The off-premise alcohol purchasing frenzie sparked by the pandemic lockdown peaked in the first full week, and wine sales were down -24% comparatively in the following week ending March 28, according to Nielsen data. However, that still represents a 27% increase over the same week last year.
“Not unexpectedly given the stunning consumer purchasing levels we saw in the two previous weeks,” says Danny Brager, Senior Vice President of Beverage Alcohol at Nielsen. “While sales still grew significantly versus one year ago in the week ending March 28, 2020, they also dropped significantly versus last week’s levels. It appears that this week was an ‘adjustment’ week during which consumers moved away from the same level of stocking up we saw previously.”
The significance of just the first weeks of sales increase can be seen in relation to the full year growth trend. Nielsen’s off-premise wine sales data from February 22 showed that sales over the previous 52 weeks was flat at exactly 0% growth, but the new report from March 21 reveals a growth of 1.9% over the previous 52 weeks; the difference fueled by just two weeks in March.
The important question of course is what the levels will look like when the stock-up adjustment is complete. Will sales remain higher, return to the same level, or a dip?
The End of Premiumization?
Recession usually causes people to trade down, potentially ending wine’s premiumisation trend, and with volume already in decline before the pandemic, this would result in a drop in total dollar value. However, so far the data does not suggest that consumers are trading down. The average off-premise bottle price over the last four weeks is exactly the same as the previous four, $7.65.
The below $11 per bottle price tier did see reversal of fortune and grew in the four week period ending March 21, but it remained outperformed by the $11-$25 tier, and the 52 week growth trend for the low price tier remained in negative territory.
Notably, Treasury Wine Estates CEO Michael Clarke, says that consumers across the world are trading down during the coronavirus pandemic. And it may be that there is only a slight delay in that trend hitting US off-premise retail as well.
The Winners
So far the real winners in the pandemic off-premise wine marketplace are eCommerce merchants, boxed wine, and big established brands. Total alcohol eCommerce sales skyrocketed +291% the week ending March 28 versus the same week prior year, and was the fastest growing department in percentage terms. Three liter boxed wine saw an 80% increase in the same week (and from a higher base than eCommerce). The top 10 brands of wine in aggregate (dollars) pre-COVID 19 picked up an additional 1.5 share points to further expand their combined leadership.
By Kim Badenfort
How would Nielsen know what smaller brands have done in the retail environment if they don’t scan the brands.