It had to happen. With more bars and restaurants opening at least partially, the year-over-year growth rate for total off-premise bev/al sales within Nielsen-measured channels had to slow. And it did, rising only 19.2% in the week ended June 27 from a year earlier. Just a week earlier year-over-year sales had been up 25.4%.
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%.
Danny Brager, Senior Vice President of Beverage Alcohol at Nielsen, said:
“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.”
On-premise gap narrows
Sales velocities in the week ending June 27, 2020, improved to down 10% from the pre-COVID norm (for those outlets still open). That was a +220% increase vs the week ending March 28, Nielsen said, adding 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%, Nielsen found.
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%.
New York 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.
Beer, FMB, Cider
Growth rates for all segments across the beer/FMB/cider category slowed significantly in off premise channels for the week ending June 27.
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, Nielsen said, noting hard seltzers 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
Wine dollar sales in Nielsen measured off premise channels grew 18.5% in the most recent week vs year ago, down from 23.8% a week earlier.
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.
Nielsen 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 three times its share in bars. With mandated bar closures more evident than restaurants, wine may weather the storm better in the on premise.
Spirits
Spirits’ growth was significantly trimmed back, to up 29.2% this week from the prior week’s up 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 percentage 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%
Cordials:+41.3%
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