Corona beer is surviving Corona

Insights , Coronavirus
13.03.2020 Temps de lecture: 6 minute(s)

As the Corona virus panic sets in and global stock markets collapse, some unexpected companies are raking in the cash

The global financial markets are groaning under the weight of the pandemic. And with them, the travel and event industry too. However, a few other sectors are unexpectedly getting a boost: for example, the providers of home entertainment and computer games, delivery services for groceries, and above all tech companies that specialize in solutions for video conferences and home office workplaces.

Schaum, der schützt: Das Bild zeigt eine Nahaufnahme von den Händen einer Dame, die sich unter fliessendem Wasser den Seifenschaum von den Fingern spült.


Foam that protects: At times, disinfectants for the hands were almost sold out in Europe. Does Corona’s beer of the same name have to suffer a demand shock? © depositphotos

  

Which companies could gain an advantage from Corona?

The beer brand “Corona” belongs to the American company Constellation Brands Inc. which has more than 100 brands in its portfolio and is listed in the S&P 500. Learn more about how companies are coping with the pandemic:

More on beer brands in our blog derinews* (in German)

Additional ideas for investors*


*also available to non-customers of Vontobel

  

  

▼ Proceed to the article ▼

  

  

By
Sophia Epstein,

London-based writer specialising in technology, business and innovation.

We feature her report here as part of our Publishing Partnership with Wired UK.

  

It’s official: the sale of Corona beer hasn’t been impacted by its unfortunate name association. One study may have inspired a few thousand clickbait headlines about people associating it to Corona virus, but as marketing professor Mark Ritson explained in a recent column, the virus is more likely to help than harm the brand.

Every crisis contains opportunities too

“We’re all constantly hearing the word ´Corona´, and regardless of whether it prefaces the word ´virus´”, he argues, “that’s going to keep the brand front of mind. When you buy something you revert back to instincts and habits; you pick the first thing you think of. When you order a beer, for example, you aren’t thinking about current events. When you walk into a bar, the question is not ‘does this pandemic make you feel different about any of the beers on the following list?’. The question is: ‘What can I get you?’.” And for thousands of people the answer will be Corona”, Ritson says. “Not because of what it stands for. Not because of the negative associations it evokes. Just because that was the first beer that came to mind”. So Corona is surviving the Corona virus. But many other brands are thriving. It’s not just obvious products like hand sanitiser, soap, and every imaginable version of a face mask that are flying off the shelves. There are some more surprising winners. “Whenever there is a crisis there is opportunity as well”, says Elspeth Cheung, global valuation director at consultancy Kantar Millward Brown – and some businesses will cash in on the pandemic. In China, where citizens have been in lockdown for months already, the uplift that quarantine is having on entertain-yourself-at-home services is already obvious. TikTok usage has skyrocketed; online games keep crashing because of too-high demand; and Alibaba has built a system so people can buy groceries via livestream.

Instant soup sales went up

In the UK we’re not in total lockdown mode yet, but we’re already showing signs of erratic behaviour. After the first positive diagnosis, people began to stockpile. One in 10 UK consumers have already started, which has forced supermarkets to bring in rations on basics like pasta, UHT milk and canned vegetables. It’s no different on the continent. Over the past week in Germany, instant soup sales went up 112 per cent; tinned fish and fruit by 70 per cent; pasta by 73 per cent; and tinned vegetables by 80 per cent.

Grocery deliveries are also on the up in the UK, as supermarkets experience Christmas-level demand for at-home deliveries in the past week. Even after increasing capacity by 20 per cent, time slots keep selling out. Demand is so high, one supermarket executive suggested the army be drafted in to help.

London-based food delivery app Deliveroo has already started benefitting from quarantine measures. Its Hong Kong lunch orders increased by almost 100 per cent last month, compared to January.

The shares of Zoom almost doubled

If quarantine measures come into place, that demand is only going to increase. As will the need for at-home entertainment, which explains why financial analysts everywhere are betting on the stocks of Netflix, Facebook, and livestream-workout company Peloton.

And as more offices in the UK start to close, the same trend will be seen here. Facebook, Sony and Nike were among the first to send their employees home, and the markets predict they won’t be the last.

While the vast majority of stocks have plummeted over the past few weeks, shares in Zoom are worth almost double what they were at the beginning of January. The video conferencing platform took a hit late last year, but the world’s sudden commitment to remote working has made the company more valuable than ever. Embarrassingly, the stock of the similarly named Zoom Technologies doubled in February as investors bet on the wrong company by mistake.

Workplace chat app Slack has also been booming – shares rose 30.3 per cent in February – adding to the growing pile of evidence that remote working is Covid-19’s biggest beneficiary so far.

In China, the sheer quantity of people working via the cloud has forced tech companies to upgrade their existing remote working apps or launch new services entirely. Bloomberg’s Shelly Banjo and Lulu Chen were proven right when they wrote: “While the Corona virus is scary for humanity, it’s likely to provide a shot in the arm to the country’s workforce productivity apps”.

Even without quarantine measures in place, workplaces all over the world are already being heavily affected – and it may not be temporary. “I think this is going to have a long-term impact on how we work on a virtual basis for the whole world”, says Chung. “The growth rates may not be as aggressive when the pandemic is over, but once we develop this habit of living our lives online, that will change our long-term consumption habits”.

People are shopping online instead

Habits are a powerful thing. They’re strong enough to keep people buying Corona, despite the negative name connection, but when people’s habits shift, they become a prime target for new products and services. As citizens are forced to stay home, they’ll adapt their lives accordingly and so will the businesses around them. Once that switched-up routine becomes second nature, it’ll be hard to break.

As Duhigg says:

“Habits shape our lives far more than we realise — they are so strong, in fact, that they cause our brains to cling to them at the exclusion of all else, including common sense.”

This isn’t the first time millions of people’s habits were shifted by an pandemic. Arguably the reason China’s online retail industry has been so successful is because it was spurred into necessity by Sars in 2003.

“Although it sickened thousands and killed almost eight hundred people, the outbreak had a curiously beneficial impact on the Chinese Internet sector”, Duncan Clark wrote in The House That Jack Ma Built, his biography of the Alibaba founder. “Crucially for Alibaba, SARS convinced millions of people, afraid to go outside, to try shopping online instead”.
If Sars got China hooked on online shopping, could the Corona virus change the way we work? As the pandemic continues to keep people out of the office, we could see a dramatic shift. At the very least, the current workplace technology will exponentially improve. Either way, we’ve found ourselves an unexpected winner.

  

  

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Who are we? How do we live today? And how will the digitization change our lives? How the future will unfold is preoccupying society more than ever, with engineers, doctors, politicians—each one of us, in fact—seeking answers. This article on the Corona virus is one of many contributions that shed light on the theme “digitization” from a new, inspiring perspective. We are publishing them here as part of our series “Impact on Investors”.

  

  

 

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