How Can Beverage Brands Survive The Epidemic?

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How Can Beverage Brands Survive The Epidemic?How Can Beverage Brands Survive The Epidemic?

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?

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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.

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How Can Beverage Brands Survive The Epidemic?

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.

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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?

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

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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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