Combined In-and-Out sales paint a very different picture
Despite In-Home FMCG sales hitting 10% in 2020, the complete 360° picture, combining sales for both Out-of-Home (OOH) and In-Home, shows a decline of between 2-5% for the food and beverages (excluding alcohol) sectors.
OOH sales were down -37% in Spain, -32% in GB, -26% in France and -25% in Brazil, so despite the strong, double-digit growth from In-Home sales, it was always going to be difficult to claw back such significant declines.
By the end of 2020, OOH beverage sales had declined over 30%, whilst In-Home sales only increased by 6%. Total sales fell by 14%. The sector was hit hard during the first lockdown period (Q2 2020), in which OOH sales more than halved.
Carbonated Soft Drinks and Coffee, which have the highest reliance on OOH, suffered the most significant decline at -16% and -22% for the year.
Even if the beverages sector could replace all OOH occasions with In-Home, it would still suffer given an average occasion cost of €1.20 OOH vs. €0.20 In-Home. A shopper would need to enjoy six times the number of drinks in their home to contribute as much spend as buying one drink outside their home.
When we consider the full picture, we can assess four additional purely OOH channels: On-the-Go, On-Premise, Take-Away and Meal Delivery.
In GB, On-the-Go and On-Premise channels accounted for 28% of total spend, pre-COVID-19. Given lockdown restrictions, both suffered, resulting in sales being down 37% and 52%. These channels were responsible for the overall decline, with all other channels in growth.
On the other hand, Meal Delivery saw growth of 150% (in GB), doubling its share from 2% to 4%. This helped keep many restaurants and cafes in business whilst stopping the food and beverages sectors from seeing more significant declines.
Meal Delivery's growth immediately started (and peaked) in Q2, as the country entered lockdown. Although the growth slowed in Q3 and Q4, spend remained at a much higher level (double that of 2019). At the same time, consumers returned to On-Premise as restaurants re-opened, albeit temporarily.
The use of third-party aggregators (companies such as Just Eat or UberEats) has been one of the critical drivers of this growth. We saw the penetration of aggregators continually rise through 2020 in both GB and Spain. And with no signs of slowing down, penetration reached a new high in both markets at the beginning of this year.
And the potential for future growth is evident. More than 80% of consumers use third-party aggregators across Asia, whilst consumers in France, Mexico, Brazil and Portugal still prefer to order by phone. In Spain and GB, restaurants’ own websites or apps have the highest penetration.
Alongside this extraordinary growth for Meal Delivery, it was Modern Trade retailers that performed best in 2020. This shift provides manufacturers with an opportunity to still win the OOH occasion, particularly in Europe.
Within the Modern Trade channel, OOH accounts for 16% of snacking and beverages spend across markets, whilst in Mexico, Thailand, Indonesia, and Mainland China, that level is 40% and higher. In Europe, the share of OOH remains below 10% despite the shift to the channel caused by COVID-19.
Key takeaways
When also considering out-of-home sales, Food and Beverages sales are down somewhere between 2 to 5% across markets. Beverages has particularly suffered, with sales halving in Q2 last year as regions entered lockdown.
The growth of Home Meal Delivery has gone some way to help the sector, doubling in size in GB. The growth of third-party aggregators was key, with plenty of headroom for future growth particularly in Europe and Latam.
