Elevated off-premise sales, particularly for gift-giving, should continue for the remainder of the year as the holiday season approaches despite uncertainty caused by the COVID-19 delta variant, according to beverage alcohol industry panelists gathered by e-commerce, on-demand alcohol delivery platform Drizly.
“Typically, we see steady increases throughout this quarter, particularly in the month of December, with spikes around some of these holidays such as Halloween, Thanksgiving Eve up to Christmas Eve and of course New Year’s Eve for Drizly in particular being the busiest night of the year,” Liz Paquette, Drizly head of consumer insights, said during Tuesday’s webinar. “This normally somewhat predictable time of the year, as we all know, is a little bit shrouded in uncertainty given the COVID-19 pandemic continues to evolve.”
Paquette was joined by Serkan Parlak, Pernod Ricard USA’s e-commerce strategy lead; Sara Harmelin, VP of digital innovation for Elizabeth, New Jersey-based Allied Beverage Group; and Jason Gold, owner of Middletown, Rhode Island-based Gold’s Wine and Spirits. The group concurred that consumers are likely to continue to drink at home, as they did during last year’s holiday season, because cases of COVID-19 continue to surge due to the highly contagious delta variant and vaccine hesitancy.
“As we entered 2021, [there was] a lot of optimism in particular around time of year, expectations that the holiday season this year would be a blowout, return of travel, corporate celebrations, big family gatherings,” Paquette said. “What we’ve come to find is that, as this pandemic continues to evolve, there are some concerns around the delta variant in particular, new mandates, lockdowns in some cases coming back into play, and restrictions vary significantly market to market.
“This is all playing a huge factor in terms of how we’re thinking about going into this OND [October, November, December] this year,” she continued.
Another At-Home Holiday Season
In the annual consumer survey Drizly conducted in June, less than half of respondents said they expected to celebrate the holidays in 2021 as they did in 2019 before the pandemic forced the closure of bars and restaurants and the cancellation of events and gatherings.
“The majority expected to celebrate in ways that they did during the pandemic,” Paquette said. “Expect to see during this time of year a mix of pre-pandemic and during pandemic behaviors, e-commerce still being a big mixed case, a mix of gathering types, smaller gatherings, potentially even some virtual, with some bigger gatherings mixed in, more at home celebrations.”
Parlak noted that online searches for hand sanitizer have begun to tick up again, indicating that concerns about COVID-19 have not abated. His company, wine and spirits purveyor Pernod Ricard, is preparing for strong off-premise sales.
“There’s a few other factors beyond just the pandemic itself that I think will drive more off-premise consumption,” Parlak said. “These are around how much people have gotten used to home nesting and home indulgences, which we expect will stick with consumers.”
Both Paquette and Parlak noted that weekday drinking has increased of late, mimicking behavior that began earlier in the pandemic but has since subsided. Harmelin noted that Allied Beverage, a wine and spirits distributor, has noticed upticks in overall celebrations.
“People seem to be looking for all sorts of reasons, big and small — birthdays and recitals, tests, and end-of-school celebrations — any reason to celebrate,” she said. “And now all with vaccinations, which we did not have, for the most part, last holiday season, people finally felt comfortable inviting others into their home so their home entertainment is expanded.”
Gift-Giving Poised for Strong Return
Expect another strong year of alcoholic beverage gifts, all panelists said. In December 2020, gift orders accounted for 20% of all Drizly sales, up from 9% in December 2019.
“This is an awesome opportunity for brands, distributors, retailers alike to drive valuable sales online,” Paquette said. “Gift orders’ average unit value on Drizly is about 72% higher than the standard.
“Further, the majority of gift orders are often sent from folks who are outside of your market, so for retailers in particular, this is an opportunity to potentially unlock an incremental sales channel,” she continued.
Christmas Eve in 2020 was Gold’s Wine and Spirits’ busiest day on the Drizly platform, Gold said.
“I think we did 85 orders in one day, and more than half were gift orders,” he said.
Nationwide, tequila and whiskey account for 35% of all Drizly gift orders, according to Paquette, who added that she expects tequila to increase its share of the spirits category, which is currently 25%.
On Drizly, gift orders typically begin ramping up in October, Paquette added.
Spirits-Based, Ready-to-Drink Offerings Still Growing Share
Unlike their malt- or sugar-based hard seltzer counterparts, spirits-based RTDs continue to grow on Drizly.
“For the first time in the last couple of years, we actually saw hard seltzer’s share decline year-over-year in this past month, while RTDs’ share has been continuing to grow steadily at about 85% year-over-year,” Paquette said. “Typically we also see a little bit of a seasonal dip in OND for hard seltzer.
“This is a big summertime beverage,” she continued. “While we’ve seen it continue to stay a little bit more throughout the year, we do definitely see a dip in OND and that has been less significant for RTDs in particular.”
At-home cocktail-making was popular last holiday season and Paquette predicted that RTDs may offer an alternative to that practice this year.
“Cordials, bitters, mixers sell at a much higher rate during OND, but we are going to see RTDs be a little bit more of a formidable force this OND than years prior,” she said.
Pernod Ricard has sat out the hard seltzer craze, instead developing RTDs for its Absolut, Kahlua and Malibu brands, Parlak said. The company is also exploring what it calls the ready-to-serve format, “typically multi-pour, slightly higher ABV and purchased by a slightly older consumer group.”
“In many ways, I think these are great solutions for consumers at the moment they’re hosting and entertaining people,” Parlak said.
RTDs’ share could reach a quarter of the beverage alcohol industry in the next few years, but along the way the current proliferation of SKUs will have to be trimmed, he estimated.
“It’s just a nascent category that’s just going to have to go through its growing pains,” Parlak said. “But it’s kind of an exciting development for us where we’re hoping to play a part in it.”
Beer Isn’t Top of Mind for the Holidays
The beer category was barely mentioned during the hour-long webinar, until a question from an audience member near the end. Asked if they had any predictions for holiday beer sales, panelists were silent for nearly 14 seconds, until Gold offered that his store primarily focuses on other categories in the winter months.
“We see a lot more, trendwise, with wine and hard liquor, especially if people are gathering indoors,” he said. “We sold a ton [of beer] this summer, way more. I think we were up like 30% beer and seltzer sales than we were even last year. The holiday season seems to gravitate all towards hard liquor, mixed drinks, and wine for us, at least in the Northeast.”