How Can Beverage Brands Survive The Epidemic?

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Data from Kantar Worldpanel’s out-of-home panel research during 2019 reported almost 20% of total out-of-home beverage market volumes were consumed at dining occasions during the month of Spring Festival. With consumers choosing to stay at home to help limit the spread of the virus how can brand owners find a way through this tough time?

How about this year given the rising challenges presented by the coronavirus outbreak? A recent survey conducted by Kantar Worldpanel shows that over 60% of consumers in Tianjin have cancelled their traditional family reunion dinner for the New Year as most people choose to stay at home to help limit the spread of the virus. This would inevitably generate a significant impact on catering and the out-of-home beverage market. Many beverage manufacturers would also face severe challenges in production and sales during the first quarter.

To learn from past experience, Kantar Worldpanel reviewed the beverage purchase behaviour during the SARS epidemic in 2003, to try and help brand owners find a way through this tough time.

How Can Beverage Brands Survive The Epidemic? - Brand Spur

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Category Strategy: Packaged water and sweet drinks “fight” against epidemic together

Although the out-of-home beverage market would inevitably be affected by the epidemic, the demand for in-home consumption was strong. Dairy (as mentioned in our article last week) and packaged water are well placed to meet consumers’ demand during times of significant health concerns.

Kantar Worldpanel revealed that during the outbreak period of SARS in 2003, the demand for packaged water grew rapidly, especially in Beijing. Due to many families stocking up during that period, the purchase volume of packaged water increased by 21% in the three months of March to May in 2003.

This year, many doctors and health experts suggest that people should drink more water to enhance their immunity. Therefore, the search volume of the keywords “drinking water” +” immunity” has greatly increased on Baidu.

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17 years ago, phone ordering water to the home was still the mainstream. We have observed that during SARS, the pack size of the packaged water stocked was still dominated by above 5 litres of barreled water, accounting for 90%. Now, there are more options for pack size and more diversified usage occasions for packaged water.

How Can Beverage Brands Survive The Epidemic? - Brand Spur

In recent years, the penetration rate of packaged water (5 litres and below) has reached 86% within the in-home market. It is possible that those who do not have a drinking fountain or those who did not have the habits of consuming packaged water at home before may start to choose packaging water less than 5L during the coronavirus epidemic. This could be an opportunity for manufacturers to increase the production of packaged water and proactively expand their sales network to provide convenience for consumers and stimulate purchase.

In terms of sweet drinks, such as carbonated soft drink or fruit juice, they either declined or witnessed a slow down in sales during the outbreak of SARS. Although sweet drinks seem to be less relevant to defend against an epidemic fight, opportunities do still exist if manufacturers and retailers can break conventional thinking.

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How Can Beverage Brands Survive The Epidemic? - Brand Spur

According to cross-category analysis, Kantar Worldpanel found that during the SARS period, consumers did not curb their desire for snacks. To some extent, sweet drinks and snacks are similar, both are attributed as ‘indulgent’ and ‘joyful’, which can bring happiness, alleviate boredom and help relieve anxiety during the epidemic. In the past two weeks ‘quarantining’ in the house as led to many netizens making bubble tea themselves in order to satisfy their craving for it.

Opportunities for sweet drink brands exist if they can communicate with consumers about diversified in-home drinking moments such as joyful and relaxing moments via short video and other social media during the epidemic.

Channel  Strategy: Ride on the trend of e-commerce and new retail to seize the opportunity resulting from increased demand for home delivery

Due to higher logistic transportation costs, the e-commerce channel is still not a large channel for packaged beverages with only 8% of the annual sales coming from e-commerce during 2019. For most beverage manufacturers, e-commerce is more like a platform for brand building and consumer communication. The epidemic this year affected a wider area than SARS, with restrictions for residents to go out to limit the spread of the virus. This combined with the obvious health and safety concerns means many families will prefer to purchase via e-commerce or home delivery service platforms until the epidemic subsides. Many consumers will only consider a trip to their local supermarket or convenience store when the e-commerce platform runs out of stock.

Many beverage manufacturers are facing the issue that the products they have distributed to offline channels before Spring Festival may now be overstocked. They could seize the opportunity to leverage home delivery service platforms or fresh food e-commerce. On one hand, this way could help activate their inventory, on the other hand, they could create more specific usage occasions to help recruit new buyers. Packaged water can be bundled with fresh food to remind consumers to use packaged water when cooking or snaking brands can promote ‘happy snack sets’ to help reduce anxiety and create new occasions.

In addition, many enterprises have resumed work with employees returning to the office this week. Generally, some white-collar consumers used to go to restaurants or fast food stores around the company for lunch. Now for safety reasons, many companies suggest employees not to have meals together, hence self-made meals and food delivery will continue to be in high demand until the epidemic is over. Many large catering enterprises consider food delivery service is essential to recover their business during this tough period. Beverage players could also seize the opportunity by cooperating with catering businesses.

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How Can Beverage Brands Survive The Epidemic? - Brand SpurHow Can Beverage Brands Survive The Epidemic? - Brand Spur

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How Can Beverage Brands Survive The Epidemic? - Brand SpurHow Can Beverage Brands Survive The Epidemic? - Brand Spur

Latest News

Asia Pacific Rayon Raises US$300m from National and International Affiliated Banks to Expand Production Capacity

  • Continued capital expenditure aims to boost production and support the recovery of Indonesian economy
  • Loan agreements aligned with Indonesian Government's strategy to drive investment growth in 2021
  • APR is a member of the RGE group of companies

JAKARTA, INDONESIA - Media OutReach - 12 April 2021 - Asia Pacific Rayon (APR), the largest integrated rayon fiber producer in Indonesia, today announced that it has secured a syndicated loan facility of Rp 4.5 trillion (US$300 million) with national and international affiliated banks. The funding will be used to support continued capital investment in the company's production facilities at Pangkalan Kerinci, Riau Province, Sumatra.

APR is vertically integrated through its supply chain, from renewable fiber plantations to high-value textile development. It commenced operations in 2019 and was formally inaugurated by President Jokowi Widodo in February 2020. APR plans to increase its production capacity over the coming year to capture the strong growth potential of viscose staple fiber (VSF), strengthening its market position in Indonesia and in export markets across the region. APR is a member of the RGE group of companies. Founded by Sukanto Tanoto, RGE manages a group of resource-based manufacturing companies with global operations.

The syndicated loan participating banks are PT Bank Rakyat Indonesia (Persero) Tbk, PT Bank Central Asia Tbk, PT Bank Pan Indonesia Tbk, PT Bank Pembangunan Daerah Jawa Barat, PT Bank Woori Saudara Indonesia 1906 Tbk and PT Bank KEB Hana Indonesia

The joint mandated lead arrangers and bookrunners for the syndicated loan are PT Bank Rakyat Indonesia (Persero) Tbk, PT Bank Central Asia Tbk, and PT BANK Pan Indonesia Tbk.

Basrie Kamba, Director, Asia Pacific Rayon, said: "This funding will be used to support continued investment in our operations in Kerinci. Rayon fiber, or viscose, is a textile raw material derived from sustainably managed plantations. As rayon is both renewable and biodegradable, it supports the trend towards sustainable fashion in Indonesia and in other markets around the world."

APR's planned expansion is aligned with the Indonesian Government's strategy to increase investment and boost employment to support the recovery of the country's economy and address the continued impact of the COVID-19 pandemic. Following the passing into law of the Omnibus Bill in October last year to streamline investment and stimulate job creation, President Widodo said last month that investment would be the key factor in achieving 5% economic growth in 2021.

"This loan facility and our continued investment in our operations are evidence of the growth potential of the viscose rayon sector in Indonesia and around the world. We are committed to supporting the Indonesian Government's efforts to improve the investment climate in export-oriented manufacturing industries, and its efforts to create upstream jobs in plantations and the processing of raw materials, and downstream opportunities in textile factories and related businesses," said Basrie.

Hari Setiawan, Executive Vice President of PT Bank Rakyat Indonesia (Persero) Tbk said : "As Representative of JMLAB and all lenders, I hope this collaboration will be useful to support the growth and development of PT Asia Pacific Rayon in increasing production and operations and also supporting the recovery of Indonesia's export growth."

"Support from BCA and other Banks reflect our confidence in APR, and as our contribution to promote a sustainable and environment friendly industry. We hope this cooperation will tighten our relationship as well," said Susiana Santoso, Executive Vice President of PT Bank Central Asia Tbk.

About Asia Pacific Rayon

Asia Pacific Rayon is the first fully integrated viscose rayon producer in Asia. Located in Pangkalan Kerinci, Riau, the company uses the latest production technology to produce high-quality rayon to meet textile needs. APR is committed to becoming a leading viscose rayon producer with the principles of sustainability, transparency and operational efficiency, serves the interests of the community and the country, and provides value to customers. APR is part of the RGE (Royal Golden Eagle) group of resource-based manufacturing companies. Sustainability is fundamental to APR. The APR Sustainability Policy, updated in September 2020, include additional commitments on pulp sourcing and clean manufacturing.

About RGE

RGE Pte Ltd manages a group of resource-based manufacturing companies with global operations. Our work ranges from the upstream, comprising sustainable resource development and harvesting, to downstream, where our companies create diverse value-added products for the global market. Our commitment to sustainable development underpins our operations, as we strive towards what is good for the community, good for the country, good for climate, good for customer, and good for company. RGE was founded in 1973. The assets held by RGE companies today exceed US$20 billion. With more than 60,000 employees, we have operations in Indonesia, China, Brazil, Spain and Canada and continue to expand to engage newer markets and communities.

How Can Beverage Brands Survive The Epidemic? - Brand Spur
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