are all-in
“No question people are excited to come back,” Schouten says. “So far, we’ve seen about a third of consumers come back, and repeat visits are high.”
About 80% of drinkers who have visited a restaurant or bar since restrictions began report they’ve gone two or more times since. A majority of these drinkers are legal-age 20- and 30-somethings.
When they come back, they want a drink – at a value
The pandemic has caused an unprecedented spike in unemployment and record jobless claims across the U.S. That carries an undeniable effect on drinkers’ budgets, and many are expected to prioritize value when returning to the on-premise.
The most cost-conscious consumers will shift to seeking more affordable options than before, but some will continue buying more premium products, Molson Coors research shows. “For them, value might be about feeling good about spending a couple of extra dollars to upgrade their drink while they’re cutting back in other areas,” Schouten says.
For bars and restaurants, that means paying close attention to assortment.
And, while many consumers itching to get a fresh pint of draft beer, with safety front-and-center, some consumers feel more comfortable with bottles and cans. So stocking them “is going to be critical in the short-term,” Schouten says.
With foot traffic down, retailers should focus on high-volume brands
Bars and restaurants are opening, but in most cases, they’re not able to open at full capacity. With foot traffic down – and expected to stay there at least for the immediate future – retailers should focus on segments that drive the most volume, says Samantha Werner, Molson Coors regional operations manager for the on-premise.
The top 10 beer brands drive 60% of on-premise revenue and appeal to more than 85% of drinkers, Molson Coors data show. That’s a trend amplified by the pandemic, with some 70% of consumers saying they gravitated some of their consumption toward familiar, trusted brands such as Miller Lite, Coors Light and Blue Moon.
But, Werner notes, some consumers are still seeking an indulgence, which is why above-premium brands in craft, imports, seasonals and seltzers also are an important part of the assortment.
Supply constraints remain an issue
With more drinkers buying beer to consume at home, demand for cans exploded in March and remains at historic levels, says Brian Erhardt, chief supply chain officer at Molson Coors. That’s resulted in a global shortage of cans for all beverage suppliers, as well as a shortage of the paperboard used to package them.
“While we are producing and shipping 12-ounce cans at a level well ahead of any year in recent memory, we continue to have constraints,” Erhardt said in a recent note to beer wholesalers and sales reps. “The reality is we simply cannot accommodate all orders that are coming in at nearly double our suggested levels.”
The shift to cans spans across all consumer packaged goods. Can sales in the beer industry were up 5.3% in 2019, but rose over 27% in the 8-week period ending May 3, per Consumer Edge Research. In carbonated soft drinks, the number of cans has fallen in each of the past three years, but rose 24% in the 8-week period ending May 3. “There is no way anyone was planning for what has occurred in 2020, and can supply can’t sustain these levels of growth,” said Consumer Edge’s Brett Cooper, in a recent note to clients.
Although Molson Coors and other beverage companies worked with suppliers to acquire as many cans as they could – importing them to the U.S. from countries across the globe including Saudi Arabia, Brazil and Mexico – it still hasn’t been enough to meet demand.
While the pandemic has been devastating to the on-premise, it offered a chance to reset
“We had the opportunity to reset, and it was the perfect time to get back to basics,” says Hilary Jamieson, director of shopper marketing for the on-premise at Molson Coors. “This is all rooted in consumer insights, category management and Marketing 101. We need to get the right brands at the right price in place, and once we have that, we’ll help our retail customers drive profitable category growth.”