Philip Blenkinsop, Paulo Lopes

SAO PAULO/BRUSSELS – With COVID-19 locksdowns normalising home delivery for everything, from aspirin to fast food, brewers can tap into a lucrative new format – delivering cold beer directly to their customers. This is even while bars reopen.

Brazilian Rafael Mazaia finds it cheaper to have beers delivered to his house than drive to the supermarket and pick them up, which could lead to their being cold when he gets back.

The 24-year-old Sao Paulo investment analyst said that there isn’t a supermarket nearby and that the drinks are not cold enough.

Anheuser-Busch Inc., the world’s biggest brewer, saw its Ze Delivery cold beer delivery service, which was launched in Brazil’s second largest market in 2016, increase in demand during the outbreak that saw its sales jump from 1.5 million to 62,000,000 in 2019.

Mexico’s Heineken rival (OTC:), launched last year delivery service GLUP in Mexico. This was also a direct-to-consumer cold beer.

Latin America was a good fit for the format. Consumers in Latin America have limited refrigeration capabilities and share a love for gatherings such as soccer matches.

Segment growth has continued despite the end of lockdown restrictions.

Spiros Mallandrakis, an Euromonitor drink analyst, stated that home has been transformed into an entertainment centre and direct retailing was the best method to get (consumers) to it.”

Michel Doukeris, chief executive of AB InBev says ecommerce enhances and not replaces in-store sales. He cites the example of friends who ran out of beer while gathered at a sporting match.

He said that most people won’t buy beer more often. “Having the beer delivered in under 30 minutes gives you the opportunity to increase the occasions for beer before most people consider opening bottles of wine or mixing spirits.

AB InBev’s ecommerce platforms saw a 62% increase in sales to reach more than 500 million worldwide. Ze Delivery was the dominant player.

Importantly, this isn’t just an additional revenue stream that beer delivery generates, but also data regarding who buys when and which brands.

Companies can tailor their marketing messages to individual consumers and better manage inventories, or test new products. They also get faster and better feedback than traditional sampling.

Brewers can sell directly to consumers to get this type of detail data right away.

Doukeris said, “Just the price of that will just justify all the investment we make directly-to-consumer ourselves.”

LATE TO THE EVENT

There are some smaller craft brewers, but beer is late to online commerce compared to wine and spirits. According to IWSR drinks market analysis, they currently represent 40% and 42% respectively, while beer, cider and ready-to drink beverages together, accounts for 18%.

However, by 2025 beer and other alcohols will have 28% of the market, overtaking wine and spirits which were 32% and 42% respectively in an online alcohol market that is 66% larger at $42 Billion.

The cold delivery part is just one aspect of it. Most beer purchased online will be included in the weekly shop. However, in developing markets large breweries are focused on selling systems and beer kegs to allow customers to create their own draft beer.

But Ze Delivery, AB-Inbev’s e-commerce platform that dominated direct-to-consumer sales, grew almost twice as fast last year.

According to him, the majority of category categories have a low penetration. Once that tipping point is reached, the volume of ecommerce grows to over 3 to 4 percent, the pace of growth then increases very rapidly. Brazil broke that barrier.

AB InBev expanded Ze Delivery to 10 additional Latin American countries since the outbreak of the pandemic. It is currently considering expanding the model to other markets.

Pablo Panizza (AB InBev’s global chief of sales) stated that as Latin America matures, we will be able to assess mature markets more easily because convenience is something customers like.

Pandemics not only stimulated at-home consumption; they also resulted in temporary lifting of previous restrictions that hindered growth.

Many Indian states have allowed the sale of alcohol through mobile food delivery services. A number of states in America allow their alcohol manufacturers to avoid wholesalers to directly sell to consumers.

It is not clear how long India’s relaxation will continue, however, a California bill will attempt to make that temporary easement permanent.

While there is potential for expansion, inflation could be on the rise, particularly in emerging countries. Heineken, for example, has acknowledged that lower disposable income could impact growth in the future due to rising inflation.

Beer has a bad reputation for being “cheap entertainment”, Felipe Dutra, former AB InBev finance chief Felipe Dutra observed during the financial crisis. Brewers were able to grow sales even though they had higher prices in the first quarter.

It is partially due to the pandemic’s emergence, where even non-alcoholics are more likely now to be surrounded by friends.

Euromonitor’s Malandrakis stated that “it’s very difficult to put it back in the container.” Consumers have begun to become used to it.”