Demand for cold beer delivery explodes in Latin America

As the COVID-19 lockdown normalizes home delivery of everything from fast food to aspirin, brewers are taking advantage of a lucrative new sales format.

For Rafael Mazaia, a Brazilian, ordering a beer for home delivery is cheaper than driving to the supermarket and risking being lukewarm when you return with a pack.

“There is no supermarket near my house, I am too lazy to go to the market, and the drinks there are not completely cold, so it’s good to order,” said a 24-year-old investment analyst from the São Paulo region. .

Anheuser-Busch InBev, the world’s largest brewer, said in 2016 that its cold beer service Ze Delivery, Brazil’s second largest market, had orders from 1.5 million in 2019 to 62 million last year. increased to

In Mexico, rival Heineken launched its delivery service GLUP last year, which also focuses on consumer-directed cold beers.

Latin America has proven a natural fit for this format, with consumers who generally have limited refrigeration capacity and like to gather for events like football matches. In particular, this year is a draw due to fans’ preparations for the world’s biggest sporting event, the World Cup in November.

The end of the lock limit did not end the growth of the segment.

“Homes have become an entertainment hub, and there’s nothing better than selling them directly to consumers,” said Spiros Malandrakis, beverage analyst at Euromonitor.

AB InBev CEO Michel Doukeris said that e-commerce complements rather than replaces in-store purchases.

“Normal people don’t go to buy more beer. “But having delivery in 30 minutes can increase the chances of people having a beer before they even think about opening a bottle of wine or mixing spirits.”

AB InBev’s e-commerce platform revenue, dominated by Ze Delivery, grew 62% to over $500 million worldwide in 2021.

But crucially, it’s not just the additional revenue that beer delivery brings, but also data about who buys when and which brands.

This allows businesses to tailor marketing to specific consumers, better manage inventory or try new products, and get better and faster feedback than traditional consumer sampling.

Selling directly to consumers gives brewers direct access to this level of detail data for the first time.

“That value alone can justify any investment we make directly to consumers,” Doukeris said.

late to the party

With the exception of some small craft breweries, beer has been late to e-commerce compared to wine and spirits, which currently account for 40% and 42% of the online alcohol market. Combined beverages according to IWSR beverage market analysis.

However, by 2025, beer and other products are expected to increase their share in wine and spirits to 28% in the $42 billion online alcohol market, which is 66% higher, regressing to 32% and 40% respectively.

Cold Delivery is where the majority of beers ordered by consumers online are included in daytime stores, while large brewers in developed markets focus on selling systems and kegs, allowing consumers to pour their own draft beers. .

However, e-commerce platform sales led by AB-Inbev’s Ze Delivery nearly doubled overall direct-to-consumer sales last year.

“I know that in most categories there is some sort of tipping point where you start out with very small penetration rates and then the volume of e-commerce grows by 3-4% or more, and then accelerates very quickly.” said. Brazil has broken down that barrier.

Since the outbreak of the pandemic, AB InBev has expanded its Ze Delivery model to 10 other Latin American countries and is currently considering markets outside of the region.

“As we become more mature in Latin America, we will be happy to value mature markets as well, as we know consumers love convenience,” said Pablo Panizza, Global Sales Director, AB InBev.

The pandemic not only boosted consumption at home, but also temporarily eased restrictions that previously hampered growth.

Some states in India have allowed the sale of alcohol through food delivery apps, and many states in the United States have also allowed alcohol manufacturers to sell directly to consumers without going through wholesalers.

It’s not yet clear how long India’s easing will last, but California’s legislation will try to make the temporary easing permanent.

However, there are threats to expansion, especially in emerging markets, with the prospect of a sharp rise in inflation. Heineken recognized that low disposable income from high overall inflation could affect growth at some point.

However, during the last financial crisis, beer gained a reputation as “cheap entertainment,” as Felipe Dutra, former financial chief of AB InBev noted, during the last financial crisis, and brewers were able to boost sales in the first quarter despite higher prices.

This is partly due to the advent of the pandemic, where people who drink at home are also likely to meet more friends.

“It’s very difficult to put it back in the box,” said Euromonitor’s Malandrakis. “Consumers are starting to get used to it.”

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