Nielsen Insight: Unlocking consumption in 2021

Nielsen client delivery team leader Rob Hallworth delves into how shoping behaviour has changed throughout lockdown.

After a pretty turbulent 2020, alcohol growth in the off-trade has settled down over the past couple of months as consumers become more used to living in a state of lockdown and new consumption patterns are established.

Is this the calm before the storm? I hesitate to use the word “storm” as this is the time when we should be positive. A third of the UK population have now had their first vaccination, we have a plan ahead for on-trade reopening and, with a fair wind, we should be back to “normal” by June 21.

But what will normal look like? Our recent global NielsenIQ study highlights the behaviour of four consumer groups, which looks to be very different to that of 2020.

● Existing Constrained – were already watching what they spent prior to Covid-19, and this has not changed

● Newly Constrained – experienced worsening household income/ financial situations and are consciously watching what they now spend

Cautious Insulated – limited impact to income/financial situation, but are watching what they spend a lot or much more than before

Unrestricted Insulated – similar or improved income/financial situation and do not feel the need to watch what they spend

The size of these groups differs by country but our study revealed that globally the number of “newly constrained” consumers doubled from 23% to 46% in the four months between September and December. Combined with the Cautious Insulated group (27%), 73% of those surveyed are cost-conscious and significantly altering their buying and consumption patterns.

In the UK these numbers are lower due to the financial support offered by the government. However, Newly Constrained accounts for 35% and Cautious Insulated 32%, meaning the majority of the GB population are watching their spending. In the 2008 recession, cautious spending resulted in a shift in sales to the off-trade channel, as the on-trade saw a reset. This pattern could be repeated, with the new normal seeing a further shift of alcohol sales to the off-trade.

We have been tracking the purchasing behaviour of these Newly Constrained consumers over the past nine months in the UK and, despite having the lowest spend per buyer of alcohol of the four groups, this group is increasing in size.

So how do you appeal to these groups of consumers?

By definition, the Newly Constrained consumers have experienced a decline in household income or their financial situation has worsened, leading them to consciously watch what they spend.

They are more likely to shop across offline and online retailers to get the best value and are looking for a greater variety of quality, value products. To attract these consumers, you need to have the correct pack strategy and offerings across channels as these consumers will not be afraid to shop around to find what they need. If we look back to 2008 the rise of the discounters was driven by this behaviour.

Cautious Insulated consumers are also watching their spend, but they are willing to pay more for higher quality and more likely to pay online subscription and delivery fees. With online growth expected to accelerate this year, appealing to this group of consumers will be key to winning the online battle. This group can also be encouraged to reallocate some of that previous out-of-home on-trade spend into in-home occasions and are still open to calculated indulgent purchases.

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