When was the last time you went out for a beer? Odds are, it’s been a while.
“Beer occasions in general are impacted by COVID-19,” says Garett Senez, VP Marketing at Vancouver-based craft-beer distributor PACRIM Distributors. “The idea of going out to a bar or socializing with people is gone — and it will be gone for the next few months — which means drinking at home is now [key].”
“You rewind back to March of 2020 and, essentially overnight, bars and restaurants were shut down,” says Luke Chapman, interim president, Beer Canada. “In a typical year, those channels account for between 25 and 30 per cent of total beer sales in Canada [and they] were eliminated,” Chapman explains, noting these channels are yet to fully recover. “There was a pretty strong uptick in off-trade beer sales (retail sales for home consumption) somewhere in the range of 11 or 12 per cent. Unfortunately, that wasn’t enough to offset the elimination of on-trade sales in 2020.”
“It’s going to be a tough road for the [beer] industry in general, particularly for the next two to three years,” Senez adds. And, the beer industry was already facing challenges before the pandemic struck last year.
“There were some changing consumer-consumption patterns prior to COVID-19 — consumers seem to be looking more towards wine and hard seltzers are becoming very popular,” Chapman explains. “In some ways, COVID-19 has accelerated some of the changes in consumer demand and I anticipate that will continue into 2021.”
Senez notes that, while beer sales have been down, unit prices have been up. “That means premiumization is happening,” he explains, which lends itself well to the craft-beer movement. And, he points out, heightened interest in supporting local businesses has also benefitted craft beer.
However, the premiumization trend limits volume consumption because, as consumers trade up, they tend to consume less.
This also ties into consumers’ heightened focus on health and wellness. Senez highlights demand for “better-for-you” offerings as another key trend that has been influencing beer. As he explains, this has led to greater interest in low-calorie beverages, as well as a growing appetite for non-alcoholic beer.
As Chapman points out, low- and no-alcohol offerings have been a bright spot for the beer segment. “It’s still a relatively small segment of the Canadian beer market, but COVID-19 definitely has accelerated growth in that area.”
Not all Canadians have taken to the less-is-more mentality. At-home beer consumption still leans heavily to large-format packs, which means many are turning to domestic economy lagers from big breweries.
“In tough times people always buy beer and lipstick,” says Senez. “They’re small luxuries that people actually have a very high esteem value for.”
