Out-of-home snacking & beverages: en route to recovery

As restrictions across the globe continue to lift and consumer confidence grows, people are gradually returning to their pre-pandemic snacking and drinking habits. Driven by this, out-of-home (OOH) spend across the snacking foods and non-alcoholic drinks categories is recovering rapidly – but there is still some distance to go.

OOH value sales rose for the third consecutive quarter in the fourth quarter of 2021, increasing 19% compared with a drop of 25% in the same period in 2020. This boosted the value of the total in-home and OOH market by 6% year-on-year; almost three quarters of which was contributed by the UK, Spain, Mainland China and France.

While this overall picture is positive, looking at the evolution of OOH spend in these categories over a three year period provides valuable perspective: it is still 10% lower than it was in the fourth quarter of 2019, before COVID-19 hit. In addition, while the proportion of total value contributed by OOH sales has risen to 34% from 30% in the fourth quarter of 2020, this has still not reached the pre-pandemic level of 39%.

Soft drinks, coffee & ice cream lead the way

OOH drinks sales are performing more strongly than snacking food – with growth of 22% and 14% respectively. Recovery is most rapid in the categories that are very dependent on OOH: soft drinks, coffee and ice cream. These were the categories most affected during the pandemic, partly because they were unable to reproduce OOH occasions at home as successfully as chocolate and salty snacks did.

OOH soft drinks spend increased by a third (34%) year-on-year in the fourth quarter, without affecting the category’s evolution in take-home, which also grew by 4%. The opening up of on-premise occasions has not affected take-home purchases, indicating that a new habit has been formed. This highlights the potential to retain in-home spend while continuing to push up impulse and on-the-go consumption in OOH. Soft drinks OOH purchases contributed 49% of the total In&Out market value – a rise from 42% in the fourth quarter of 2020, but still below the 57% share it commanded in 2019. The full recovery of this sector will depend on boosting spend in bars, coffee shops and restaurants.

While coffee and ice cream have still not recaptured their previous levels of OOH spend, both are growing. The complete recovery of coffee value will depend on coffee shops and bakeries, while the consumption of ice cream has shifted during the pandemic to impulse channels and convenience stores.

Mainland China shows the route to recovery

We can look to Mainland China for inspiration, where the OOH market has not only fully recovered, but has intensified compared with pre-COVID figures (2019). This has been driven by two new occasions:

1. impulse and on-the-go consumption, with people spending most in convenience stores
2. the growth of on-premise consumption, thanks to the expansion of milk teahouses – both premium and mass – and the rise of local premium coffee shops, such as Manner, Seesaw and M Stand, which have opened hundreds of new stores.

As a result, this additional OOH consumption in Mainland China is benefiting coffee, ice cream, soft drinks and chocolate, which are the categories enjoying the highest growth.

Of course, the channel landscape varies from one country to another. Brands and retailers can learn from what’s happening in Mainland China, however, and take advantage of the shift in consumers’ habits by adapting to offer on-the-go and ready-to-drink options in their most relevant local channels.

Find out more about the global snacks and non-alcoholic drinks market by downloading the full Q4 Out-of-Home barometer through the form below, or by reaching out to our experts.