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DATA: Reasons for the drinks industry to be cheerful

07 December, 2020

Surging sales in the US and Canada will drive the global drinks industry to a better than expected performance in 2020, according to new IWSR forecasts.

The data provider initially anticipated double-digit declines for the year after the Covid-19 pandemic swept across the world. However, dynamism within the ecommerce channel, soaring off-trade growth and on-trade resilience caused IWSR to review its projections. The firm now believes the global beverage alcohol industry will decline by just 8% year on year in 2020. The US and Canada will be the star performers, with both countries shrugging off challenging trading conditions to grow volume sales by more than 2%. IWSR crunched the numbers for 19 key markets, plus the global travel retail channel, to arrive at its updated projection. The key markets reviewed were Australia, Brazil, Canada, China, Colombia, France, Germany, India, Italy, Japan, Mexico, Poland, Russia, South Africa, Spain, Thailand, Turkey, UK, US. When combined with travel retail, that accounts for 75% of the global drinks trade.

“Given the incredibly tough measures the industry has continued to face due to Covid-19, it’s encouraging to see that beverage alcohol in the 19 focus countries is only projected to decline by 8% in 2020, rather than by the doubledigit losses originally expected,” says chief executive Mark Meek. “Excluding national spirits such as baijiu and shochu, total beverage alcohol in the 19 focus countries will recover to 2019 levels by 2024. We may see that recover even faster now, given the recent news on encouraging vaccine trials.”

Viagra maker Pfizer announced recently that its Covid-19 vaccine was more than 90% effective in preventing the virus. “Yes! Yes! Yes! YES! YES! YES! The little blue pill people give us something else to shout about…” said London’s Daily Star in its front page headline the following day. Pfizer has teamed up with BioNtech to develop the vaccine, which trains the immune system to fight the coronavirus. They completed a crucial Phase 3 clinical trial featuring 43,358 participants, and said that no safety concerns arose. Pfizer said it could produce 50m doses before the end of 2020, and a further 1.3bn in 2021. Each person requires two doses, so 675m people could have been vaccinated by December 2021. Four alternative vaccines from Moderna, AstraZeneca, Johnson & Johnson and Novavax have also entered Phase 3 trials, and could all be ready in 2021.

SEMBLANCE OF NORMALITY

There is now clear light at the end of the tunnel, and it suggests that life could return to a semblance of normality next year, sparking relief among beleaguered bar owners and travel retail operators. The US and China will remain the key drivers of growth in the alcoholic beverage industry. Markets in the US reacted positively to the news that Joe Biden had won the presidential election, and that the Republicans are likely to retain control of the Senate, resulting in a split Congress that should keep interest rates low. That all depends on two Senate runoffs due to take place in Georgia on January 5. If the Democrats flip both – a genuine possibility with Stacey Abrams mobilising African American communities to vote – they will seize control of the Senate, along with the House and the White House. Either way, there is hope that Biden will put an end to the costly tariff war between the US and Europe, which has damaged drinks sales on either side of the Atlantic. American whiskey exports to Europe are down 41% as a result of the trade war, while scotch whisky exports declined 34%. Biden is expected to undo much of Donald Trump’s work – he will re-enter the Iran nuclear deal and the Paris Climate Agreement, while doubling down on commitments to NATO – and ending the trade war could also be high on the agenda. Biden advisers say he will seek to end “artificial trade wars” with Europe and would immediately consult with US allies before deciding on the future of US tariffs on Chinese goods, in a bid for “collective leverage” against Beijing.

Keywords: IWSR




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Nick Strangeway

Bar food's blurred lines

Once upon a time pubs and bars were somewhere you went with the sole purpose of getting pissed and there wasn’t a knife and fork in sight, just a packet of dry roasted nuts.

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