As more markets begin to ease regulations amidst Covid-19, one of the key considerations for the alcohol trade is how to plan for translating somewhat theoretical rules into practical operations.
In many countries, the regulatory framework is decentralised, with a variety of rules applying in the different administrative sub-divisions. While beverage alcohol suppliers in the US and India have long been used to differing rules state-by-state, or even among communities within a state, it can be fairly difficult for suppliers in Germany, Australia, Spain, Italy or France to keep abreast of the change in regulations when they do not apply to the entire market.
Brand owners will likely need to review their logistics chain management; fulfilment centres, distributors, long & short haul transport, and cash vans are all parts of the supply chain that will need to be aligned according to the varying degree of rules across each of the markets. This will be especially important for beer, where brand owners will need to be more mindful of the product’s shorter shelf life.
In South Africa, a total ban on alcohol sales was instated at the start of lockdown in March 2020. All official distribution channels for beverage alcohol were made inaccessible, including on- & off- trade and ecommerce. South Africa will prove an extreme example this week, however, as the government announced on 28th May that at least the off-trade would be allowed to recommence by 1st June 2020. This left the sector having to attempt to fill the distribution pipeline in a matter of only a few days. Liquor stores will now need to find a way to balance pressure from the government to avoid overcrowding in and around shops, while at the same time ensure they have shelves filled with product in order to avoid disappointed or angry customers.
“Beverage alcohol stakeholders in South Africa will also need to fine-tune logistics and operations to address the limited hours of operations (daytime Mondays to Thursdays) allowed for liquor stores as well as for ecommerce, which will also be allowed to start from 1st June,” notes Mark Meek, CEO at IWSR.
While it is easy to restrict the operating hours for liquor stores, it is a more challenging prospect to apply operating hours to the ecommerce channel. When planning for ecommerce, industry stakeholders will likely need to consider what the operating hours relate to – do orders alone need to be placed within the restricted timeframe, or does fulfilment and distribution also need to occur during the specified hours of operation?
Meanwhile, in Mexico, the lockdown has taken a very different shape altogether. The government has placed a complete ban on production and all operations (including import and export) of domestic brewers in early April, however distilleries were allowed to remain open and distributors of imported spirits, wines and RTDs were also allowed to continue operations. The on-premise remains officially closed, but ecommerce, catering primarily to higher-income strata, has been allowed to continue.
“Mexico, with its disparate restrictions on the brewery sector, will most probably see a run on shops once beer brewing and distribution is allowed to re-commence,” reflects Meek. It also remains to be seen whether consumers, in the weeks-long absence of beer from the shelves, may have switched their allegiances to alternative products, such as RTD mixed drinks or spirit-based long-drinks, or whether newly-created shelf-space for these products will once again disappear.
For the first time in India’s history, alcohol ecommerce trials were underway in the country in May 2020. The decision was prompted by public health concerns after overcrowding in liquor stores as Covid-19 restrictions eased. India is getting used to the liberalisation of alcohol ecommerce in places. In states where third-party operators have been weaved into providing delivery logistics over the last two weeks, there is palpable anticipation on how the concept will work. There is, of course, no certainty on whether states will provide longevity to the channel or if it is really only seen as a stop-gap solution to avoid crowding in Covid-19 times. Nevertheless, the opening of the ecommerce channel in India is one that many industry players would have thought an impossible prospect prior to Covid-19.
“The emergence of the ecommerce channel in one of the world’s largest beverage alcohol markets will be keenly observed, not only by states that so far may remain reluctant, but by both the beverage alcohol industry and ecommerce platform providers as well,” notes Alastair Smith, Director at the IWSR.
The findings from this article are based on IWSR’s report series examining the impact of Covid-19 on 12 key markets. This report series is updated every two weeks, in order to help the beverage alcohol industry stay on the pulse of the impact of the pandemic around the world. This report series is available complimentary for current subscribers to the IWSR Global Database.
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