Nielsen U.S. off-premise (retail) alcohol update, 6/27/20 GD
July 08, 2020
The year-over-year growth rate for total off-premise alcohol dollar sales within Nielsen measured channels is +19.2%, which is the second slowest growth week since mid-March. That’s down from a growth rate of 25.4% for the prior week.
- Spirits continue to lead growth, up 29.2%, but also slowed significantly compared to previous weeks’ growth trends.
- Wine grew 18.5% in dollar sales.
- Beer/FMB/cider was not far behind that, up 16.1%. Core beer excluding FMB/seltzer/cider was up 8.1%.
The following two graphics reflect the year-over-year change in dollar sales for the pre-COVID, ~full pandemic (17-week period ending 6/27/20) and recent one-week periods. The second graphic also includes year-over-year change in volume sales over the full pandemic period.
In the words of Danny Brager, Senior Vice President of Beverage Alcohol at Nielsen:
“Off-premise trends are slowing down – at least for now. We are finally seeing the off-premise slowdown that many of us expected to see earlier this month, when the on-premise space started opening up.
If the on-premise would have continued to open up, we would have predicted that the slowing of off-premise trends would have continued in upcoming weeks, as alcohol volume would have increasingly shifted back to the on-premise. However, with the second round of on-premise closures happening in key states across the country, we will likely see an uptick again in off-premise growth, particularly for the next two weeks of data, which will include July 4th related sales.”
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), sales velocities in the week ending June 27, 2020 improved to -10% vs the pre-COVID norm (for those outlets still open), representing a +220% increase vs the week ending March 28.
- However, there is predictably significant state by state variation based upon differences in COVID infection rates by state and government action in those states.
- For instance, in Texas and Florida recent velocity growth over the last few weeks has been tempered. In Florida, velocity was flat at -0.2% for the current week vs the prior one, while in Texas velocity dropped by -4%.
- On the other hand, in the latest week, velocity grew by +53% June 27 vs June 20 in NYC metro, with the wider state growing by +24%.
- NY aside, a common observation across many states is that key cities have, and continue to, perform worse than the rest of their respective states compared to their pre-COVID levels. With business travel/commuting still massively restricted and large events and late night occasions still not really happening, the city centers are still having a difficult time.
- We have obviously now entered a period of turbulence and flux in the on premise channel as many states have begun dialing back their opening plans, so a very localized view will be necessary to understand impacts.
- Growth rates for all segments across the beer/FMB/cider category slowed significantly in off premise channels for the week ending 6/27/20.
- Hard seltzers were up 187%, which represents the first time since November 2019 that hard seltzer growth dropped below 200%.
- However, this doesn’t minimize the total size of seltzers, which sold $107 million in Nielsen off premise channels for the latest week (the second largest week ever for hard seltzer sales – next only to the week leading up to Memorial Day 2020).
- Hard seltzers continue to chip away at dollar share, accounting for 10.7% of category dollars for the latest week.
- Seltzers now have annual sales of $2.8 billion (latest 52 weeks) in Nielsen off premise channels, up $2 billion in annual sales from a year ago.
- After seltzers, super premium was the segment with the next strongest growth rate, up 16.7%.
- Craft grew 12.9%, Mexican imports +11.2%, FMBs excluding seltzers +10.4%, premium lights slowed to +4.4%, cider +1.6%, and below premium dropped to -0.6%, representing the first time any segment in the category experienced negative growth trends since the first week of March.
- Wine dollar sales in Nielsen measured off premise channels grew +18.5% in the most recent week vs year ago, down from +23.8% the last week.
- While the ‘hot’ $20-$25 price tier segment cooled a bit this week, the price tiers just below and above it ($11-$15, and $25+) performed strongly.
- Within pack sizes, the highest growth rates - albeit on relatively small bases - remain cans and 375 ml bottles.
- We examined table wine varietal performance this week; over the past 17 weeks, the fastest growing wine types have been Sauvignon Blanc, Red Blends, Moscato, Pinot Noir, Rose’, Cabernet Sauvignon and Riesling (in that order) -- all +30% or more, with Sauvignon Blanc leading at +38%. However, if we compare the difference in growth rates during this 17 week period versus pre-COVID (52 week ending Feb 29, 2020), the order looks a little different, with Moscato and Riesling leading the way, followed by Red Blends, then Pinot Noir and Sauvignon Blanc.
- We should also note that wine is more ‘restaurant’ aligned than bars - its share of alcohol in restaurants pre-COVID was close to 3x its share in bars. With mandated bar closures more evident than restaurants, wine may weather the storm better in the on premise.
Spirits’ growth was significantly trimmed back - to +29.2% this week from last week’s +39.5%, with that deceleration spread across ALL spirit segments. Yet, spirits’ growth continues to lead both wine and beer by a wide margin -- by more than 10 pct points in the latest period.
Since the re-opening period (week ending June 6, 2020), the strongest segments over the past 4-weeks versus year ago have been…
- RTD cocktails: +91.8%
- Tequila: +69.8%
- Cognac: +51.4%
A strong test of a segment’s overall strength is how effectively the segment’s pre-COVID higher on-premise development has been transferred to off premise growth. From the table below, it appears that tequila, followed by cordials and gin, have done the best job in achieving that transfer; rum has not been as successful.
Another view of spirits’ strength is that while it’s skewed more heavily to bars than restaurants compared to wine and beer, and is therefore more exposed to bar closures, much of that lost volume has been effectively transferred to the off premise.
Unless otherwise noted, all trends below are for dollar sales within Nielsen U.S. off-premise channels for the one-week period ending 6/27/20 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.