Forget months, March 2020 feels like it happened years ago. COVID-19 caught the country unprepared for a pandemic. Like everybody else, the beverage alcohol industry had to adapt rapidly. It faced a surge of panic purchases, questions whether liquor stores could remain open, and the need to protect customers and staff from a suddenly spreading virus.
Consumer habits, too, have changed with our new world. For instance, shopping now takes place far more frequently through digital channels.
In this multi-part series, we catch up with the alcohol industry amidst the pandemic. In this first part we look at how consumer spending trends have changed (or not) all these months now into the pandemic (or is it years?).
What Consumers Are Buying Now
When COVID-19 first swept across America, customers bought in panic. They reached for name brands in bulk. Large-format bottles of Tito’s and Kettel One flew off of shelves. Boxed wine was a hit. Same with 30-packs of macro lagers like Budweiser, which for years had been losers in the expanding craft movement.
The coronavirus has flipped the script. Products and styles that had been popular a decade ago became desirable once again. Fearing for their health — and unsure whether liquor stores would remain open — consumers who had once browsed craft products instead grabbed better-known brands, preferring the value and consistency.
Has this changed in June?
“Name-brand items continue to be popular,” says Edward Mulvihill, owner of Peco’s Liquor Store in Wilmington, DE.
With the flagship Total Wine located nearby, Peco’s in recent years had repositioned to be more niche with craft products. “Now, we’re reversing course,” Mulvihill says. This includes the store’s largest order of 30-packs in a long time, along with cases and cases of Svedka.
Other retailers have witnessed the same trend.
“There’s a resurgence of known brands,” says Jonathan Blue, owner of the Liquor Barn chain of Kentucky. “I see this as a flight to quality and familiarity.”
Blue believes that the lockdowns taught consumers “they can enjoy things at home as much as they could out of their homes at bars and restaurants, even if they have nobody to entertain.”
Hence why vodka has become a best seller. People are mixing up cocktails, even just simple drinks, in the comfort of their own home. Tequila has also benefitted.
“Tequila is our biggest category increase, followed by prepared cocktails and vodka,” says Kevin Neitzel, owner of Fridge Wholesale Liquor in Manhattan, KS. “Sales on 1.75-L are the most popular. Domestic beer brands are really thriving.”
For Half Time, a New York-based chain specializing in craft beer, people spend less time perusing the stores’ famous mix-six section. Instead, consumers have “reverted to tried-and-true craft producers like Jack’s Abby and Sierra Nevada,” says COO Jason Daniels.
By this same trend, Half Time has actually seen a rise in sales of craft beer imports. “The ‘old-timers’, so to speak, are also going back to things a little more tried and true,” says Daniels. “For them, that means Belgian and German brands.”
This sudden shift in consumer habits, coupled with supply-chain issues due to COVID-19, has caused shortages for some products. For example: box wine.
“Delaware is almost completely out of Bota Box,” says Mulvihill of Peco’s.
Retailers across the country report similarly.
“We’re still getting regular shipments of Bota Box, but it’s less and less,” says Blue. “It’s a convenience thing for consumers, a value play. And the shortages in mixers and RTDs, that’s also a national trend.”
Agreeing with Blue is Garfield of Garfields Beverage Warehouse. “We’re seeing box wine running out, along with cocktail mixers and premade-cocktails,” he says. “A lot of the mixers used to make cocktails, we’re really seeing a spike in that.”
Which is not to suggest that many products have gone the way of toilet paper during the pandemic’s outset.
“I’m surprised there hasn’t been more of a problem with inventory,” Garfield says. “I would have expected to see more out-of-stocks that we have. Overall, other than some items, product availability has been very good.”
Have Alcohol Sales Cooled Off?
If consumers are buying similar products as from the beginning of the pandemic, are they buying just as much? After all, the panic-driven stock up of March furnished retailers with holiday season sales numbers. Has that remained the same?
“Sales have begun leveling off to normal volumes,” reports Gary Fisch, founder and owner of Gary’s Wine & Marketplace, based in NJ. “In March, overall NJ sales were up 35.6%, April sales were up 40%, and then May sales were up 13%.”
In Illinois, Garfields also saw sales calm down in the first weeks of April. “What I’d say now is that we’re about back down to normal for this time of year,” says Garfield.
Other retailers have divulged rosier numbers.
“Week-over-week, our sales have increased every week since that first week of the pandemic in March,” says Daniels of Half Time. (Worth noting is that Half Time is a pioneer in digital alcohol sales, with industry-leading ecommerce.) “Sales have been strong,” he adds. “And they’ve been steady. There’s not as much fluctuation now in sales. We have a better idea to what people are buying.”
At Peco’s in Delaware, “April was our best month ever in 84 years,” says Mulvill. “We were up 75% in April over the same month last year. In May we were up 50%. We’re starting to regulate a tiny bit, but we’re still doing double the sales volume that we would normally do.”
What about the threat of lost sales as bars and restaurants reopen?
“We wondered whether our sales numbers might soften once those businesses began reopening up, but that hasn’t been the case,” says Dustin Mitzel, general manager of Happy Harry’s Bottle Shop in Grand Forks, ND. “Things settled down for us in the first part of April, but yearly, we’re still up.”
What About Craft?
The COVID-19 consumer trend towards name brands would seem bad for craft. Add in taproom closures and a looming recession, and the pandemic seemed like a potential extinction event for much of the craft industry.
That may no longer be the case.
“Craft products have picked up, though they never went totally away,” says Mulvihill of Peco’s. “We’re still selling more craft products than ever before, but the proportions of sales have changed. Before, 60% of our sales were craft. Now they’re down to 30%, with the rest being bulk and national brands.”
Like many retailers remaining open while bars and restaurants closed, Peco’s felt a “survivor’s guilt mentality,” Mulvihill adds. “So we brought in more than 200 cases of locally made beer and spirits, and donated proceeds to the local restaurant association.”
Among craft nerd circles, there is a phenomenon during the COVID-19 lockdown. Many of us have taken this bizarre time as opportunity to open older beers from the cellar, or put sizeable dents in our rare bottles of whiskey. Now, we restock. Also, there are the sour dough-baking people of the world who power through this pandemic through the fun of experimentation.
“We’ll see people who have the mindset that they’re going to be home cooking new things, and making sour dough, and so they want a lot of different beers, because there’s not a lot else to do at night other than experiment,” says Daniels of Half Time.
Breweries with shuttered taprooms have found an outlet in the Half Time growler station.
“Because we’re buying from breweries that need help moving product, we have some amazing kegs on draft right now,” says Daniels. “People are seeing liquid on draft right now that they would have never had the chance before to get on draft.”
Although craft sales may have slowed down as name brands spike, hardly any retailer reported craft sales cratering.
“Craft purchases have remained steady,” says Neitzel of Fridge Wholesale Liquor. “It seems they are having the hardest time keeping shelves full.”