The damage that the COVID pandemic has done to the food and beverage sector has been widely reported. Plenty of well-known and well-loved restaurants and pubs have entered into an insolvency process or formally restructured their debts in an effort to survive. My colleague Rahim recently blogged about the restructuring of Pizza Hut which saved 90% of its business and 5000 employees - but other restaurants and pubs have not been so fortunate.
Ahead of the second lockdown, many pubs slashed the prices of drinks in order to limit losses and avoid wasting product. Wetherspoons, in particular, touted a sale of 99p pints having reported earlier this year its first ever loss in its trading history. Doubtless there is also a link between the restrictions in ability to attend pubs over the last 7 months and the reduction in the number of small breweries, who rely heavily on pubs as a key outlet.
However, prior to the pandemic - a new trend (particularly amongst younger drinkers) of "NOLO" (no alcohol or low alcohol drinks) had begun to emerge with pubs reporting anecdotal evidence of an increase in NOLO sales. The pandemic seemed to highlight even further this development. NOLO drink sales surged during the first lockdown - increasing by 30% since March (a value of around £188m).
Some well-known alcohol providers had already reacted to the new trend - Adnams, the creators of Ghost Ship, launched their low-alcohol alternative over two years ago and now report that this constitutes 10% of their beer sales. Guinness has also recently announced an alcohol-free drink touting the same taste but with no alcohol content.
Companies reacting to changing trends tend to fair better from an insolvency perspective than those who sit tight and trust that the market will revert to its "normal state". With the second lockdown now underway and dry-January on the horizon, perhaps drinks manufacturers (and pubs) responding to the NOLO trend may yet avoid becoming further corporate fatalities of the pandemic.
Steep growth in the “nolo” drinks category was previously driven by sales in pubs, bars and clubs, but Covid-related restrictions and curfews have increased consumers’ thirst for hangover-free options from the supermarket and corner shop, as drinking habits have become home-based.