The Shout Magazine (New Zealand)

World’s top liquor brands could lose $50 billion from COVID-19

The world’s most valuable alcoholic drinks brands could lose up to US$33 billion (NZ$50 billion) worth of brand value as a result of the COVID-19 pandemic.

According to the Brand Finance Alcoholic Drinks 2020 Report, different alcoholic drinks brands across the sector are likely to be impacted differently.

Beer brands will be heavily impacted, facing a potential 20% brand value loss, but spirits and champagne and wine brands are likely to be moderately impacted, facing a potential 10% brand value loss.

Interestingly, the Brand Finance Beers 2020 ranking named Corona as number one, with a brand value of US$8.1 billion.

However, with China being Corona’s largest market outside of Mexico, the unfortunate combination of the coincidence in name and strict nationwide lockdown across the nation at the beginning of the year over Chinese New Year has caused a decline in sales.

But Brand Finance says the makers of Corona have hit back at allegations that the pandemic has damaged its brand, claiming that consumers understand that there is no link between the two.

Don Julio (up 79% to US$958 million) was named the world’s strongest spirits brand in this year’s report.

However, parent company Diageo has warned of a significant sales hit, estimated at just over €200 million (NZ$358 million), as the brand suffers with bar and pub closures as well as travel restrictions, which are significantly impacting airport sales.

“We are witnessing mixed fortunes across the alcoholic drinks industry as a result of the COVID-19 pandemic,” says Richard Haigh, Managing Director, Brand Finance.

“On the one hand, the almost global lockdown and closures of bars and restaurants has resulted in the standstill of on-trade sales.

“Off-trade sales, however, in the supermarkets and bottle shops, have spiked as consumers shift towards consuming alcoholic drinks at home.

“It is yet to be seen whether this spike can offset the loss and therefore how brands will fare in the coming year,” he says.

Brand Finance says they assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020 and the likely impact on brand value was estimated for each sector.

The industries were classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020. 

For a preview of the Brand Finance Alcoholic Drinks 2020 report, click here.

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