For the week ending May 2, 2020 – Danny Brager, Senior Vice-President, Beverage Alcohol Practice

MHW is proud to have partnered with Nielsen to bring weekly alcohol sales as measured by their select off premise channels. Thank you to Danny Brager and the Nielsen team for their insights.

“The following represents retail sales in certain key off premise trade channels – not ALL trade channels – and off premise growth has to be massive to offset the collapse of a large portion of the on premise just to get back to flat, let alone overall growth. In addition, while over the long term, retail sales generally turns into consumption, within individual weeks, there could very likely be some degree of pantry loading as a result of the significant disruption to normal purchase patterns. Finally, this represents a total category view – and the impacts on individual companies that are part of the alcohol industry are not equal.” ~ Danny Brager

Unless otherwise noted, all trends below are for Nielsen off premise channels for the week ending 5/2/20 compared to the same week in 2019.

The week ending 5/2/20 represented the strongest growth rate for alcohol since the peak pantry-loading week of 3/21/20. Total off premise alcohol dollar sales in Nielsen measured channels increased +32.0%, with spirits leading (+38.6%), followed by wine (+35.8%), and beer/FMB/cider (+28.1%). By way of comparison, total fast-moving consumer goods (FMCG) growth was +15.4%. Of course, the strong alcohol growth rates in off premise channels must be viewed against a huge shift in consumer spending from the on premise, something more unique to this sector than many other departments and categories.

Why was this week’s growth so strong? This week might be capturing some pre-Cinco de Mayo related consumer purchasing as an ‘extra’ boost to off premise sales, whereas last year many of those celebrations were on premise. That said, many non-Cinco centric segments also grew rapidly – i.e., growth went way beyond Mexican beer or Tequila. Perhaps warmer weather in many parts of the country, coupled with some ‘indoor fatigue and monotony,’ also contributed – driving more people outdoors, and leading to more drinking occasions (and related higher sales activity). Everyone is finding their own unique ways to ‘celebrate’.

Has the growth been enough to offset the overall loss in the on premise? A reminder that Nielsen estimates that total alcohol needs to maintain at least 22% volume growth rates averagely in off premise channels in order to make up for the losses in the on premise. As the on premise begins to emerge from lockdown that number will change. Below are the breakdowns of the categories.

Spirit sales in Nielsen measured off premise channels grew +38.6% – and that was on top of the +39.6% recorded last week.

Again, RTD Cocktails led the way in growth, with each of Cordials and Tequila also continuing to exhibit strong growth, followed by Gin and Irish Whiskey. It’s likely no coincidence that each of those segments had a higher dollar share of Spirits in On Premise (as per Nielsen CGA) than their share in Off Premise, particularly Cordials and Tequila – just another validation that consumers are shifting their On Premise preferences to drinking preferences at home.
We took a deeper look at price tiers (breaking all segments down into 5 tiers from the “value” end at the lower end up to the “ultra” price tier at the other end), and then looked at the difference in price tier growth pre COVID (52 w/e 2-29-2020) vs the period of time since then. The price tiers with the smallest increase (but still double digits) were at the extremes – both the lowest “value” end (gain of 15 pct points in dollar growth vs pre-COVID) and the highest “ultra-premium” end (18 pct points). Premium and SuperPremium tiers had the largest gain in percentage growth (an increase of close to 33 pct points), with Mid-Price tiers gains of 26 pct points.

Wine dollar sales in Nielsen measured off premise channels grew +35.8% in the most recent week vs year ago – that’s now 3 weeks since the beginning of March with weekly sales growth above +30% (with 3 other weeks where growth was between +28% and +30%).

Evidence of the impact of warmer weather is reflected in the uptick of white wine growth – this week its growth rate vs year ago was 5 pct points higher than its growth we saw last week. And while celebrations in the midst of the current environment are likely different in nature than pre-COVID, French Champagne had one of its best weeks for growth, up +22% vs year ago vs other recent weeks of no to low growth.

Consistent with several prior weeks, Wines (in glass) in the $20-$25 range led others in growth, with $11-$15 and then $15-$20 price tiers just behind, in that order.

Further evidence of rising retail pricing is found in our examination of the top 100 wine selling SKUs in Nielsen measured channels. Over 90% of those items were selling at a higher price in the 4 weeks ending 4-18-2020 than they were a year ago at the same point in time, and about 75% were selling a higher price than the 4 weeks towards the end of February.

Overall beer/FMB/cider growth is likely below the threshold required over the COVID YTD period to negate the on premise declines, but the latest week’s growth looks a lot more promising, with the total category up 22.4% in volume compared to the same week last year. This category also grew more than wine and spirits between weeks (comparing this weeks’ sales to last week).

Across the board it was a good week for beer in off premise channels, with every segment experiencing strong growth. Even if we exclude FMBs and seltzers, traditional beer was up 18.6%. What were some of the growth drivers?

  • Seltzers, of course. White Claw alone contributed to 18% of total category dollar growth. The hard seltzer segment contributed to nearly 30% of growth dollars, with growth rates of 362% for the latest week compared to year ago. The segment now accounts for 8.8% for total category dollars, and could easily reach 10% by June.
  • Big brands contributed to growth. The top 15 brand families (ranked by pre-COVID dollars) accounted for 78% of total category dollar growth for the latest week. Additionally, every one of the top 25 brands (also ranked by pre-COVID dollars) has positive growth rates for COVID YTD time periods, compared to the same 9 weeks year ago.
  • Aside from seltzers, other segments that experienced strong growth included hard tea +44%, non-alcoholic beer +42%, FMBs (excluding seltzers) +31%, super premium +29.6%, craft +24.4%, and cider +23.4%.
  • Premium lights had a very strong week, up 15.8%, with all three premium light brands in the top 10 growth brands, accounting for 14% of category dollar growth.
  • The Convenience channel experienced its strongest week to date, with growth rates of 24.2% compared to last year. The strongest performers in the C-store channel were seltzers +489%, Mexican imports +35.8%, and super premium +30%.