Glocalization—the practice of developing a global strategy and suite of products, while adapting to local markets—was already in evidence in the out of home drinks market before COVID-19. But it has been brought into even sharper focus by consumers’ growing sense of community and desire for local products during the pandemic.
Ethical and trust factors have made the desire to support local businesses a trend for some time, but it has now grown into one of the top considerations when consumers choose where and what to drink. CGA’s latest global research shows it has become a worldwide movement too—which makes it an essential consideration for drinks suppliers shaping global On Premise strategies.
Nearly a third of consumers around the world now buy more local produce than they did a year ago, and the figure jumps to two in five in France, South Africa and Italy. This has manifested itself in drinks choices too. Just over a quarter of global consumers have been drinking local brands in the On Premise since COVID-19, a figure that is up by four percentage points from before the pandemic.
In reopened markets, this is causing some significant shifts in sales towards products and brands that tap into the desire for local. In Scotland, for example, local brand Tennent’s has increased its share of lager sales. Local craft beer brands have been outselling other beers in London, while in France, the French Rum category has gained share.
This comes at a time when consumers have been reconnecting with their local areas. More than half of workers in our recent global study were working from home, and this trend has led to major change in outlet choices. In reopened markets, there has been a 24% drop in consumers visiting the sector for after-work drinks, and many visits have shifted from city centres to suburbs. This is set to continue, with two in five consumers predicting they will continue to work from home most of the time, and two thirds at least occasionally.
The biggest driver of this trend is convenience—cited by 60% of consumers who are increasing their visit rate to local venues. This is followed by a desire to ‘support local businesses’, with a sense of community increasingly vital for people who have been engaging with their localities more often than ever over the past 18 months.
For global suppliers to the industry, this poses potential threats. How can a global portfolio of drinks cater for consumers who are looking to buy, support and trust local? And how can field sales teams target local outlets and changing occasions when they have been used to focusing on key accounts in city centres?
Responses to these questions need to start with a sophisticated and targeted strategy for ‘local hero’ outlets. Utilising market intelligence to identify, target and activate in outlets at the centre of their communities can help brands to win the hearts and minds of consumers looking to support their local businesses. It is also important to remember that local does not necessarily mean anti-corporate, and big brands can and should partner with outlets to support local causes.
Of course, if the portfolio allows, local hero brands like Tennent’s in Scotland, Brooklyn in New York or Amarula in South Africa should be prioritised. With niche and craft distillers globally increasing production, acquisition of local brands may be another option.
Global brands also have an opportunity to adapt to the needs of local markets, by tweaking their products, marketing or both. As French Rum has shown, local does not necessarily have to mean produced in the local vicinity, and highlighting the roots of global brands can help to make meaningful connections. While much in the On Premise has been changed by COVID, we can expect glocalization to continue to impact the global drinks market well into the post-pandemic future.
Charlie Mitchell is CGA’s research and insights director. For more information about CGA services that can help drinks brands establish and grow their presence in the On Premise and beyond, contact charlie.mitchell@cgastrategy.com.
