Alcohol ad spending won't reach pre-pandemic levels until 2023

Zenith forecasts a 5.3% rise this year.

Alcohol: 2021 will see more drinking in pubs, but ad spend will still lag 2019
Alcohol: 2021 will see more drinking in pubs, but ad spend will still lag 2019

Alcohol brands are set to bounce back from the pandemic this year, with ad spending growth climbing at a faster rate than the rest of the ad industry. However, it will take until 2023 until spending is back to 2019 level, according to research from Zenith.

As hospitality opens up again, alcohol brands will spend 5.3% more on advertising in 2021 than the year before, slightly above a UK average growth rate of 4.9%. According to Zenith’s Business Intelligence – Alcohol Beer and Spirits report published today, the rise will continue beyond this year, with ad spending back to its pre-pandemic level of £6bn by 2023, up from £5.2bn in 2020.

TV is normally the prime channel for alcohol brands with most spending about half of their budget on the channel, roughly twice the proportion for the average advertiser. However, TV spend is set to drop 2.4% per year as audiences on linear television get smaller. The research suggests budgets will start moving towards digital channels, which accounted for 19% of spend in 2019 but will rise to 30% by 2023. 

Could mobile bridge home and pub drinking?

Alcohol advertising was particularly hard hit by the pandemic. With a drop in total spend of 11.6% in 2020, the sector contracted at twice the rate of the rest of the market. This was prompted by brands seeking out a closer relationship with consumers online that spoke to drinking at home, rather than fun nights out, Jonathan Barnard, head of forecasting at Zenith, said.

“The collapse of the on-trade business led to a rise in drinking at home but it wasn’t enough to make up for sales lost to hospitality being closed, so spending on advertising dropped sharply,” he said.

“It was difficult for brands to talk to customers about socialising, because there wasn’t much going on, but now hospitality is opening up again, we’re going to see an increase in spending but we won’t get to pre-pandemic levels until around 2023.

A lot of brands, Barnard said, have “shifted their investment online during the pandemic, including their own websites where they have tried to talk to customers about enjoying their drinks at home, such as how to make cocktails.

That more direct relationship is set to continue. Considering apps are currently often needed to order drinks at bars, there could be a huge opportunity for brands to use mobile to extend that more direct relationship they have been developing with customers into the on-trade business as bars open up again.”

Increasing value, not volume

One of the major trends Zenith expects is that the “premiumisation” of spirits will continue and spread into beer categories. Alcohol brands are barred from encouraging extra consumption in advertising and so have concentrated on promoting premium brands instead.

The report outlines how spirts brands have been far more successful at this than beer, leading to spirit sales rising above those of beer for the first time in the run-up to the pandemic. Zoe Novick, business director at Zenith, who works on the agency's Molson Coors account, said this was a hot topic for beer brands.

“Alcohol brands have been very good at premiumisation in some of the verticals, such as the recent ‘ginaissance’ we’ve seen,” she said.

“They now know they need to take this to more of their brands, specifically beer and cider. They need to evolve the experiences they talk to consumers about to show why it’s worth paying more. They’re going to be seeing how that theatre of cocktails they’ve been providing in spirts, particularly during lockdown, can play in beer and cider categories.”

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