Nielsen U.S. off-premise (retail) alcohol update, Week Ending July 4
July 15, 2020
The year-over-year growth rate for total off-premise alcohol dollar sales within Nielsen measured channels slowed to +11.5%. That’s down from a growth rate of +19.2% for the prior week.
Spirits continue to lead growth, up 23.2%.
Wine grew 15.2% in dollar sales.
Beer/FMB/cider lagged significantly, at +6.6%. Core beer excluding FMB/seltzer/cider was actually down 0.8%; this is the first time since the last week of February that core beer experienced negative growth trends.
The following two graphics reflect the year-over-year change in dollar sales for the pre-COVID, ~full pandemic (18-week period ending 7/4/20) 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:
“With a second round of closures for the on-premise in many states, we expected off-premise trends to be stronger for the July 4th holiday; however, as we have seen over the past several months, off-premise trends have been very unpredictable. Off-premise performance for beer, in particular, was interesting and sobering in the latest week of Nielsen data, given that July 4 is traditionally a big beer week.
Still, we do need to keep in mind a couple of things. The year ago comparison is versus the week ending July 6, 2019. July 4, 2019 fell in the middle of that week, so sales for that week reported by Nielsen were likely largely inclusive of most sales related to the holiday. This year July 4th fell on a Saturday; as such, it’s quite possible that this set of data may not fully reflect all of July 4th related sales, since some retailers don’t report their weekend sales until the following week, and there might have even been some carryover celebratory purchases made on Sunday, July 5th. We'll need to see next week's data to obtain a full grasp of off premise sales related to the July 4th holiday.”
CONSUMER PURCHASING DYNAMICS
For the first time since the COVID related shutdowns took effect back in March, the increase in the number of households buying adult beverages off premise fell below +10% (up 7% and 8% respectively for the week ending 6/13 and 6/27 vs. year ago).
Spend per trip continues to be up over 10%, with 6/27 enjoying a 14% increase in total adult beverage dollar sales per trip vs. year ago.
Trips per household are consistently slightly below last year.
Breaking down the last week in the quarter by category shows some definite differences between beer, wine and spirits:
Beer buying households (excluding seltzers/FMB/cider) were flat vs. year ago; however dollars per trip were up 8%.
Wine buying households off premise increased by 11%, led by large double digit increases in sparkling wine; however, still wine dollars per trip were up 18% vs year ago to help drive sales.
Spirits consumer dynamics continued to be very strong; 19% more households are buying this year off-premise vs the same week year ago, with dollars per trip up 11% for an overall strong consumer performance.
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.
Over the weekend of July 3-5, Nielsen CGA surveyed consumers in Texas, Florida, California, and New York who drank alcohol in the last 3 months. While overall visitations to the on premise remained relatively stable (38% have been out primarily for an eating occasion, and 14% primarily for a drinking occasion), there was a significant increase in visits in New York, but only stable levels in the other states. When asked if the recent outbreaks and rise in COVID-19 cases in parts of the country had affected decisions to go out to the on premise, 61% said they chose not to go out at all, 27% remain unaffected, and 12% chose to go to a different venue.
Takeout and delivery remained important, with 65% ordering food and 11% ordering alcohol. The most popular means of ordering alcohol for takeout/delivery are directly from restaurants/bars (45%), from third party delivery apps (38%) and from online liquor, wine and beer retailers (31%). Wine remains the most popular ‘alcohol type to go’ (red, then white), well above craft beer and cocktails in second and third place, respectively. Within spirits, the popularity of the Margarita shone through, with tequila being the most popular base for to-go cocktails
News for the category wasn’t all dismal. To start with, the category had tough comps, with year ago comparisons being the largest beer-selling week of the year for off-premise channels. This year is no different, with July 4th week accounting for the highest off-premise dollar sales to date, totaling $1.16 billion dollars in Nielsen off-premise channels. That’s up 15.3% compared to the previous week.
However, if we consider the bump that July 4th typically provides to the beer category, we would have expected prior week comparisons to be even bigger. For example, for the week ending 07/6/19, beer/FMB/cider dollar sales were up 26% compared to the prior week.
Another way to look at it would be to compare July 4th sales to an average week of beer sales throughout the year. In 2019, category dollar sales for the week of July 4th were 43% higher than the average weekly sales in off premise channels.
This year, sales were 36% higher than average weekly sales to date for 2020. Of course, we should also note that average weekly sales for 2020 are completely out of the norm for the category in the off premise.
Out of stocks most likely played a large role in the category’s July 4th performance.
Yes, this was the biggest week of off-premise sales for beer/FMB/cider in 2020, however, how much bigger could it have been without the out of stock challenges?
Who were the category winners for July 4th? Seltzers. While dollar growth rates for seltzers have softened, up 134% compared to the same week last year (which again, were tough comps, particularly for hard seltzer), this still represents the segment’s strongest week in sales ever for off-premise channels. What’s more is that hard seltzers experienced a big jump in dollar share, representing 11.9% of total category dollars for the week ending 7/4/20. That’s up more than a share point from the previous week.
Outside of hard seltzers, there were many segments that experienced low single-digit growth and even negative growth rates for the first time in months in off premise channels. Premium lights are down -3.3%, below premium -3.4%, cider -8.4%, and craft was flat at 0%. The super premium segment, which had been experiencing strong double-digit growth, was up 5.6%. Mexican imports were down -2.5%, which was most likely driven by out of stocks.
The slowing of growth for beer/FMB/cider doesn’t bring us back entirely to pre-COVID shopping behaviors. Growth rates of large pack sizes are still well above pre-COVID rates, with 30 packs up 4.9% (as a reminder, 30 packs were down in pre-COVID time periods), 24 packs up 8%, and 12 packs up 19.9%, although the 12 pack growth is largely driven by hard seltzer variety packs.
Wine dollar sales in Nielsen measured off premise channels grew +15.2% in the most recent week vs year ago, down from +18.5% the last week, and it represents one of the lower growth rates for wine over the past three months.
We should note that wine generally doesn’t experience the same sort of July 4th bump as do spirits, and especially beer. And in fact, wine’s dollar sales increase versus the prior week (+5.8%) was significantly lower than the double digit increases vs prior week for both beer and spirits.
It’s worth pointing out that some smaller wine segments are booming since the beginning of March through the current week, versus a year ago, particularly vermouth (+55%), flavored beverage wines (+82%) and wine based cocktails (up triple digits). The latter two are benefiting from consumer interest in the kinds of products and characteristics that are also behind the rise of hard seltzers--elements related to flavors, packaging (especially cans), health & wellness related characteristics, and effervescence.
Vermouth is likely benefiting from a combination of its use in food recipes with more consumers cooking at home, as well as an ingredient in a variety of popular cocktails, as an additive to a spritz, or as an aperitif on the rocks.
Within pack sizes, while the growth of most sizes cooled a bit, exceptions were the 375 ml bottle (it remains a hot growth segment, albeit on a small base) as well as 3L boxes, the latter likely benefiting from some July 4th related celebrations. Wine in cans hit a share high of 1.4% of total category dollars.
Spirits’ growth of +23.2%, while also lower than in prior weeks, belies the fact that its weekly dollar sales of $440 million in Nielsen measured off-premise channels represents its second highest weekly sales of 2020 to date.
In addition, spirits sales grew 16% vs the prior week--even larger than the percentage increase vs. prior week for beer; so, we definitely saw a July 4 related bump, perhaps aligning with the impact of renewed bar closures.
All that said, spirits continues to grow its share of alcohol, as it continues to do a very effective job of transferring lost on-premise sales to the off-premise.
Generally, growth rate versus year ago deceleration was widespread by segment.
Yet, most major sub-categories continue to post strong double digit percentage gains, with two exceptions - brandy now struggling to stay above year ago levels, and more significantly vodka with growth of +7.3%--the first time since mid-March we’ve seen its growth drop into the single digit ranges.
As in the past, RTD cocktails and tequila growth remain solidly above others.