Bacardi posts strong recovery, but scarcity looms

The outbreak of the coronavirus crisis early last year has been a severe blow to the spirits market. Nevertheless, Bacardi expects a double-digit growth this year, as Regional President Europe, Francis Debeuckelaere, explains.

Three trends

Since the outbreak of the pandemic and the closure of the hospitality industry, the market has been recovering ever more vigorously. Consumers have reacted to the crisis by making cocktails at home and have rediscovered the charm of aperitifs, which they had somewhat forgotten, Debeuckelaere told Belgian newspaper L’Echo.

In addition, the demand for low or non-alcoholic drinks has increased significantly, a trend to which Bacardi has responded by launching alcohol-free Martini, available in both bottles and cans. The beverage group also developed and patented a unique process of de-alcoholisation. By 2024, Debeuckelaere is targeting annual sales of one billion dollars (900 million euros) in this market segment in Europe.

Finally, the race to premiumisation has gained momentum with the reopening of the hospitality sector, Debeuckelaere reveals. “In cafes or restaurants, consumers want to treat themselves and prefer high quality. We also notice this within the supermarket segment, where customers are rushing to buy the most expensive bottles to gift as end-of-year presents.”

Scarcity

Bacardi is now even facing a problems on the supply end: “There is not enough cognac, tequila and single malt whisky left on the world market”, Debeuckelaere says. “I could sell a lot more.”

The shortage results from increasing demand and disruption to supply chains. It does mean that prices will rise. The increases should not discourage consumers, Debeuckelaere said. “The price elasticity in the spirits sector is small. When prices rise by a few per cent, the market traditionally holds up.”