Alcohol brands devoted 49% of their budgets to television in 2020, compared to 24% for the average brand
Ad spends on digital media increased from 21% of budgets in 2019 to 24% in 2020
Spends on alcohol advertisements in 12 key markets, including India, will grow by 5.3% in 2021, ahead of the 4.9% growth of the ad market as a whole, as brands recover from a steep drop in 2020, according to a report by media agency Zenith published on Monday.
Alcohol advertising shrank nearly twice compared to the overall ad market in 2020. It fell 11.6% compared to 6.4% of the market as a whole. The findings said that brand finances were squeezed by reductions in consumption volume, the average price per drink, and profit margins. The combined ad spend in the category fell from $7.6 bn in 2019 to $6.7 bn 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 8% below the 2019 level by the end of 2021, at $7 billion. Zenith does not expect alcohol advertising to exceed the pre-pandemic peak until 2023, when it will reach $7.7 billion.
The report said that alcohol advertising will grow roughly in line with the market, with 4-5% annual growth in 2022 and 2023.
The pandemic has forced the alcohol brand experience to move online.
Brands have also grown through a process of premiumisation -- getting consumers to drink better instead of drinking more.
Alcohol brands, therefore, 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% of their budgets to television in 2020, compared to 24% for the average brand, and 19% to out-of-home advertising, compared to 5%. This tactic has become less effective as audiences shift to digital media, though, particularly the young consumers are most likely to visit a new bar and try out a new drink.
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 21% of budgets in 2019 to 24% 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 own cocktails.
“Spirit brands have surpassed beer brands in terms of sales value by offering more premium experiences and rituals around their product and serve," said Ben Lukawski, global chief strategy officer, Zenith. “With the pandemic taking audiences away from the on-trade we have seen a greater emphasis on bringing these premium experiences in 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 e-commerce even after pubs and restaurants are fully open, fuelling 9.2% annual growth in digital ad spend between 2019 and 2023, when digital advertising will account for 30% of alcohol advertising budgets.
Zenith predicts alcohol brands will reduce their expenditure on television by 2.4% 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 1.1% a year, even taking into account the pandemic-induced reduction in foot and road traffic.
The 12 markets included in this report are Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK and the US, which account for 73% of total global ad spend.
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