Consumers are still buying alcohol to drink at home, and with impending on-premise shutdowns as the COVID-19 pandemic surges, they could be buying even more soon, according to market research firm Nielsen.
“Given the ongoing restrictions in bars and restaurants, as well as [a] second round of closures in some markets, alcohol sales continue to shift from on-premise to off-premise, allowing off-premise alcohol sales to surpass growth rates of total fast-moving consumer goods,” Nielsen’s beverage alcohol insights team wrote in a report.
Off-premise dollar sales of beer, FMBs and cider increased 13.9% in September and October, lagging behind total alcohol sales, which increased 17.6% in that two-month period, according to Nielsen. Beer category dollar sales have also decelerated in the most recent two months compared to dollar sales of beer through the COVID-19 period year-to-date (early March through the latest week), which are up 17.7%.
Beginning in September, total alcohol has grown at twice the rate of total fast-moving consumer goods (FMCG). FMCG dollar sales increased 9% in September and October, a rate that held steady into the week ending October 31. In those same periods, total alcohol increased 17.6% and 17.9%, respectively, indicating a slight acceleration.
Dollar sales growth of both wine (+18.9%) and spirits (+26.3%) outpaced beer (+13.9%) in September and October. However only spirits (+28.5%) were able to maintain momentum in the week ending October 31; both beer (+13.8%) and wine (+17.5%) decelerated that week.
When hard seltzers and FMBs are excluded from the category, off-premise dollar sales of core beer products grew 8.7% in September and October, the only beverage alcohol category to lag behind total FMCG.
Beyond-beer offerings drove beer’s growth, with dollar sales increases in hard seltzer (+103%), hard tea (+38%), hard kombucha (+129%) and cider (+14.9%). Share changes within the category favored hard seltzer (+4 dollar share points), super premiums (+0.4 dollar share points) and craft (+0.2 dollar share points), at the expense of budget offerings (-2 dollar share points) and premium lights (-1.9 dollar share points).
Within core beer, several segments’ dollar sales increased: super premium (+19.7%), craft (+15.4%) and non-alcoholic beer (+41%). The success of non-alcoholic beer, hard kombucha and hard seltzer align with the high value consumers assign to health and wellness.
Although off-premise sales of hard seltzer have decelerated from their summer boom, 2020’s fall slowdown is less drastic than 2019’s.
“For September/October, hard seltzers accounted for 9% of total category dollars, down from summer months, but up four points compared to September/October last year,” Nielsen wrote.
Although millions of Americans are still out of work during the pandemic, price-conscious segments across all beverage alcohol categories have seen only modest increases, if at all.
Below premium beer dollar sales decreased 1% in September and October, Nielsen beverage alcohol practice VP Danelle Kosmal told Brewbound. Dollar sales of sub-$4 table wines declined 4.9%; dollar sales of $4-$7.99 table wines increased 2.6% in the same period. Value spirits’ dollar sales increased 3.9%, lagging far behind the rest of the spirits category.
However, to offset the loss of business from the on-premise channel — which went from being closed for on-site service in the spring, to open with capacity restrictions in the summer and early fall, to shutting down for on-site service again in several states — beverage alcohol categories need to hit a 22% increase in volume sales, Kosmal said. Only spirits (+26.3%) has achieved this. Wine (+18%) and Beer/FMB/Cider (+14%) have not.
Sales velocity in the on-premise channel has increased 233% during the week that ended November 7 compared to the week that ended March 28, Nielsen said. Those gains now seem tenuous.
With COVID-19 cases on the rise nationwide, governors of several states have set curfews on indoor service for bars and restaurants, which often include brewery taprooms, or shut down on-site service entirely.
As consumers consider their Thanksgiving celebrations next week, many are looking to stay home with smaller guests lists, according to a survey Nielsen conducted of 15,000 households between October 22 and November 2. Seven in 10 respondents said their Thanksgiving dinner will have six or fewer people in attendance. Nearly 40% plan to celebrate at home with only immediate family, an increase of 14% from 2019.
Hosts’ plans for alcohol at their Thanksgiving table follow roughly the same trends as last year with slight declines:
- 37% plan to serve wine, compared to 39% in 2019;
- 24% plan to serve beer, compared to 28% in 2019;
- And 19% plan to serve spirits, compared to 20% in 2019.
However, smaller celebrations also mean smaller basket rings — almost 25% of survey respondents told Nielsen they plan to spend $25 or less on alcohol for Thanksgiving.
E-commerce sales factor into plans for 25% of respondents, who said they will shop online for delivery or pickup this year. In September, online sales of alcohol increased 256% over online sales for the same month in 2019, about half the rate of increase the alcohol e-commerce industry had in the early days of the pandemic.