Unless otherwise noted, data and insights below are for the four weeks ending May 29, 2021 compared to the same four weeks last year in NielsenIQ off-premise channels.
As more Americans become fully vaccinated, and as bars and restaurants expand in their capacity, alcohol volume continues to shift from off-premise channels back to on-premise establishments. This shift, combined with year ago comparisons representing extraordinary strong sales, resulted in continued declines for off-premise alcohol sales in recent weeks. For the latest 4 weeks ending May 29, 2021, total alcohol off-premise sales are down 10.9% compared to the same four weeks in 2020. Wine experienced the strongest declines, down 13%, followed by beer/FMB/cider down 11%, and spirits down 9%. Alcohol declines surpassed the declines of total fast-moving consumer goods, which are down 2% for the latest four weeks.
Despite the declines compared to last year’s sales, off-premise alcohol sales remain far above average compared to pre-pandemic time periods. For the latest 4 weeks, spirits is up 32%, wine is up 16%, and beer/FMB/cider is up 11% compared to the same 4 weeks in 2019. This clearly is an indication that not all drinkers are returning to the on-premise, and alcohol consumption continues to be shifted more towards in-home consumption, compared to pre-pandemic time periods.
Premiumization of course was a trend that was very prevalent in alcohol prior to the pandemic. However, during the pandemic, premization accelerated, as consumers traded up to more expensive price tiers and more premium segments of alcohol for at-home consumption. As we enter a recovery phase of COVID in the U.S., we need to answer some questions about the rate at which premiumization is happening in off-premise alcohol. Are consumers still trading up to more premium products at a faster pace than pre-pandemic periods, or is premiumization beginning to slow? For the most part, alcohol premiumization is slowing. It remains above pre-pandemic time periods, but the trading-up trend is happening at a much slower rate than peak COVID months in the U.S. from 2020.
During the initial months of the pandemic, when consumers were loading pantries with large sizes and mainstream or value brands, high-end alcohol share gains began to slow (with the exception of seltzer). Following the initial pantry-loading months, beginning in June 2020 there was an acceleration in share growth across high-end segments. The growth of premium share gains peaked in Jan/Feb 2021, and then started to level off in March. The exception to this timing is hard seltzers, which peaked in share gains during initial months of the pandemic, and then began a steady decline in share gains beginning in May 2020.
One of the contributing factors to premiumization in alcohol during the pandemic was the closure of on-premise establishments. Consumers shifted their dollar spend from bars and restaurants, to more premium brands and products for at-home consumption. With the re-opening of on-premise across the country, we should expect premiumization to grow at a much slower pace in off-premise retailers over the coming months, and we should expect to see some consumer segments begin to shift premium dollars back to the on premise. Additionally, it is important to note that not all consumers will react the same. Some consumers are still hesitant to return to the on premise, and similarly, some consumers have developed home-body mentalities that will linger for the foreseeable future. Finally, we should expect a divergence in the way that consumers contribute to premiumization — with the “insulated consumers” (those who have not faced financial hardship during the past 15 months) contributing to a greater share of that premiumization. With little to no financial constraints, the insulated consumers will be seeking ways to explore and experiment in premium segments of alcohol.
Total wine declined by 12.5% in the latest 4 weeks, driven primarily by table wine (-15.3%), while sparkling wine was only down 1.0%. Declines are consistent across all channels. As a reminder, trends vs two years ago were still strong, up 16% (compared to 6/1/19). Wine based cocktails (+41%), French Champagne (+24%) and non-alcoholic (+39%) are the only segments seeing growth.
From a packaging perspective, cans (+2%) and tetra (+7%) are still driving growth as well as smaller formats, with 375ml and 187 ml both up 8%. We continue to see diverging trends within pricing, with only $25+ wines seeing growth (+4%), but even that growth has slowed in recent weeks.
For the latest 4 weeks, spirits dollars were down by 8.5% compared to last year, with vodka (-13.9%) and whiskey (-5.9%) as the largest contributors to decline for total spirits. Most other spirit categories are down compared to last year’s soaring off-premise sales, with rum (-19.8%), gin (-15.1%), and cordials (-17.9%). Throughout most of the last year, cognac, tequila and ready-to-drink cocktails were driving most of the growth for spirits. Facing incredibly tough comps, cognac is now in decline (-4.1%), as is tequila (-3.3%). However, RTD spirit-based cocktails are skyrocketing, with dollar sales up 102% compared to last year.
While spirits is down compared to 2020, off-premise dollar sales are still far above normal ranges, with total spirits up 32% for the latest 4 weeks compared to 2019.
Dollar sales for the total category were down 11.2% in off-premise channels for the latest 4 weeks. Core beer (excluding FMBs and seltzers) was down slightly more, -12.7% compared to last year. Premium light (-15.4%), craft (-16.8%), and below premium (-15.5%) contributed to the largest declines in the category, while most beyond beer segments are still growing, with hard seltzers up 3.6%, hard tea (+15.3%), kombucha (27.6%), and non-alcoholic beer (+24.1%). Imports experienced slight declines (-6.5%), super premium (-10.1%), cider (-21%) and FMBs excluding seltzer (-18.7%).
For additional information on alcohol trends reported by NielsenIQ, please contact [email protected].