With most of the world having been in lockdown at some point during 2020, OOH consumption has been hit hard. The question is, exactly how hard has it been hit?
OOH value sales between January and August this year were down 30% compared with the same period in 2019. And despite a 9% growth in In-Home spend, the result was an 10% decrease in the combined value of the Snacking and Beverages categories, a loss of $13 billion. In April, when most of Europe was in full lockdown, combined spend on In- and Out-of-Home declined by 18%. OOH sales in this month fell by more than half, equating to a loss of $3 billion. Losses of over $2 billion were also seen in May and June.
Europe was most impacted by the mandatory lockdowns, with France, Spain and the UK all experiencing around a 40% decrease in OOH value sales. Penetration of OOH also dropped in these markets, falling from 75-90% to 20-40% during April. Where these countries differ is in how fast shoppers have returned. By July more than 80% of Spanish consumers had returned to purchasing OOH, whereas in France and the UK the figure was just over 60% – and even by early August penetration was still well below 80%.
In most markets, the switching of spend to In-Home consumption has not been sufficient to make up for the losses from OOH, where double-digit decline is the norm. Net declines have been seen across most of Asia, for example.
Only in Indonesia and Mexico has the growth of In-Home been enough to compensate for OOH losses, due to these markets being more Snacking orientated. The price gap between In- and Out-of-Home is much lower for Snacking products in these markets, compared to Beverages. We’ll explore this further on the next page.
Local lens
In Mexico, an interesting trend emerged around how lockdown impacted the OOH spending of consumers at different social-economic levels. Consumers in the highest levels followed non-mandatory lockdown rules more closely, with many staying at home, driving a 19% decline in spend. The lowest social-economic households were less likely to be able to work at home, and their OOH spend remained flat as a result.
Exploring the split between Snacking products and Non-Alcoholic Beverages provides us with a vital lens through which to understand OOH performance. In 2019, Beverages accounted for 63% of OOH spend. More reliant than Snacking on OOH sales, it is this part of the OOH landscape which has declined fastest, with a year-on-year drop in value of 36%, compared with 21% for Snacking.
This means that Beverages accounted for 75% of the total decline in OOH spend.
Comparatively, Snacking also saw faster In-Home growth and as a result total value sales remained flat in 2020.
As well as being more reliant on OOH sales, Beverages also declined at over 60% in March (vs 40% for Snacking) and has since been much slower to recover. By August, Beverages was still seeing a monthly decline of 45%, while the Snacking decline halved to 22%.
We can see clear evidence that Beverages will continue to decline in value, even if all OOH occasions switch to In-Home.
In Spain, for example, the category is much more reliant on the Horeca (hotels, restaurants, cafés) channel, with 82% of OOH spend coming from here, versus 55% for Snacking. This has a direct impact on the cost per occasion – with the gap between OOH and In-Home being +1€ for Beverages and half that (+0.50€) for Snacking.
Digging deeper into these numbers, the average Beverages cost per occasion is 1.20€ OOH vs 0.20€ In-Home, meaning that a shopper needs to enjoy a drink six times in their home to contribute as much in value terms as buying one drink outside their home.
For Snacking, the average cost per occasion is 1.10€ OOH vs 0.55€ In-Home, meaning consumers only need to snack twice as often at home, a frequency that was easily reached during lockdown, which triggered six more at-home meal occasions each week, with snacking moments seeing the biggest uplift at home (+50%).
There are four key channels within the OOH market: Modern trade (Hypermarkets, Supermarkets and Convenience stores), Traditional trade, and two which are pure OOH – Horeca and Impulse (vending machines, street vendors, gas stations). These pure OOH channels represent 69% of OOH spend, but 81% of the decline, equating to a $13 billion fall in spending.
This disproportionate fall has led to Modern trade winning five value share points from the other channels, moving from 25% of the market in 2019 to 30% in the year to date.
Big, sustained shifts within the channel landscape are not a trend within every market: only the Chinese Mainland and the UK experienced drastic change. At the other end of the spectrum, while there was a substantial drop in OOH sales in France, Spain and Portugal there was only a low level of channel change as spending started to recover. Pre-COVID OOH habits prevailed in these countries, with shoppers returning to the same channels they used before the pandemic.
As stated on the previous page, the UK has seen significant changes take place within its channel structure during the pandemic, in particular the Horeca channel. Value sales within Coffee Shops – the market’s leading sub-channel – almost halved during the first months of lockdown, but bounced back to pre-pandemic levels as OOH recovered.
The next biggest sub-channels – Quick Service Restaurants and Bakeries – were the biggest winners, growing their sales during April and May. These continued to do well in July and early August, even as people returned to their favourite coffee shops. Bars, Pubs and Full-Service Restaurants have suffered most during both lockdown and recovery, with year-on-year spend still 40% lower in July and August.
The Modern Trade channel has seen a change in terms of the products people are purchasing to consume Out-of-Home. This has been driven by a significant drop in OOH penetration, from close to 15% per month to 5%, amongst buyers visiting the workplace or education establishments.
This has directly impacted the shape of OOH within Modern Trade, which relied heavily on workers and students purchasing food and drink to consume during the day. The result has been a fall in share of Hot Drinks and Meals, and a rise in Cold Drinks and Snacks. Retailers within this channel need to adapt their product range to respond to the increased importance of this type of OOH occasion.
