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03/23/2021

​COVID-19 Pandemic Drives Fundamental Changes in the Business of Alcoholic Beverages

NATIONAL REPORT — The alcoholic beverages category entered 2020 already experiencing shifts in preferences, and as the "new normal" takes hold of 2021, the industry is seeing changes in alcohol shopping behavior, consumer trends and attitudes.

According to a new report from Drizly examining the year-over-year shift from March 2020 to March 2021, the dramatic sales impact at the start of the pandemic has sustained as consumers have adapted to the new way of shopping for alcohol. 

Here's what the analysis found:

An impact on annual growth

A major spike in purchasing occurred at the onset of the pandemic last March as consumers prepared to settle in, stocking up and at-home cocktail making took a major increase. Throughout the summer, purchasing behavior sustained at unprecedentedly high rates, then the fourth quarter saw typical seasonal incline, with December sales representing the second highest of the year. 

Shifts in basket size

From February to March 2020, average order volume increased 50 percent from approximately $50 to $75, indicating that consumers were exhibiting a "stock up" mentality, Drizly reported. Order volume ebbed and flowed throughout subsequent months, but looking at March 2021, basket size has significantly grown approximately $60, a well-above baseline new normal. 

Taking the top spot

Historically, wine has reigned supreme as the largest category on Drizly, followed by liquor, beer and extras. In February 2020, wine accounted for about 41 percent of category share. However, amidst the peak pandemic period identified as March-May 2020, liquor overtook wine and as the largest category.

Now at 41 percent in March 2021, liquor continues to hold the top spot. Paired with the fact that sales of mixers, bitters and other cocktail ingredients have risen sharply on Drizly since mid-March 2020, this is indicative of the rise in at-home cocktail making and a generally new view on at-home drinking behavior.

Subcategories on the rise

A few key subcategories have seen substantial shifts amidst the pandemic, with the most notable spike in sparkling wine and champagne. While there was an initial decline at the onset of the pandemic, as celebratory gatherings and gifting happened largely from afar, this subcategory grew dramatically throughout the second half of the year, Drizly noted.

Liqueur, cordials and schnapps also surged as consumers experimented with at-home cocktail making. Tequila and ready-to-drink (RTD) cocktails also experienced a steady increase since February 2020. New England/Hazy IPA and Imperial/Double IPA also experienced an uptick at the onset of the pandemic. 

Momentum behind gift orders

Prior to the pandemic, gifts represented about 3 percent of all orders on Drizly, with a typical holiday surge to around 9 percent. When large gatherings and in-person celebrations were curtailed throughout spring of 2020, share of gift orders increased by about 2 percent.

Holiday 2020 represented an all-time-high for gifting, at an unprecedented 19 percent of order share. With the COVID restrictions tighter than ever in Q4, consumers looked online to spread love from afar, with alcohol serving as a perfect, special gift. Since then, gifting has maintained a significantly higher-than-baseline share, at 10 percent of all orders.

SPRINGTIME TOP-SELLERS

As spring blooms, beverage alcohol purchasing preferences shift as warmer weather expands opportunities for outdoor gatherings. This is likely to be more prevalent than ever in 2021 as consumers revel in the ability to more safely socialize outside after a long, pandemic-impacted winter, Drizly reported.

Prior year Drizly data indicates that throughout Q2, beverages associated with outdoor gathering and warm weather — such as rosé wines, beer, RTD cocktails and tequila — see the largest sales spikes.

According to its latest BevAlc Insights by Drizly report, retailers can expect hard seltzer to be a significant driver of beer sales in Q2. When the category was on the rise, springtime share gains were significant: Hard seltzer held 11 percent of beer share in Q2 of 2019, while it only held 6 percent of share in Q1 of 2019. It also gained share in spring 2020, though the growth was less significant because hard seltzer had already become a staple of the beer category.

"This year, though the share gain may be less significant, hard seltzer will sure to be a key sales driver for retailers, particularly as product innovation continues in the category," said Liz Paquette, Drizly's head of consumer insights.

2019 and 2020 Drizly data indicates that rosé share of wine sales typically doubles from Q1 to Q2 each year as newly released favorites from wineries are released to retailers. However, year-over-year data indicates that the rosé fervor could be slowing: Rosé held 11 percent of wine share in 2020 vs. 12 percent in 2019.

“Rosé is still an important wine category for retailers to plan for in spring, particularly around occasions like Mother’s Day or Easter where the category is a popular gift order driver,” Paquette noted.

Among Drizly's top-selling spring rosé brands are:

  1. Château d’Esclans
  2. Wolffer Estate
  3. Bota Box
  4. Gerard Bertrand
  5. Dark Horse Wine
  6. La Vieille Ferme 
  7. Miraval
  8. Josh Cellars 
  9. Prophecy 
  10. Barefoot 

In 2020, a new category trend also emerged. In Q2, liquor overtook wine as the top-selling category on Drizly, gaining 1 percentage point over Q1 to reach 40 percent of sales share. This was likely related to pandemic bar and restaurant shutdowns, as liquor had actually lost a percent point of share in Q2 of 2019, according to Drizly.

"In 2021, the pandemic impact will likely be felt differently across the country this spring," said Paquette. "Some cities and states will start to open sooner as vaccination occurs at a faster rate than others."

One of the major share drivers for the liquor category was tequila, a subcategory that has seen major year-over-year growth and also tends to experience share growth from winter to spring each year. Tequila share rose from 11 percent in Q1 to 14 percent in Q2 in 2019, and it grew from 13 percent in Q1 to 16 percent in Q2 in 2020. In both years, tequila share peaked in May due to the Cinco de Mayo holiday, comprising 15 percent of share in 2019 and 18 percent of share in 2020 during that month.

RTD was among the hottest categories in 2020 in terms of sales growth, particularly within the single-serve offerings, which spiked in Q2 amidst changing spring weather and the COVID-19 pandemic. While vaccinations and declining case counts are hinting at a potential return to normal in the not-too-distant future, it’s likely single-serve offerings will remain popular, Drizly reported.

Social distancing and new ways of gathering led consumers to value the convenience and safety of single-serving packaging even more, making canned cocktails a breakout category in 2020. But the RTD cocktail trend has been growing for years, and RTDs gained share from Q1 to Q2 in both 2019 (from 1 percent to 2.5 percent) and 2020 (from 1 percent to 3 percent). 

"In spring 2021, we expect new entrants to gain share year-over-year as new product innovation and launches in the category increase competition and choice for consumers," said Paquette. 

Drizly's top-selling spring RTD brands are:

  1. High Noon 
  2. Jose Cuervo
  3. Skinnygirl
  4. 1800 Tequila
  5. Cutwater Spirits
  6. Drinkworks 
  7. On The Rocks 
  8. Bacardi 
  9. Cayman Jack 
  10. Fisher’s Island

Drizly is the largest online marketplace for alcohol in North America. Through partnerships with thousands of retailers in more than 1,400 cities, Drizly is available to 100 million-plus customers across the U.S. and Canada.