“Dominated” may be a bit strong, but distilled spirits had a breakout year in 2021, gaining three percentage points of total share on Drizly. Spirits accounted for a 44% of all Drizly sales, while wine’s share declined one percentage point year-over-year to 38% and beer dipped two percentage points to 16% share.
Data from market research firm IRI for the 52-week period ending Dec. 26, 2021 tells a similar story: liquor gained 2% in on-premise dollar sales as wine declined 6% and beer sales decreased 0.4 percent.
Tequila was the year’s big winner within the liquor category, gaining three percentage points on Drizly to reach 18% of spirits share. IRI data confirm tequila’s gains, showing an 11% increase in retail dollar sales in 2021 over the previous year.
Premium tequilas — particularly aged varieties — saw tremendous growth last year, Scott Moore, senior vp-national off-premise accounts at Southern Glazer’s Wine & Spirits told Drizly. “We had fresh offerings and new consumers entering the category every day,” he says.
Other agave-based spirits didn’t see the same level of success, however. Mezcal, which outplaced tequila’s growth on Drizly in 2020, remained flat year-over-year at 1% of total liquor.
In the wine category, Champagne and sparkling wine saw a significant spike in 2021, experiencing a wine category share increase on Drizly to 24% from 20% year-over-year. By year’s end, share for the Champagne and sparkling wine subcategory ranked third behind red and white still wines.
Likewise, dollar sales for Champagne in IRI-tracked off-premise channels rose 6% in the 52-week period ending Dec. 26, while case sales grew just over 2%.
“People were ready to celebrate in 2021, and short supply drove demand and pantry loading,” says Moore. “Champagne sales were through the roof.”
Domestic Beer Sales Plunge 5%, Imports Gain 5%
That’s according to IRI. Despite recent discussion of hard seltzer demand leveling off, it experienced a 17 percent jump in dollar sales over 2020.
Hard seltzer also remained the top beer subcategory on Drizly at 21 percent share, gaining two percentage points within the category. But lagers, including light and American-style varieties, saw growth across the board year-over-year as well. Within the IPA category, New England/hazy IPA continued to see gains, while standard and imperial/double IPA share remained flat.
Soaring Ready-to-Drink (RTD) Cocktail Growth
Even as consumers returned to on-premise drinking venues and became slightly less obsessed with mixing cocktails at home, demand for ready-to-drink (RTD) cocktails soared. This was due in large part to their convenience, high quality, and innovative flavors.
“We saw many new entrants last year and lots of variety in this space, from brand extensions to totally new standalone brands,” says Moore. “Winners in these categories are being chosen much more quickly at retail than in the past.”
IWSR Drinks Market Analysis forecasted the year’s sales volume growth for spirits-based RTDs at 53 percent, with tequila- and vodka-based beverages as top sellers. “As spirits and RTD consumption continues to rise in the U.S.,” says Brandy Rand, IWSR’s chief operating officer of the Americas, “opportunities are booming for creative crossover cocktails in cans and bottles.”
Though the RTD cocktail category remains small on Drizly, it has made major gains. In 2021, RTDs accounted for just under a two percent share of total sales — nearly doubling from 1.1 percent in 2020 and up significantly from 0.4 percent in 2019. Many new brands also entered the market last year in response to the category’s growth, bringing the total on Drizly to 450 — an impressive 45 percent increase over 2020.
Liz Paquette, Drizly’s head of consumer insights, notes that the RTD boom affected growth for the hard seltzer category in 2021. “Hard seltzer’s overall share on the platform declined three percent year over-year, while the share for RTDs grew 83%,” she says. “This suggests that RTDs took some share from the hard seltzer category as a result of increased competition.” RTDs seemed to have a lesser impact on smaller categories such as hard iced tea, which doubled its share on Drizly last year, and hard kombucha, which saw its share remain flat.
Rising Tide for No/Low Drinks
In response to the trend toward “better-for-you” beverages, non-alcoholic wine, beer, and spirits showed definite signs of growth in 2021.
Month after month, all three placed among Drizly’s fastest-growing subcategories year-over-year. Non-alcoholic beer was the platform’s biggest non-alcoholic seller, while zero-proof spirits saw the strongest share growth within the liquor category — up 200 percent year-over-year. Ninety percent of retailers on Drizly now carry no/low products, and the category’s share has increased 120 percent since 2020.
IRI tracking for the 52 weeks ending Dec. 26 shows a 24% increase in dollar sales for non-alcoholic beer, along with a 37% jump for non-alcoholic wine beverages.
IWSR projects that sales volume will see a compound annual growth rate of approximately 11% between 2020 and 2024. “Moderation is here to stay and is part of consumers’ everyday lifestyle,” explains Rand. “Alcohol-adjacent products that offer better-for-you cues are becoming more popular and available across all channels.”
Gifting and Splurging
Gift orders saw huge growth in 2021, with share on Drizly increasing 66% year-over-year. Gifting accounted for an impressive 11 percent share of Drizly’s total sales last year compared to 7% in 2020.
“Gifting initially soared on Drizly during the 2020 holiday season as consumers sought ways to send gifts and celebrate from afar,” says Paquette. “In 2021, awareness of gifting options became a key growth driver. Last year we saw an increase in everyday gifting outside of the typical holidays when we had previously seen the majority of gift sales.”
Consumers also continued trading up to higher-end products in 2021. “Tequila and whiskey led the way, but premiumization touched almost every segment of the wine and spirits categories,” says Moore. “It’s a form of affordable luxury that consumers are greatly enjoying.”
Shortages and Supply Chain Disruptions
Ongoing supply chain issues presented numerous challenges for retailers and suppliers in 2021. Imported beverages saw the greatest impact due to scarcity of shipping containers, a lack of workers to unload ships, and not enough truck drivers to transport goods to their destinations. Demand for packaging materials also left some domestic spirits producers unable to fulfill retailers’ orders.
“The impact has been significant, even as we worked feverishly with our partners by engaging in forecasting activities,” says Moore. “Finding components including glass, closures, cans, and labels — as well as securing transportation — was challenging and disruptions often came without warning.”
With tequila in extreme demand, retailers experienced holiday season shortages of high-end products like Don Julio 1942 and Clase Azul. Cognac and whiskey also saw shortages in the year’s fourth quarter.
Due to reduced supplies of top-selling Champagne brands such as Veuve Clicquot and Dom Pérignon, stores stocked up on alternative brands, grower Champagnes, and sparkling wines from regions beyond Champagne.
Expanding E-Commerce
Alcohol e-commerce became increasingly prevalent in 2021 as retailers adopted online sales as an essential business strategy. The number of stores on the Drizly platform grew more than 45 percent last year, reflecting increased awareness and investment in e-commerce from retailers across the country.
Last year also saw the state of Iowa open up to alcohol home delivery, bringing the total number of Drizly-operational states to 31, along with the District of Columbia. “Several other states are on the table to open up in 2022,” says Paquette, “including Alabama, Arkansas, New Mexico, and Mississippi.”
An IWSR study released in December found that online business models for alcohol sales are becoming more diverse, leading consumers to shift more often between channels and retailers according to their specific needs at any given time. According to the firm’s estimates, total beverage alcohol e-commerce in the U.S. grew by more than 26% in 2021. The study further predicted that total beverage alcohol e-commerce sales across key global markets will grow more than 66% in the next five years.