Alcohol industry not expected to rebound until 2024, industry group finds

IWSR Drinks Market Analysis CEO Mark Meek joins Yahoo Finance’s Zack Guzman to discuss why global beverage alcohol consumption won’t rebound until 2024.

Video Transcript

ZACK GUZMAN: As we've been highlighting over the last few weeks. The coronavirus pandemic has hit restaurants particularly hard when you look into the data. And that's shifting the way that Americans and people around the globe really have been consuming alcohol. Specifically there, when you look at the data that we're seeing now, one major data tracking firm says that global beverage alcohol consumption is not expected to come back to what it was before for at least five years' time. That's a long time for things to return back to normal.

And for more on that, we're joined by the CEO of that data analytics team, IWSR Drinks Market Analysis. CEO Mark Meek joins us now. And Mr. Meek, I mean, when we look at this, I guess we were expecting a slowdown, but maybe not one that would take five years' time to get back to normal. And so how is that playing out right now across the globe?

MARK MEEK: Hey. Hi, Zack. Good to speak to you, and thanks for having me on the program. So the first thing to point out is-- actually, it's interesting to look at this upcoming downturn versus 2008. And the first key difference to point out is, in 2008, for global beverage alcohol consumption, pretty much across all markets and all channels, it was very much a kind of a V-shaped downturn and then very, very quick upturn. So

Whilst we are predicting, you know, in volume terms that it's going to take five years to come back, pretty much across the globe, actually as things start to normalize, whether it's travel, bars, and restaurants start opening, you know, pretty much in every market we're tracking we are saying that there will be an uptick. But it won't be the V shape we saw in 2008, and it'll be more-- as we're sort of describing it, more a Nike-shaped type of upturn. So the right-hand side of the V, if you like, is going to take longer than we saw in 2008.

There are markets as well which are going to prove a little bit more resilient than others. So actually, the US, according to our predictions and forecasts, will come out relatively unscathed. And the key reason behind that is the US is relatively unique in the strength of sales and volumes that you have through your key retailers and liquor stores and e-commerce. In a lot of ways, it's outweighing the negative effect and the downside from all the bars and restaurants being closed.

ZACK GUZMAN: Yeah.

MARK MEEK: So the US is quite a different thing.

ZACK GUZMAN: I mean, you don't got to tell me about it, the way that we've got a lot of liquor stores around here, here in New York. I've definitely noticed that. But when we look into which specific alcohol spirits and other categories might be a little bit in better position to withstand all this, we have noted that seltzer sales continue to be robust, and that's something that you guys are also seeing. What other markets, in terms of whiskey, gins, everything else, might be able to fall in a similar camp?

MARK MEEK: OK, so in terms of what's doing well in the US and-- for example, if we talk about the US, is US whiskey, you know. So that is doing well. And any spirits that is relevant to local markets-- so whether it's scotch here in the UK, whether it's Baiju, which is a massive spirits drink in China-- any local spirits or local beers-- or hard seltzer, actually, is pretty local to the US-- are doing pretty well in their local markets.

Where brand owners and categories struggle is the ones that have a real international exposure. Scotch is an example. So that will go back into growth, but it's going to take a longer time. Champagne is another example-- sparkling wine and wine in particular. So categories that have quite a big international footprint going to take longer to come out of this downturn. And the ones that have a very strong local presence and footprint, they're going to do better.

ZACK GUZMAN: Yeah. Well, I mean, you mentioned champagne, and that might be the saddest alcohol story-- sub-story-- to come out of this as well, because we've seen reports that global champagne sales are about to be-- are expected to come down by about a third because there are so few things to celebrate so far in 2020. I don't know if that'll nec-- I pray that that'll change in 2021, but I'm not entirely sure. I mean, is it really that simple to say, yeah, champagne sales are weak because people are very sad right now?

MARK MEEK: So look, you know, there is-- in certain markets, there's a link between celebration and champagne. But actually, in its home market, it's more actually almost an everyday drink. And France is the biggest market for champagne. So look, you know, there's a lot of gloomy forecasts, and I saw those numbers that were produced by the trade body that represents champagne. So there's some gloomy numbers out there in terms of champagne. Actually, we think it's a little less gloomy, and we think actually sparkling wine is more of a steep decline. And I'll talk to that in a second.

Now, why do we think champagne, whilst will still struggle in the short term, is less gloomy, as I say, than those forecasts that you reference to, is the first thing to note is that actually more than 50% of champagne sales are in the last three months of the year. And hopefully we're going to be in a better position in terms of handling this virus by the time we come-- I mean, if there's a second spike or better off.

So the numbers that they are referencing is the first sort of five months of the year, and that's less than 30% of champagne sales.

ZACK GUZMAN: Got it.

MARK MEEK: So the key will be what happens in the second half of this year. So actually, yes, not great, but less gloomy.

ZACK GUZMAN: All right, there you go. I always end-- I always enjoy ending segments on a little bit less gloomy note. But appreciate you sharing the time with us, Mark Meek, IWSR Drink Market Analysis CEO. Appreciate you chatting with us.

MARK MEEK: Thank you very much, Zack. Thank you. Bye, bye.