South Africa’s alcohol bans impacted not only booze sales but also consumer behavior

SOUTH AFRICA – Further assessing the impact of South Africa’s latest liquor ban, a new NielsenIQ report has equated the loss to R7.6 billion (US$520m) during the four weeks it lasted from 28th June to 26th July 2021.

Looking back at the financial fallout of the liquor ban, the report found that after the first prohibition (June 2020) the sector was able to recover two weeks of lost sales but these gains were short-lived and rapidly declined in the weeks that followed.

Consumers also carefully considered which categories to purchase in case of re-closure and spirits and wine captured 78% of incremental sales in the weeks post-prohibition, reports BizCommunity.

Sales after the second prohibition (September 2020) also initially gained ground for three weeks but in the ten weeks that followed were less than the same period last year (week ending 15 November 2020) and by the end of 2020, liquor sales were down by 36% year on year (2020 vs 2019).

NielsenIQ SSA commercial director Ged Nooy explains, “What the study found is that with each new wave and lockdown; immediate pre- and post-lockdown behaviour changes are merging into a pattern and people are not reverting to behaviours, and in certain cases products, that were favoured before Covid-19. The reality is a changed consumer and changed in-store shopping patterns.”

Changes in consumers and shopping habits prompted by the ban

After the end of the third ban in January this year, liquor categories performed quite differently in terms of regained sales and growth.

In the first quarter of 2021, liquor grew across all categories except beer, which remained under pressure driven by a decline in on-consumption in taverns, local bars and pubs (licensed), which has resulted in less demand through the wholesalers.

“What the study found is that with each new wave and lockdown; immediate pre- and post-lockdown behaviour changes are merging into a pattern and people are not reverting to behaviours, and in certain cases products, that were favoured before Covid-19.”

NielsenIQ SSA Commercial Director – Ged Nooy

Numerous factors have contributed to this including a decline in those who are buying beer in taverns as consumers have been heavily impacted by pressure on the economy and their finances/income have shrunk.

So, despite beer experiencing single-digit growth in March 2021, due to the absolute size of beer in the category, sales were 33% less versus the same period last year.

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At a total market level (on and off con consumption) beer was therefore undeniably under pressure.

On the upside, wine and spirits showed the most growth of all liquor categories and picked up in terms of sales and volume in Q1, 2021.

Of this, box wine was the biggest contributor to volume as consumers are moving to ‘longer lasting’ liquor options, which they perceive as better value for money and at the right price point for stocking up.

During the last few weeks of the first quarter of 2021, there was also stimulation in flavoured alcoholic beverages (FABs).

Interestingly, prior to Covid-19 large cans averaged 25-28% of the total category sales but they have gained in importance and during Q1, 2021 commanded 33% of sales.

“One of the reasons for this is that people are not going out or entertaining as much. They are happy to buy ‘longer-lasting bottles’ like quarts and box wine as there is no need to impress their guests and image is no longer so important,” Nooy comments.

In line with this, the industry has also seen a dip in sales of premium gin and has moved away from the incredible growth seen in the ultra-premium gin category before Covid-19.

The report has further highlighted the continued rise of the omni-shopper experience using channels such as social media endorsements, whisky and wine clubs, and innovative online shopping options.

These channels have mostly been used by the high-end consumers who continue to spoil themselves with their spending remaining fairly resilient, although they are experiencing some reset behaviours due to their altered living, working and entertaining circumstances.

However, they still want to experiment and innovation and product launches still appeal to them.

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