How Australia’s liquor industry has pivoted through Covid crisis

The pandemic has been a mixed bag for the liquor industry. On-premise channels have been particularly hard hit, while despite operational pressures the off-premise has ultimately benefited from consumer stay-at-home orders.Retailers and venues have had to reconsider and adapt their business models. And some of what’s changed is likely to stick.At the time of writing, there was effectively a two-speed economy, with NSW and Victoria in lockdown and most of the rest of the country operating something akin to “normally”.E-commerce channels expandIn lockdown states, at the time of writing Dan Murphy’s online standard two-day delivery was at capacity, with only express delivery or click-and-collect offered.E-commerce adoption and acceleration have, of course, been one of the pandemic’s big retail stories. In the liquor industry, it is taking a number of forms.There’s been an increase in independent stores doing their own deliveries. And in brands delivering direct to consumer (D2C). And not only the big brands. A number of craft brewers not only offer curbside pickup but deliver four-packs and six-packs, not just cases, to consumers using their sales teams, particularly if the sales representatives are not able to be out on the road calling on accounts. Sales teams are being repurposed when they aren’t “couch repping” (working from home, calling accounts on the phone to take orders).In wine, where wine clubs (phone, email and mail order) have been a longstanding sales channel particularly important for smaller producers, D2C e-commerce has likewise ramped up along with click-and-collect to become integral revenue streams. Some wineries offer consumers free shipping for “lockdown packs”.And the consumer propensity to buy and support local and small businesses has seen the growth of organisations specialising in ranging small producers, with companies such as Love and Other Drinks joining the likes of Naked Wines. Love and Other Drinks was itself borne of the closure of its Stag Hotel premises in Adelaide during lockdowns and served as a way to continue to support both producers and hotel staff.On-premise gets in on the actIn the absence of being able to open their doors to the public, on-premise venues have joined the click-and-collect and home delivery action.Independent hotels and restaurants, including upscale eateries, started offering pickup and delivery during 2020 and this has continued, and is likely to. Takeaway and delivery food service is the primary income stream for locked down pubs still operating, and a number are offering food and beverage bundles such as “beer and burger” deals for pickup orders. In 2020, pub and restaurant group Merivale offered consumers an upscale version of Marley Spoon, with restaurants such as Mr Wongs providing recipes and instructions in a make-at-home format. (At time of writing this appeared to have been replaced with pickup and delivery). Taking it a step further, in July “finish at home” (heat and plate up) upscale restaurant marketplace provider Providoor launched in Sydney with 34 restaurants after nearly 12 months of operation in Melbourne. It offers delivery for a $16.50 fee or click-and-collect.A number of bars have taken a similar tack, making and delivering cocktails to consumers who don’t want to make their own.And some restaurants, such as Sydney’s landmark Italian restaurant Pendolino, are selling off their wine cellars, effectively functioning like an upmarket Jimmy Brings.Brands have continued to support on-premise operators with programs such as keg buybacks.Product innovations for pandemic occasionsHow do you get consumers to try new products when in-store tastings and product demonstrations are not available? Send samples to their homes. In times gone by this would have been, for appropriately sized items, sachets arriving in the mailbox. Now it’s a free sample provided with a current purchase, eg “buy a four-pack and get a free X to try”. Or via partnerships with retailers for e-commerce orders. Naked Wines vouchers have been appearing in Amazon boxes for a couple of years, but brands are now looking to provide actual product samples. From the retail customer standpoint, suppliers encourage retailers to range a new product with deals such as Bridge Road’s offer of a free case of their non-alcoholic beer with any on-premise keg purchase.Combined with consumer caution, continuing limitations on on-premise venue capacities means outdoor events are on the rise, and eco- and picnic-friendly new products such as Greenskin Wine’s 750ml recyclable soft pouches fit the bill.And irrespective of lockdown status, no and low alcohol and “better for you” options continue their relentless march. In spirits, New Zealand brand Finery’s alcohol-free cocktails launched in Australia to add to home-grown Lyres and Diageo-owned Seedlip alcohol-free spirits. Diageo’s Gordon’s Gin very recently introduced its first alcohol-free product in Australia. Space on supermarket shelves for non-alcoholic wines, beers and ciders has increased significantly. And the “nolo” movement has thrown up some new specialty retailers such as Sans Drinks and Craftzero.So what is likely to stick? Nolo products will continue their upward trajectory as they tap into the broader consumer wellbeing trend. Contactless delivery, as in all aspects of retail, will continue to be an expectation as part of elevated e-commerce sales. Supporting local businesses will likely continue to an extent, and restaurants and cafes may choose to continue pickup and delivery as sources of channel revenue.