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Think back to the early days of the pandemic when stay-at-home orders were implemented in the United States and panic buying quickly took hold. Nearly every category in the store saw increases, and the beverage category—with non-alcoholic, ready-to-drink (NARTD) beverages in particular—was no exception.
Bottled water was the big hero in the category, with sales increases of 52 percent in March alone, but retailers also saw a significant increase in sparkling beverages that are staples in the home, as well as tea, juice, and value-added dairy as people looked for ways to boost immunity and more families were having breakfast together.
Yet in spite of all those increased grocery sales, the picture isn’t entirely rosy. Throughout the pandemic, shoppers have favored large quantity, stock-up items over immediate consumption packaging, and as a result, sales are down in those products (like the 20-ounce plastic bottles in the checkout aisle).
“Shopping trips really fall into three key buckets,” Global Account Director of Coca-Cola North America Ryan McCann says. “One is weekly shopping or pantry loading. Then you have fill-in food trips to grab a couple of things you need for a meal that evening. And the third trip is grab and go. As consumers were shifting away from the grab and go and fill-in trips to minimize the amount of time and frequency they were spending in grocery stores, that really impacted the immediate consumption packages.”
Watch the interview with IGA Senior Director of Red Oval Partnerships Heidi Huff and Coca-Cola North America’s Ryan McCann for suggestions to help you navigate supply issues and changing consumer behavior—or read on for more.
“Usage for aluminum cans has been relatively flat over the past 4+ years, so it’s clearly not something we were expecting,” McCann says of the aluminum can shortage. “The industry has already used 2 billion more cans than forecasted for the year, and all signs point to this being an ongoing issue that will really impact the entire beverage industry throughout 2020 and into 2021.”
In response to the shortage, U.S. can suppliers are ramping up production and Coca-Cola has been working with its international suppliers to expand global sourcing options. At the same time, Coca-Cola bottlers are also limiting their production to core brands in an effort to avoid out-of-stock scenarios, and it’s those bottlers who can help retailers gain a better understanding of the current package constraints within their respective market.
“Keep in mind this is a very fluid situation and can vary significantly depending on your geography and depending on your bottler,” McCann says. “So stay close to your local bottler to really understand the situation for your store.”
McCann suggests these strategies to navigate inventory shortages through the end of the year.
Another snag to hit retail beverage promotions is the absence of product sampling due to COVID-19 health and safety guidelines. To encourage consumers to try new products, McCann recommends including a new product offer alongside a more traditional product. Coca-Cola recently released Aha!, which is helping to grow basket size and household penetration in the mainstream sparkling water category at IGA. To boost sales of this new product, a retailer could run a product promotion that offers an 8-pack of Aha! at a special price with the purchase of two half-liter 6-packs of Coca-Cola products, like IGA is doing with upcoming National Digital Ad offers (each of which run during a two-week timeframe).
The U.S. NARTD industry has an estimated retail value of $200 billion, which, to put into perspective, is about the same size as the U.S. commercial aviation industry and about 33 percent larger than the motion picture and sound recording industry. Sparkling soft drinks make up about 40 percent of the industry value, but over the next four years all NARTD categories are expected to grow—and in turn, fuel total retail growth.
According to McCann, trends in the sparkling beverage market offer great insight into consumer behavior today and a glimpse of what’s ahead in the category for independent retailers.
“Without question COVID-19 has been a significant disruption and will change shopper behavior moving forward,” he says. “However with all disruptions, it’s helped clear the fog and really accelerate some of the trends already happening in the marketplace.”
McCann outlines four key trends that will continue to change shopper behavior this year and into 2021:
McCann recommends IGA retailers use these insights to help their shoppers during this trying time to boost future loyalty. “I believe when you follow the consumers, good things will happen,” McCann says. “So you really need to have a good pulse on the consumer and the trends in the marketplace and be agile and flexible to meet their evolving needs. And I truly believe if you do that, you’ll grow sales and share."