Part one of this post reviewed one situation where an Alien Invasion (an overwhelming competitor from a different market space) is visible (in regulated markets) and another where it may be hard to view another competitor. The differences between an Alien Invasion and large-scale secular change in a marketplace may not be obvious to enterprises fulfilling traditional roles in their marketplaces. The ongoing reduction in alcoholic beverage sales, a trend of long-standing, may see some abrupt disruptions.
Cannabis – An Alien Invader to the Alcoholic Beverage Industry?
Legalized cannabis, and cannabis-related substances, appear to reduce the consumption of traditional alcoholic beverages in key demographics (women 21-45 and men too). Reduced consumption by aging demographics also plays a role.
A related set of data points for simultaneous nicotine use, food choices, and consumption of alcoholic beverages is also affected by secular trends, personal consumption microeconomics, and demographics (fewer people maturing to legal drinking ages, more states legalizing cannabis). Research studies are not entirely conclusive, with mixed results showing some alcohol consumption increasing in males 18-24 after recreational cannabis legalization. In contrast, other results show decreases in alcohol consumption after different legalization steps and in young women. Whether or not legalized cannabis is an Alien Invasion of the alcoholic marketplace is hard to determine.
Warehouse & Super Retailers – Alien Invaders or just market preference Changes?
Another possible example of an Alien Invasion, or just a new sales trend, is the marketplace for selling alcoholic beverages. New marketing data has emerged from off-sale and colossal retailer sales of traditional alcoholic beverages (Walmart, Target, Costco, CVS, Walgreens, Kroger, Amazon Fresh/Whole Foods, Aldi, Trader Joe’s.) Specifically, Costco has continued its trend of house-branded products with alcoholic beverages. These retailers can demand discounts on enormous volumes – Major brands can’t simply ignore them.
It appears that colossal retailers driving changes in consumer alcohol purchasing behaviors. Target and Walmart permit (local laws allowing) curbside pickup with groceries. Amazon Fresh, Kroger, and Instacart provide new home delivery options. Aldi and Trader Joe’s chains support more shopping checks. Costco is innovating with ‘house branded’ alcoholic beverages at lower margins than traditional brands. There are more than 16,000 CVS and Walgreens offering alcoholic beverages for sale. Colossal retailers have waged legislative and court battles to sell in major jurisdictions. It does seem clear there is an impact on traditional sales channels (on and off-sale) for alcoholic beverages that are being affected by new, colossal competitors.
A look at the changes in the alcoholic beverage markets reveals trends. The shift to selling via colossal merchants (not to mention the effects Covid-19 closures had on buying patterns) might be considered an Alien Invasion. However, the regulatory requirements have slowed the actual effects. Demographic, personal spending habits and behavioral substitution (cannabis) may also be large factors. The example shows changes in a market can be dramatic, structural, and economically huge – and maybe an Alien Invasion.
Changes in the alcoholic beverage market could be considered an "alien invasion." This is because the changes are dramatic, structural, and economically huge. The author also argues that the regulatory requirements have slowed the actual effects of these changes.
The example of the alcoholic beverage market shows that changes in a market can be dramatic and have a significant impact on businesses. Competition is a constant in business, but there are structural changes that require changes in basic strategy as opposed to tactics such as pricing and merchandising. Cannabis represents a potential secular decrease in consumption. Hyper Retailers are changing vendor abilities to price at will. These sorts of changes may require more drastic measures to preserve business sustainability.
You can read this and other pieces at www.ekalore.com/alien-invaders
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