Sparkling Wine Growth Accelerate as Consumers Settled into New Normal

Unless otherwise noted, all trends below are for dollar sales within Nielsen U.S. off-premise channels for the one-week period ending 7/18/20 compared to the same week in 2019. We continue to remind our readers that we are only measuring some specific off premise channels, and that the impact of the health crisis on sales is uneven across companies in the alcohol industry.

The year-over-year growth rate for total off-premise alcohol dollar sales within Nielsen measured channels was +19%.

Spirits continue to lead growth, up 29.3%.
Wine grew 19.7% in dollar sales.
Beer/FMB/cider growth was at +15.4%. Core beer excluding FMB/seltzer/cider was +8.6%.

In the words of Danelle Kosmal, Vice President of Beverage Alcohol at Nielsen:

“While growth rates have ebbed for all three categories, coinciding with on premise re-opening to varying extents, spirits has clung on to its earlier growth better than either beer or wine, while the latter’s growth has decelerated the most. That may be attributed to some business moving back to the more wine-friendly restaurant environment, which is less impacted by new closures than bars.

Looking at just those more recent growth rates may be a better indication of what we’ll potentially see through the end of the summer, and maybe even into the fall, as consumers settle into their new normal.”

We have been measuring/referring to a few different time periods related to COVID impacts: 1) COVID year-to-date, which started the first week of March (now 20 weeks); 2) Restricted Living (first week of March through the end of May); and 3) Re-opening (first week of June through the latest time period).

ON PREMISE

NOTE: this section is focused on the on-premise (bar, restaurant, taproom, etc. space). Everything else in this report is focused on the off-premise (retail…grocery store, liquor stores, etc.) space.

The following on-premise insights come from the Nielsen CGA RestauranTrak dataset, powered by Check-Level Insights Pool (CLIP), for the week ending July 25.

Here are a few highlights:

Overall sales velocity (average dollar sales per the average on-premise outlet in Nielsen CGA measurement) in U.S. outlets that are currently operational is down -28% vs last year in the week to July 25.
Compared to March 28, when the on-premise shutdown commenced, sales velocity is +205%.
Week on week velocity has increased +3% July 25 vs July 18 across the US.
Average purchase/transaction value is -9% compared to pre-COVID norms, up from -50% at its lowest.
It’s worth noting that restaurant sales velocities over the last few weeks are more stable now than what we saw previously, but that these numbers are specific to dining locations, and not the much less stable ‘bar’ environment.

BEER/FMB/CIDER

Total beer/FMB/cider was up 15.4% in dollars and 12.0% in volume for the latest week ending 7/18/20. Core beer (excluding beyond beer segments) is up 8.6% in dollars. We’re back to positive growth rates for every segment in the beer category in off premise channels, likely due to the shift back from on premise with the second round of closures.
Considering the tough comps from the summer of seltzers in 2019, the segment continues to grow at phenomenal rates, up 142% compared to the same week last year. Seltzers accounted for 45% of the total category growth.
Growth rates for other key beer segments for the week ending 7/18/20 were: super premium +20.6% with Mich Ultra once again as the top growth brand extension for the category, craft +12.6%, Mexican imports +7.2%, premium light +6.4%, FMBs +5.0%, and below premium +0.4%.
The beer/FMB/cider category had a strong week in the convenience channel, up 18.4%, outpacing growth rates for the grocery channel, which were up 15.4%.

SETTLING INTO THE NEXT NORMAL

For some segments, there were distinct differences in trends during the restricted living time period compared to the re-opening time period. Total beer/FMB/cider growth during the restricted living time period was up 21.8% in dollar growth. That slowed to +16.6% in the re-opening period (to date). Here are segments and channels that saw some of the biggest shifts from the restricted time period to re-opening:

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Beer/FMB/cider in grocery channel: +30.1% during restricted vs +18.6% in re-opening
Cider: +18.6% vs +6.7%
FMBs (excluding seltzers): +23.1% vs +11.7%
Kombucha: +70.0% vs +30%
Mexican imports: +20.4% vs +10.5%
Hard seltzer: +312% vs +180%

Segments that haven’t shifted as much between the two COVID time periods or phases include super premium, premium light, craft, and non-alcoholic beer.

WINE

Wine dollar sales in Nielsen measured off premise channels grew +19.7% in the most recent week vs year ago, up from last week’s +16.8%.

Comparing growth rates between the earlier restricted living period and the more recent re-opening period:

Package size growth rates are showing a very big swing: earlier in the pandemic period, consumers shopped in stores infrequently and sought larger packages, and so we saw larger packages (e.g. 1.5L bottle, 3L and 5L boxes) growing quickly. Those growth rates have subsided significantly, though the 3L box is still up 30% during the past seven weeks vs year ago. Cans and 375 ml bottles are both growing in the 50% range during that same time period.
Within just bottles, growth of the lower price tiers ($11 and under) have receded substantially. Growth rates of price tiers in the $11-$20 range are still substantial, but reduced versus where they were earlier, while growth rates of price tiers $20-$25 and $25+continue to be the highest, and steadiest. A reminder again, consumers moving their product purchase from on to off premise are saving large sums of money when that happens.
Unlike table wine, sparkling wine growth rates have, if anything, accelerated as consumers have settled into their ‘new normal’ and moved their celebrations from the on premise into or around the home.
By channel, while generally growth rates predictably decelerated moving into the re-opening weeks, the Convenience channel was the only one that maintained consistent high rates of growth across the two time periods suggesting a steadier shopping pattern.

SPIRITS

Spirits’ growth of +29.3% continues to lead the other beverage alcohol categories by a wide margin, and continues to gain share within the total beverage alcohol space. Comparing growth rates between the earlier restricted living period and the more recent re-opening period:

Segments where growth has slowed much faster than the total spirits category (but still growing): American whiskey; cordials; gin; rum; vodka
Segments where growth has increased moving into Re-opening: cognac; Scotch; Japanese whisky

And how about the two clear sub-category winners:

RTD cocktails: +89% in the first three months vs year ago; and +81% over the last seven weeks. Cans now represent around ⅓ of the RTD category over the last 52 weeks, with now triple digit growth
Tequila: +67% in both periods of time

A few other interesting nuggets:

Across the various off premise channels we’re tracking, in those selling a large array of fast moving consumer goods as well as alcohol such as the Grocery channel, spirits growth rates decelerated moving into the re-opening period. On the other hand, growth rates are more consistent across the two time periods in more specialized channels, such as the Liquor and Convenience channel. And in fact, growth rates in the Convenience channel are higher than any other.
Package size growth rates are showing a very big swing: earlier on consumers shopped in stores infrequently and sought larger packages, and so we saw the 1.75 Litre grow faster than the 750 ml bottle, but that has now reversed. And smaller sizes (all the way from the 50 ml to 375 ml) are growing faster now than they did in the first three months

Overview: Nielsen COVID-19 insights and analysis