Prior to the events of 2020 the importance of OOH was clear. But abrupt changes in channel structure caused by COVID-19 has brought new habits for consumers and competitive scenarios for manufacturers.
Prior to the events of 2020 the importance of OOH to the snacking and non-alcoholic beverages sector was clear. It accounted for 44% of value sales in the sector, as well as helping to drive total OOH value, with growth consistently above that of purchases for In-Home consumption.
But, as we have shown, OOH value has been hit hard due to restrictions over the course of 2020, with spend down 30%. Combined with In-Home spending, the total value of these sectors has decreased 11%, representing a loss of $13 billion. And with some markets returning to lockdown, we forecast that total In-Home and OOH sales for 2020 will decline between 2% and 7%.
Given how vital OOH spending is, it is imperative that the industry works to minimise the impact of further decline by revisiting range and channel strategies. With Beverages the part of OOH that’s suffering the most, we see two different ways to drive value back into this sector:
1. Ensure the habit & driving new OOH occasions – one example of this is Pret a Manger’s new subscription service, which for a set fee offers consumers unlimited coffee. This will drive subscribers back into store, having a positive impact on the rest of its offerings.
2. Winning share of In-Home occasion and driving value – Starbucks launched coffee pods at the end of 2019, which are widely available across retailers, with the hope of keeping the brand top-of-mind whether In-Home or OOH.
The silver lining for the whole sector has been the continued rapid expansion of Home Meal Delivery, offering consumers the possibility of replicating an OOH experience in the home. This had a positive impact in the UK, for example, where total food and drink spend (including main meals) only declined 9%, despite a 75% fall in OOH value sales in April and May.
Home Meal Delivery and the use of Food Tech will keep growing fast - and with the development of these services at different stages around the world, the optimal solution to growth will vary between continuing to drive penetration, drive frequency, or to drive value.
In Europe, where it is very much in its infancy, there are many shoppers still to go after. Home Meal Delivery will be increasingly seen as a direct competitor to retailers, as ‘ordering in’ becomes a direct replacement for cooking at home on a regular basis. In Mexico and Brazil, where enjoyment is the reason most current customers use the service, turning light users into more regular ones by targeting more occasions during the week is the obvious growth opportunity.
Bring it home beyond meals - consumers are looking to replicate other out-of-home experiences in-home. There is the opportunity to expand delivery from meals-only to include complementary elements such as desserts and drinks. As well as the opportunity of the 'drinks-only' delivery as seen in Vietnam.
