With COVID-19 lockdowns normalizing home delivery of everything from fast food to aspirin, brewers are tapping into a lucrative new sales format — delivering cold beer on demand to people still gathering at home with friends even as bars reopen.
For Brazilian Rafael Mazaia, it is cheaper to order beers for delivery to his home than to drive to the supermarket to pick up a pack and risk them being tepid when he returns.
“There is no supermarket near my house, I’m too lazy to go to the market and the drink is not completely cold there, so it is better to order,” the 24-year-old investment analyst in the Sao Paulo region said.
Photo:Bloomberg
The world’s largest brewer Anheuser-Busch InBev (AB InBev) saw orders at its cold beer service Ze Delivery, launched in its second-largest market Brazil in 2016, explode during the COVID-19 pandemic from 1.5 million in 2019 to 62 million last year.
In Mexico, its rival Heineken last year launched delivery service GLUP, also focused on direct-to-consumer cold beer.
Latin America has proved a natural fit for the format, with consumers typically having limited refrigeration capacity and a shared love of gathering for events such as soccer matches — a particular draw this year as fans gear up for November’s FIFA World Cup, the world’s biggest sporting event.
The end of lockdown restrictions has not ended the segment’s growth.
“Home has become the entertainment hub, and there’s no better way to reach [consumers] than with direct retailing,” Euromonitor drinks analyst Spiros Malandrakis said.
AB InBev chief executive officer Michel Doukeris said e-commerce complements rather than replaces in-store purchases, citing the example of friends gathered for a sports match running out of beer.
“Usually people don’t go out to buy more beer, but having the delivery in 30 minutes allows you to expand the number of occasions for beer, before people think about opening a bottle of wine or mixing spirits,” he said.
Sales on AB InBev’s e-commerce platforms, dominated by Ze Delivery, last year rose 62 percent to more than US$500 million globally.
Yet crucially, it is not just additional revenue that beer delivery brings, but also data on who is buying when, and what brands they select.
That enables companies to tailor marketing to specific consumers, better manage inventories or trial new products, and receive better and faster feedback than traditional consumer sampling.
Selling straight to the consumer allows brewers to access this level of detailed data directly for the first time.
“Just the value of that will justify all the investments we make in direct-to-consumer by themselves,” Doukeris said.
Some smaller craft brewers aside, beer has been late to e-commerce compared with wine and spirits, which account for 40 percent and 42 percent of the online alcohol market respectively, against an 18 percent share for beer, cider and ready-to-drink beverages combined, IWSR Drinks Market Analysis said.
However, by 2025, beer and the others are expected to increase their share to 28 percent, taking ground from wine and spirits, which are seen retreating to 32 percent and 40 percent respectively.
Cold delivery is just a part of that, with much of the beer ordered online by consumers included in a weekly shop, while in developed markets big brewers focus on selling systems and kegs enabling consumers to pour their own draft beer.
However, AB InBev’s Ze Delivery-dominated e-commerce platform sales grew at nearly twice the rate of its direct-to-consumer sales as a whole last year.
“We know that for the majority of categories, they start with a very small penetration and there is a kind of tipping point when the volume of e-commerce goes to more than 3 to 4 percent, then accelerates very, very fast,” he said.
Brazil has broken that barrier.
Since the pandemic began, AB InBev has expanded the Ze Delivery model to 10 other Latin American countries and is considering other markets outside the region.
“As we get more maturity in Latin America, for sure we are going to be willing to evaluate mature markets as well, because we know convenience is something consumers like,” AB InBev global head of sales Pablo Panizza said.
However, there are threats to expansion, with the prospect of sharply rising inflation looming, especially in emerging markets. Heineken for one has recognized that lower disposable income due to high overall inflation could have an effect on growth at some point.
Yet beer has a reputation as “cheap entertainment,” as former AB InBev chief financial officer Felipe Dutra said during the last financial crisis, and brewers have managed to increase sales in the first quarter even with higher prices.
That is partly because of the emergence from the pandemic, with even drinkers at home now likely to have more friends over.
“It’s extremely difficult to put this back in the box,” Malandrakis said. “It’s something consumers have started to get used to.”
‘IN A DIFFERENT PLACE’: The envoy first visited Shanghai, where he attended a Chinese basketball playoff match, and is to meet top officials in Beijing tomorrow US Secretary of State Antony Blinken yesterday arrived in China on his second visit in a year as the US ramps up pressure on its rival over its support for Russia while also seeking to manage tensions with Beijing. The US diplomat tomorrow is to meet China’s top brass in Beijing, where he is also expected to plead for restraint as Taiwan inaugurates president-elect William Lai (賴清德), and to raise US concerns on Chinese trade practices. However, Blinken is also seeking to stabilize ties, with tensions between the world’s two largest economies easing since his previous visit in June last year. At the
Nearly half of China’s major cities are suffering “moderate to severe” levels of subsidence, putting millions of people at risk of flooding, especially as sea levels rise, according to a study of nationwide satellite data released yesterday. The authors of the paper, published by the journal Science, found that 45 percent of China’s urban land was sinking faster than 3mm per year, with 16 percent at more than 10mm per year, driven not only by declining water tables, but also the sheer weight of the built environment. With China’s urban population already in excess of 900 million people, “even a small portion
UNSETTLING IMAGES: The scene took place in front of TV crews covering the Trump trial, with a CNN anchor calling it an ‘emotional and unbelievably disturbing moment’ A man who doused himself in an accelerant and set himself on fire outside the courthouse where former US president Donald Trump is on trial has died, police said yesterday. The New York City Police Department (NYPD) said the man was declared dead by staff at an area hospital. The man was in Collect Pond Park at about 1:30pm on Friday when he took out pamphlets espousing conspiracy theories, tossed them around, then doused himself in an accelerant and set himself on fire, officials and witnesses said. A large number of police officers were nearby when it happened. Some officers and bystanders rushed
Beijing is continuing to commit genocide and crimes against humanity against Uyghurs and other Muslim minorities in its western Xinjiang province, U.S. Secretary of State Antony Blinken said in a report published on Monday, ahead of his planned visit to China this week. The State Department’s annual human rights report, which documents abuses recorded all over the world during the previous calendar year, repeated language from previous years on the treatment of Muslims in Xinjiang, but the publication raises the issue ahead of delicate talks, including on the war in Ukraine and global trade, between the top U.S. diplomat and Chinese