People visit the M&M store in Times Square in July in New York.
Spencer Platt | Getty Images
The Covid-19 pandemic has dramatically changed consumer behavior from where they shopped to what they bought. It’s been felt across the snack and spirits industries and some of those habits have stuck, senior executives from Beam Suntory and Mars Wrigley said at CNBC’s Evolve Global Summit.
Jessica Spence, brand president of Beam Suntory which produces a variety of spirits, from bourbon whiskeys like Jim Beam and Maker’s Mark to Courvoisier cognac and Sauza tequila, said that “suddenly when you couldn’t get out in your favorite restaurant where the holidays were unbalanced, spending a little more for that bottle of whiskey or tequila became a greater pleasure.”
Spence said that led many consumers to switch to more expensive brands or “premiumization,” a trend that has continued. She also noted the boom in e-commerce sales, particularly in the United States, where online alcohol shopping has lagged in the past. Among online alcohol shoppers in the United States, 54% said they made their first purchase during the pandemic, according to the spirits industry market analysis firm IWSR.
Perhaps the biggest boom has come in the form of pre-mixed, ready-to-drink cocktails and drinks.
“There were a lot of people who experimented and had time to have fun with cocktails, and there were a lot of people who realized they weren’t the best bartender in the world,” Spence said. “When you want that cocktail, maybe you don’t want to do all the hard work.”
Pre-mixed cocktails were the fastest growing spirits category last year with 42% year-over-year revenue growth to $1.6 billion, compared to 30% growth for tequila and mezcal and 16% for Irish whiskey, according to the United States Distilled Spirits Council.
Ready-to-drink cocktails were second only to vodka in volume consumption in 2021, and several major spirits companies have further invested in the category with expectations of further growth. For example, Anheuser-Busch InBev bought Cutwater Spirits, while Diageo offers ready-to-drink cocktails using alcohol from its brands such as Ketel One Botanical and Crown Royal.
Beam Suntory offers several ready-to-drink options, including On The Rocks cocktails, which use several of the company’s other spirits, such as Effen vodka and Hornitos tequila.
“It’s something that’s going to continue and the innovation in this space is going to continue to grow,” Spence said. “It’s already a tough category but I think there’s still room to push it further into the high end.”
The confectionery industry has also seen changes in consumer behavior, said Anton Vincent, president of Mars Wrigley North America.
While part of that was premiumization as shoppers searched for different types of confections or chocolates, one of the main trends was people buying bigger packets of candy while they stayed at home, a Vincent said.
Vincent said that as the pandemic subsided, convenience store sales have returned to normal levels, but the company is still seeing strength in e-commerce and other types of sales channels, which he said. him, indicates a more important change of point of view towards small snacks such as chocolate bars.
“I think people have really reconnected with themselves…in a very inexpensive way,” he said.