Home Industry News Releases Off-Premise Alcohol Gains Not Enough to Make Up for Losses in On-Premise

Off-Premise Alcohol Gains Not Enough to Make Up for Losses in On-Premise

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Unless otherwise noted, all trends below are for dollar sales within Nielsen U.S. off-premise channels for the one-week period ending 8/22/20 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.

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The year-over-year growth rate for total off-premise alcohol dollar sales within Nielsen measured channels was +18% (now +23.2% for the entire 25-week pandemic period).

  • Spirits continue to lead growth, up 26.2%.
  • Wine grew 17.4% in dollar sales.
  • Beer/FMB/cider growth was at +15.4%. Core beer, excluding FMB/seltzer, grew 9.8%.

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

“Off-premise alcohol also has experienced steady and somewhat consistent trends since June. Alcohol grew 18% in off-premise channels for the latest week ending 8/22/20, and year-over-year dollar growth trends for the previous week were +18.5%. The idea of consumers settling into this next normal continues, and I expect to see similar off-premise growth trends for next several weeks.

While off-premise growth rates for alcohol continue to outpace growth rates of total consumer goods, we reiterate that the off-premise growth is not enough to make up for the total losses in on-premise channels. There has been a significant shift in volume from on-premise channels, which has exaggerated growth rates for off-premise alcohol.”

Nielsen U.S. off-premise (retail) alcohol update, 8/22/20ON PREMISE

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

  • Week on week sales velocity (average rate of sale per the average establishment) has grown +3% August 22 vs. August 15 across the US, representing the 7th consecutive week without decline.
  • Sales velocity in New York remains in growth again at +4% vs August 15, representing a +285% increase vs. March 28 when on-premise shutdown commenced.
  • Illinois experienced the strongest growth across the states analyzed at +11% August 22 vs. August 15 and is now only -36% below velocity vs. the same week last year.
  • On-premise velocity in outlets that are currently operational is down -22% vs. last year in the week to August 22. This is however a +239% increase on March 28 when the on-premise shutdown commenced.

BEER/FMB/CIDER: OFF PREMISE

  • Hard seltzers continue in triple-digit growth in off premise channels, up 113% for the latest week compared to last year.
    • Hard seltzer growth rates are slowing compared to growth rates from June and July, and share has fallen back a bit, although still above 10% of the category, accounting for 10.2% of total off-premise category dollars for the latest week.
  • Off premise dollar growth trends for other segments in the category include:
    • craft had another strong week, up 14.1%
    • super premium up 21.8%
    • Mexican imports bouncing back a bit at +12.8% compared to the same week last year.

WINE: OFF PREMISE

  • Total wine grew 17.4% in off premise dollars for the week ending 8/22/20. Table wine was up 13.3%, and was outpaced by sparkling wine, which was up 35.5%.
  • Imported table wine +17.1% continues to outpace growth of domestic table wine +11.9%.
    • Imported growth is driven by New Zealand (+23.6%), Italian (+23.3%) and French (+18.7%) table wines. 
  • Domestic table wine is losing share at a much faster pace than pre-COVID time periods, and is down 3.0 share points compared to the same week last year. California table wines accounted for most of that, down 2.5 share points.

SPIRITS: OFF PREMISE

  • Spirits off premise dollar growth for the latest week ending 8/22/20 was +26.2%.
  • While whiskey dollar growth rates slightly lag that of the category (+24.2%), whiskey contributes to more overall dollar growth compared to any other category in spirits.
    • For the latest week, whiskey accounted for 33% of total spirit growth dollars in Nielsen off premise channels.
    • American whiskey leads at +27.8%, followed by Irish whiskey (+27.6%).
    • Japanese whisky, while still very small (0.3% of spirit off premise dollars), has experienced a surge in off premise growth since mid June, and is up 60.1% in off premise for the latest week compared to the same week last year.
  • Other strong spirit categories that continue to drive growth include tequila (+59.1%), ready-to-drink cocktails (+101%) and cognac (+53.2%).

CONSUMER SENTIMENT

We wanted to check in on consumer sentiment and shopping behavior. Here are some high-level findings from a Nielsen survey of 18K+ consumers, fielded July 1-8, 2020.

  • Since June, we have started to see some consistent trends not only for off-premise alcohol, but also across many consumer good categories. That comes to life in consumer sentiment as well. 60% of households expect their routines to remain altered for at least the next 4 months.
  • We’ve shared insights in the past in several forms about how premiumization within off-premise alcohol isn’t slowing down, and has in fact accelerated during COVID weeks. However, when it comes to total consumer goods, we are starting to see more cautious consumer sentiment in relation to spending. Approximately 4 in 10 (42%) of households say they are watching what they spend as a result of COVID.
  • The homebody economy continues. When asked what percentage of time households eat meals or snacks at home versus outside of home, 39% of households said they ate 100% of their meals and snacks at home. An equal amount (39%) said they ate outside of their home only 10% of the time. As a comparison, when asked what their habits were prior to COVID, only 12% said they ate all of their meals at home.
  • When asked what their plans are for the coming months, close to 1 in 3 households (28%) said they plan to eat all of their meals at home. That of course was lower for younger consumers aged 21-34, and much higher for consumers aged 65+.
  • What about consumer plans if economic conditions get worse (recession and/or inflation)? When asked about things they would do to save money when shopping for beer or wine, 39% said they won’t change how they shop for it. However, nearly ¼ said they would buy less. That’s a slightly different story for households with lower income (<$30K), which said they would be more likely to stop buying it all together.

Overview: Nielsen COVID-19 insights and analysis

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