• Alcohol advertising spending across 12 key markets* will grow from $6.7 billion in 2020 to $7.7 billion in 2023.
  • Alcohol brands spend twice as much on television advertising as brands in other categories, but due to declining viewership, annual TV spending in the category is estimated to decline by 2.4%.
  • Alcoholic beverage producers quickly shifted to creating their own online content so consumers could continue to expand their brand experiences, which is usually the main driver of sales growth.
  • Digital advertising will account for 30% of alcohol advertising spending in 2023, compared to 21% in 2019.

Alcohol advertising spending across 12 key markets* will increase by 5.3% in 2021, outpacing the overall advertising market growth of 4.9%. Brands will be recovering from the sharp decline in 2020 – according to the "Business Intelligence - Alcohol: Beer + Spirits" report published by media agency Zenith. Alcohol advertising will then grow roughly in line with the overall market, at 4%-5% annually in 2022 and 2023.

From the perspective of the Polish market, beer has the greatest impact on the dynamics of the entire alcohol category, as it accounts for nearly 87% of the volume of all alcoholic beverages. Last year was not kind to the beer category in Poland for obvious reasons. The excise tax increase and negative effects such as the freezing of the hospitality sector and the lack of mass events were felt and resulted in a volume decline of 1.6%, albeit with a value increase of 3.1%, which can be explained by premiumization and the popularity of specialties and non-alcoholic beers (Nielsen data).

We estimate that in Poland, advertising spending for 2020 (net after discounts) in the category fell by 12% year-on-year, driven not only by business considerations but also by the need to postpone or reformulate some marketing campaigns whose communication axis was major sporting events (e.g., Euro 2020) or music events.

The pandemic forced a global shift of alcohol brand experience building to the internet

The pandemic moves alcohol brands online

Alcohol brands often cannot directly encourage the consumption of their own products. On the other hand, alcohol consumption is deeply rooted in the culture of every country and it seems this will not change quickly. Therefore, brands grow through premiumization, i.e., encouraging consumers to drink better-quality beverages rather than larger quantities. This is something that spirits brands have been more successful at than beer producers. According to Euromonitor International data, consumption of both beer and spirits did not change significantly between 2016 and 2019, but the sales value of beer grew by 3% annually, while spirits sales grew by 7%.

Premiumization means persuading consumers to choose higher-value products that provide better experiences by building brand image through mass communication. Alcohol brands therefore rely on television and out-of-home advertising, spending twice as much on TV as the average brand and nearly four times as much on outdoor advertising. In 2020, alcohol brands allocated 49% of their budgets to television, compared to 24% spent by the average brand, while 19% of spending went to outdoor advertising, compared to 5% for the average brand. This tactic has become less effective as audiences shift to digital media, although young consumers in particular are the most likely to visit a new bar or try a new drink.

Digital drives post-pandemic growth

The role of digital in the alcohol industry has grown significantly in recent years, and the COVID-19 pandemic has further accelerated this trend. The closure of hospitality venues forced brands to look for a new path in the market. Breweries, bars, and restaurants developed toward direct-to-customer delivery and takeout orders, which was certainly facilitated by e-commerce and digital media advertising, especially social media. As a result, alcohol brands increased their digital spending from 21% in 2019 to 24% in 2020. Seeking to create compelling brand experiences at home rather than in a bar, alcoholic beverage companies began investing in their own websites and educational content. Spirits brands were particularly prominent, using influencers and commercial partners to teach consumers, for example, how to mix their own cocktails.

"Spirits producers have overtaken beer brands in terms of sales value by offering more premium experiences and rituals related to their product and the way it is served" – said Ben Lukawski, Global Chief Strategy Officer, Zenith. "With the pandemic limiting the use of the HoReCa channel, we observed a greater emphasis by brands on delivering premium experiences at home through digital media."

Consumers are now much more aware of the available options for buying alcohol online, and alcohol brands have begun to have distribution networks capable of delivering it to them. Zenith predicts that brands will expand their digital advertising budgets to support alcohol's position in e-commerce, even after pubs and restaurants fully reopen, driving annual digital spending growth of 9.2% between 2019 and 2023, when digital advertising will account for 30% of advertising budgets across the entire alcohol industry.

How will alcohol advertising spending grow in Poland?

According to the forecast by media agency Zenith, alcohol brands will reduce their television spending by 2.4% annually through 2023, compared to the level recorded in 2019, as traditional television viewership continues to shrink. Meanwhile, the value of global outdoor advertising spending will grow by 1.1% each year, even taking into account the pandemic-related reduction in pedestrian and road traffic. The shrinking reach of television makes the ubiquity of out-of-home even more valuable.

Alcohol advertising will rebuild by 2023 after the 2020 decline

Alcohol advertising will rebound by 2023

Advertising spending in the alcohol industry shrank almost twice as fast as the entire advertising market in 2020, falling by 11.6% compared to 6.4% for the overall market; brand budgets were constrained by falling consumption, average price per drink, and profit margins. After bars, pubs, and restaurants closed, consumers drank less alcohol, and the beverages they consumed were purchased in stores, where they cost less, at significantly lower margins. This caused brands to sharply cut their marketing budgets to protect their results, and their total advertising spending fell from $7.6 billion in 2019 to $6.7 billion in 2020.

Brands are now restoring their budgets back to the market, as vaccination programs have encouraged consumers to go out and socialize again, and the hospitality, tourism, and hotel sectors have begun to reopen. However, the return to normalcy will be slow, and alcohol advertising spending will remain 8% below the 2019 level through the end of 2021, at $7.0 billion. Zenith does not expect alcohol advertising to exceed its pre-pandemic peak until 2023, when it will reach $7.7 billion.

Western Europe will see the fastest recovery after the sharp decline

Zenith forecasts that Spain, the United Kingdom, Germany, and France will be standout growth markets, with annual growth rates of 28%, 21%, 10%, and 8% respectively between 2020 and 2023. This is because these markets, where drinking in bars, pubs, and restaurants is an integral aspect of everyday social life, experienced the largest declines after lockdowns were introduced. In 2020, alcohol advertising spending fell by 52% in Spain, 48% in the United Kingdom, 22% in Germany, and 23% in France. The rapid recovery in these markets will mean that by 2023 they will return roughly to their 2019 levels.

"The alcohol industry has been hit harder by the pandemic than most other categories, which was reflected in the sharp decline in advertising spending last year" - said Jonathan Barnard, Head of Forecasting, Zenith. "The recovery will not be as dramatic as the slowdown, but investment in digital communication will drive steady growth in alcohol advertising for the next few years."

*The 12 markets included in the report are Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the United Kingdom, and the USA, which together account for 73% of total global advertising spending. It covers advertising for all types of beer and spirits in these markets.

 

Summary

According to the Zenith agency report, alcohol advertising spending across 12 key markets will grow from $6.7 billion in 2020 to $7.7 billion in 2023. The pandemic accelerated digital transformation – brands increased digital budgets from 21% in 2019 to 24% in 2020, and by 2023 this is expected to reach 30%. In Poland, the beer category, accounting for 87% of volume, recorded a volume decline of 1.6%, but a value increase of 3.1% thanks to premiumization.