Future state of the Food & Beverage industry

I’m pretty sure most of us are worried and curious about what the world will be like once things return to “normal”. If there’s one thing I have learned about the situation we are all in, it’s that what we consider normal is just an illusion. We will soon learn to adapt to new conditions, which will turn into the new norm. Illusions are fragile.

Please let me think out loud, as a concerned barfly and epicurean. Reading a few articles online and listening to some podcasts regarding the current state and what will most likely be the future state of the Food and Beverage (f&b) industry. There are several respected voices bemoaning the actions of their respective governments due to the lack of support. Questions like why aren’t f&b establishments getting more help and receiving bail out money?

Despite learning of the industry’s predicaments abroad, I still only get to see bits of what’s happening in countries like the US, Singapore and Hong Kong. (Sorry, Europe based folks, I don’t know much EU based sources). The situation here is a lot more real for me, because I live in Metro Manila. Like in many other parts of the world, local bars haven’t been operational ever since our own version of a lockdown, the Enhanced Community Quarantine, started in mid-March. Restaurants have only been allowed to sell food via take out. Most of them aren’t allowed to sell booze with the food, because most of the cities in Metro Manila and Luzon have liquor bans implemented.

The liquor ban is painful for a community whose spirits and cocktail scene has been slowly progressing. Through social media, we get to see how the more advanced markets we admire adapt to the challenges. I follow more of the Singapore and Hong Kong scene, where they are allowed to execute fewer common practices, like selling bottled cocktails and sample bottles of spirits. We ask ourselves and the government how come we can’t do something similar?

I’ve been feeling 50/50 with regards to our government’s implementation of the liquor ban. On one hand, I feel bad for f&b establishments and retailers, as they’re prevented from making a living. I’m pretty sure this ultimately falls into the hurting the economy discussion. But I’ve told myself it’s fine as, ideally, this should help in flattening the curve. It prevents people from unnecessarily gathering and getting exposed in case there are those who don’t practice social distancing. Drinking here is, in my opinion, a more social heavy activity compared to America or other parts of Asia. (I can’t say for any parts of the EU as I’ve never been there.) It also just prevents more people from doing something stupid, which could put others in danger, or spending their much-needed funds on booze instead of necessities. (There have been reports of financially challenged citizens buying illegal drugs using the government handouts.)

On the other hand, I’m wondering why governments, like the Philippines, are usually so heavy handed on booze? This article from Bangkok pretty much became the reason for my writing this article. This quote from Niks is also spot on. “You should educate people on how to consume things responsibly, everything has a middle way. But alcohol is always the scapegoat.”

While the intention behind a liquor ban is a good one, banning something just makes people want it more. There will be cases of unregulated products going around the black markets. There have already been cases of others dying due to mixing random chemicals to replace booze. How do the authorities expect businesses who rely on alcohol sales to stay in business? What’s wrong with disciplined drinkers drinking at home? There are times when I think liquor bans are just a lazy band aid solution. I’ve seen the American news where their local governments are allowing the sale of alcohol, just so the alcoholics won’t add more stress to the health system. Have these governments who imposed liquor bans thought of these individuals?

Let’s move on to potentially a touchier topic. The link from Bangkok has led me to wonder if brands should be held more accountable. Should other bodies like social media do more? Aside from the “drink responsibly” slogan, can they do more? Should they do more? For me, a reason for excessive drinking still exists because of “the more I drink, the cooler/manlier I am” stigma. Should brands through shows and movies promote a “I’m cooler because I’m a more disciplined drinker” stigma? For the sake of health, I think it will be better if brands became more supportive of movements like low abv drinks and Earn Your Booze. I think more brands should educate their consumers with more technical stuff like the toxicity of heads and tails. Or that the liver processes alcohol and sugar similarly. I realize it is counterproductive for alcohol companies to send a message of drinking less. But shouldn’t there be a middle point? Thankfully, there are already brands filled with intrinsic quality who automatically convey the “quality over quantity” message. But those who drink to enjoy, are surely a minority compared to the ones who drink to get drunk or other less healthy reasons.

On to more industry related questions. I’m sure the answers to the following questions will be very varied. But I still wonder. What’s alcohol retail going to look like down the road? With people being discouraged from going and staying out, I can see more consumers ordering more alcohol online. As a result of more reliance on online orders, I can see a lot of brick and mortar stores closing or being less staffed until the economy picks up again. For how long will this be a trend? Will this be the death of physical spirit specialist shops? Through reading some of the contents on Malt, I’ve become sure that ordering online is already a thing in first world countries. But ordering alcohol online in the Philippines is still fairly new. So, I’m also curious to compare how things will go here.

What’s going to happen to the brand ambassadors (BA)? I’m pretty sure they won’t be traveling any time soon until a vaccine comes out. So, what becomes of them? From what I know, there’s one BA per region. For the big brands like Diageo and William Grant, their Asia offices and BA’s are based in Singapore. I’m sure North America is handled by a few BAs who split the region between East and West. We’ve already been seeing more virtual tastings and online classes ever since the lock downs started. Once the curves in their respective cities or countries are flattened, will their brutally efficient higher-ups be satisfied with them physically covering only a small portion of the area they’re being paid to cover? I can see the brands working with their distributors to send out official sample bottles, or branded cocktail kits, to reconnect with their audience. Aside from that, what else can they do? I’m interested to see what the brands will do with the unspent chunks of travel and marketing budget now that traveling and events are not allowed.

When the lockdowns are finally lifted, how long will it take for bars and restaurants to bounce back? How many of them will reopen? Dave Chang thinks this will be the death of mom & pop restaurants. (Unless a miracle happens and their government saves them.) Only the big chain restaurants will be able to survive this. The really good independent ones may be bought out. But being part of a bigger machine usually means the death of artistic freedom. I’m sure there are people thinking that restaurants should be making a killing with all the take-out orders. But I keep hearing, it’s a fraction of what they normally make. They may look busy, but that’s only because there’s a lot less people working. That PPP (Payroll Protective Program) you’ve been hearing on American news, isn’t that big of a help to restaurants’ costs according to Ed Rudisell. Labor costs are said to only amount to ¼ of restaurant costs.

What kind of restrictions will be implemented on them by their respective governments? Before the lock down in Singapore, their government required bars to seat guests, sitting one seat apart from other parties. I can see these kinds of restrictions being implemented in most areas. While it’s good that bars and restaurants will be allowed to operate again, it’s also sad that they can’t operate at full capacity. Less capacity means less guests. Less guests means less staff needed and less profit. I can see some establishments charging a cover charge similar to Japan. I can imagine the higher end establishments requiring a minimum bill per party. In the Shift Drink podcast, Sother Teague of Amor Y Margo, said something along the lines of the craft bars will be more exclusive. Because of exclusivity and trying to make up for lost profits, he said that drinks will be more expensive.

I’ve already seen a lot of bars adapt to selling bottled cocktails. I’m sure a lot of bars will follow this trend as well. I’m curious how strong and how long this will be. After a certain amount of time, how much profit bars will profit from this? I feel sorrier for the spirits focused bars. They can sell sample bottles of spirits, but the wholesalers and retailers can outprice them. After all, there will be those who will want a good drink, but won’t want to risk catching the virus, or deal with the hassle of whatever restrictions will be implemented. So, having quality drinks delivered to them, to be enjoyed at the safety and comfort of their own home, is a good idea.

With the impending restrictions, what’s drinking at bars going to be like? I’m going to be very sad if I can’t sit at the bar. Service in bars and restaurants is going to be different and weird for a while. The warm intimacy will, understandably, not be there until a vaccine is manufactured. We will not be able to greet our favorite bartenders as warmly as we usually do. Sharing of drinks to the curious stranger sitting beside you, is not going to be smart. Hooking up at bars, is going to be a lot less safe for a while. I can’t even imagine what nightclubs are going to be like, as seen recently in South Korea.

We can’t discuss an establishment without its team. A lot of closed and restricted establishments mean they’ll be out of jobs. How many of them will return from the lock downs with their job/s back? I’m sure there will be those who will stick with their passion and find jobs elsewhere. But there will definitely be a lot of talent lost because of this pandemic. Aside from catching the disease, some of the talent may move on to other industries and never look back.

For those who were able to keep their job, will it be enough to earn a living? The f&b industry in the US and Philippines, relies on tips and service charges to supplement the income of their team. Again, less guests means less tips.

My apologies for all the rambling. I realize that stress is not something most of us want now. But we will all have to face the facts sooner or later. Having plenty of friends in the f&b industry and being someone new to alcohol distribution, is making me wonder and worry about the future. People have been slowly learning to drink better. It would be disheartening to see all that progress go down the drain, because we all fell into tough times. All this worrying and wondering, has led me to a bunch of questions that if or when answered will surely lead to more questions.

  1. Jojo says:

    Alcohol has been used and abused over the course of human history and people will adapt. They have no choice. It’s the businesses that need to learn how to tap into the revised norms and habits (I don’t like the term “new normal”) of people and turn that into profit. Regulations may help or hinder this process and what they have to understand is that most of these regulatory regimes (liquor bans etc) are socially and culturally-rooted. Marketing and operations will need to evolve to capitalise on these (e.g. produce sanitisers for now instead of vodka, etc.) while transitioning. The spending power of people will also be affected, even those who still have jobs as they would want to build a more resilient nest egg, so they spend less on “non-essentials” (an arguable point). There are signs and trends now (e.g. online tasting, etc.) that point to this adaptation process but there is no clarity just yet.

    1. John says:

      Agreed. The answers to these questions are entirely dependent on the governments. All we can do is wait and see while staying safe.

      “Marketing and operations will need to evolve to capitalise on these (e.g. produce sanitisers for now instead of vodka, etc.) while transitioning. ”
      I’ve heard of there being issues with this. Something about the products which can be mistaken or misused as something potable.

  2. Jhun says:

    Business have to adapt to the “New Norm”, otherwise, they will vanish… I’ll be attending an Ardbeg Masterclass next weekend (June 6th), where it will be done in a resto and the BA will be virtual… Let’s see how this goes… \m/ \m/

    1. John says:

      I’m not a fan of the term “new norm”. Let me know what the virtual masterclass is like. I’m curious how brands will use their BAs.

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