Online Sales Continue to Play a Role in Off-Premise Growth for Alcohol

Unless otherwise noted, all trends below are for dollar sales within Nielsen U.S. off-premise channels for the one-week period ending 7/11/20 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 increased to +17.3% (+14.1% compared to the prior week). That’s up from a growth rate of +11.8% for the prior week.

Spirits continue to lead growth, up 25.5%.
Wine grew 16.6% in dollar sales.
Beer/FMB/cider lagged significantly, at +14.1%. Core beer excluding FMB/seltzer/cider was +7.6%.

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

“Online sales continue to play a role in off-premise growth for alcohol. For the COVID weeks ending 6/27/20 (beginning the first week of March), online off-premise alcohol dollar sales grew 309% compared to that same time period last year. Week-over-week, alcohol was one of the fastest growing categories in e-commerce channels, though as one of the smallest categories in e-commerce channels, there is a lot of opportunity for growth.

Across the three categories in alcohol, wine maintains the bulk of the share of online alcohol sales; however, spirits has been growing faster and gaining share throughout COVID impacted weeks. The challenge of course for beer is to identify ways to gain a bigger piece of that online pie.”

The following two graphics reflect the year-over-year change in dollar sales for the pre-COVID, ~full pandemic (19-week period ending 7/11/20) and recent one-week periods. The second graphic also includes year-over-year change in volume sales over the full pandemic 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.

Based on Nielsen CGA RestaurantTrak data (comprised of ~15,000 independent restaurant operators and smaller groups), after a slight dip in overall restaurant sales for the July 4 weekend, the on-premise at a Total US level saw week-on-week growth again (+4%), but the performance varied by state.

A common thread across all states is that key cities have and continue to fare worse than the rest of their respective state.

On-premise sales velocity is -30% lower than last year in the week to July 11 in outlets that are operational, but it does represent a +184% increase compared to March 28 when the on-premise shutdown commenced.

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Average transaction/purchase value is also continuing its upward trajectory and is now only -7% lower than it was a year ago.

BEER/FMB/CIDER

The growth engine of hard seltzers continues with triple-digit growth, up 149% in off premise channels for the week ending 7/11/20 vs year ago.

Hard seltzer dollar share of the category is 11%, down from the previous week’s record-breaking share of nearly 12%, but up slightly from the several weeks prior to July 4th.

The latest week of off premise data also looks better for super premiums at +19.6%.

Crafts are also back to double-digit growth, up 10.6%, and Mexican imports had a slightly better week, up 8.2%, which is still much lower than the COVID YTD dollar growth rates for Mexican imports, which is 16.8%.

As we discussed last week, out of stocks are most likely driving the slowing of growth for Mexican import beer.

Other segment performance: premium lights +5.0%, FMBs (excluding seltzers) +6.7%, cider +2.3%, and below premium -1.6%, which was the only segment in the category to have negative growth trends.

WINE

Wine dollar sales in Nielsen measured off premise channels grew +16.6% in the most recent week vs year ago, up slightly from last week’s +15.6%.

Sparkling wines continued to grow faster than table wine; in fact, while earlier on in the health crisis, sparkling wines were lagging, it’s been eleven consecutive weeks now where sparkling wines have grown in excess of table wine, and often by substantial margins.

During the last six weeks for instance, sparkling is up 31.1%, almost double that of table wine growth, and imports (both Champagne and Prosecco) are contributing to that. This suggests that sparkling wine, just like pre-COVID, is a strong segment, and that a large number of consumers are still celebrating many occasions, but just transferring those celebrations from a restaurant or bar to ‘around the home’.

Latest Direct to Consumer (Dtc) wine shipment numbers for June 2020 from Nielsen’s partnership with Wines Vines Analytics in collaboration with Sovos ShipCompliant showed a hefty dollar increase +31%, and an almost +40% increase on volume, again depressing the average price vs year ago.

This is now the fourth consecutive month where volume growth exceeded value, although the June gap was not as large as April or May.

And on the encouraging side, the 31% increase in dollars was the highest of the last four months. The total 12 month value of DtC wine shipments is now creeping up on $3.5 billion in sales.

SPIRITS

Spirits’ growth of +25.5% continues to lead the other beverage alcohol categories by a wide margin, almost 10 points better than wine or beer/FMB/cider.

Leading are RTD cocktails (+71.6%), tequila (+69.4%), and cognac (+53.1%).

Vodka just managed to stay out of single digit territory with dollar growth of just +10%, well behind the overall spirits category.

The higher Ultra Premium spirits tier continues to outperform the growth rate of the other price tiers below it, with growth rates generally above +50% for most weeks.

Remember again that all those consumers who might have ordered a cocktail in a restaurant or bar are able to save a significant amount of money when they buy a bottle of the same liquor or drink components, at a store or online, and have that drink at home.

Overview: Nielsen COVID-19 insights and analysis