As brands push premium, global alcohol ad spend to rise $1bn by 2023

The outlook

• Alcohol ad spend across 12 key markets including the UK, US and Russia is forecast to jump 5.3% in 2021, outpacing 4.9% growth for the ad market as a whole.

• The projection, outlined in Zenith’s Business Intelligence – Alcohol: Beer + Spirits report, then expects alcohol advertising to fall into line with the broader market, experiencing between 4% and 5% annual growth in both 2022 and 2023.

• Faced with a broadly stagnant market, the consumption of beer and spirits saw no growth between 2016 and 2019. Brewers have opted to focus on quality not quantity, with the value of beer sales jumping 3% and spirit sales up 7% over the same period.

• This vindicates a strategy of premiumization, which has seen drinkers persuaded to upgrade their choice of tipple to more expensive variants by focusing on brand image and communication.

An industry in flux

• Alcohol brands are of particular importance to television advertising, spending twice as much (49%) on the medium as the average brand (24%) through 2020, but have been steadily scaling back spend as audiences shrink, trimming budgets by a further 2.4% this year.

• This divergence is even more pronounced in the out-of-home sector, where alcohol brands devoted 19% of their budgets versus just 5% for non-drinks brands.

• Alcohol brands are thus left playing catch-up with other brands as they seek to reorient themselves with a greater emphasis on digital advertising. Such pivots are expected to see digital advertising account for 30% of all alcohol spend in 2023, up from just 21% in 2019, on the back of 9.2% annual growth.

• This trend echoes a notable migration among spirit brands to online platforms in a bid to help customers wishing to recreate the brand experience while stuck at home.

• Ben Lukawski, global chief strategy officer at Zenith, said: “Spirit brands have surpassed beer brands in terms of sales value by offering more premium experiences and rituals around their product and serve. With the pandemic taking audiences away from the on-trade, we have seen a greater emphasis on bringing these premium experiences in home through owned digital content.”

• Alcohol advertisers must now play a smarter game to reach footloose consumers who have been procuring alcohol online while pubs and restaurants were out of action – a shift likely to continue even as the economy reopens.

• As a consequence it is expected to recover from precipitous falls in 2020, when it contracted close to twice as fast (11.6%) versus the overall market (6.4%), by 2023.

• A broad retreat saw brands slash marketing spend from $7.6bn in 2019 to $6.7bn in 2020 as consumers picked up bargain booze from low-margin retailers instead of pubs and clubs.

• Any recovery is likely to be slow, with alcohol ad spend still falling short of 2019 levels by 8% at the end of the year at $7bn, not surpassing the pre-pandemic peak until 2023 at the earliest when the equivalent figure will reach $7.7bn.

A mixed global picture

• Sounding a cautious note, Jonathan Barnard, head of forecasting at Zenith, adds: “The alcohol industry has suffered more from the pandemic than most, and that was reflected in the steep drop in ad spend last year. The recovery won’t be as dramatic as the downturn, but investment in digital communication will drive steady growth in alcohol advertising for the next few years.”

• Western Europe is expected to lead the global recovery with Spain, Britain, Germany and France likely to be the chief bright spots with growth rates of 28%, 21%, 10% and 8% respectively between 2020 and 2023.

• These jumps must be set against the backdrop of a low base, however, following respective declines in alcohol advertising of 52% in Spain, 48% in the UK, 22% in Germany and 23% in France during 2020.