Earlier this year, a Commonwealth Bank report found a 42 per cent increase in bottle shop spending. Online and home delivery services have seen a sharp rise, too.
E-commerce player Jimmy Brings enjoyed a 23 per cent rise in new customers in April versus March and a 152 per cent year-on-year order increase.
Online retailer Beer Cartel experienced online orders that “just went through the roof”, according to founder Richard Kelsey. In March compared to last year, the brand had an 88 per cent increase in online orders. In April, there was a 302 per cent increase and May had over 200 per cent growth.
This is corroborated by data from other markets. A Nielsen report from the US revealed that in the early days of the pandemic in April, off-premise dollar sales went up 21 per cent versus the same period last year, and online sales more than doubled at 234 per cent. In mid-March, US-based online liquor platform Drizly reported sales three times higher than earlier in 2020, with wine and spirits growing twice as fast as beer.
In the UK, wine merchants have struggled to keep up with demand. Corney and Barrow reported a 40 to 50 per cent increase in deliveries at the end of March, while Armit Wines said March had seen its highest turnover in online sales in over a year, with traffic levels similar to Christmas.
Alcohol consumption on the rise?
Based on what people have claimed about how much they drink, trends during the pandemic present a mixed picture – albeit indicators are that a section of the population is drinking more frequently.
A YouGov/International Alliance for Responsible Drinking survey released in early June indicated that while 26 per cent of Australian drinkers said they were consuming less alcohol during shutdown, 15 per cent said they were drinking more.
A Wine Intelligence report indicates that for wine, Generation X has increased its frequency of wine consumption, whereas Generation Z, the youngest cohort, reduced their frequency of wine drinking the most.
Twenty per cent of Australian households reported buying more alcohol than usual since the Covid-19 outbreak, according to figures from a FARE poll. Within these households, 34 per cent said they were drinking alcohol daily, with 28 per cent drinking to cope with anxiety and stress and 20 per cent starting drinking earlier in the day.
Since the pandemic, alcohol consumption has been revealed to be slightly higher for men, but substantially higher for women in a recent Australian National University study. The increase in consumption by men was primarily due to anxiety and boredom caused by job loss or decline in working hours, whereas for women, it was more likely due to the stress of at-home child care. For both, the main reason given for the increase in drinking was their new housebound lifestyles during lockdown.
The psychology of consumers under economic and psychological stress has seen a return to the comfort of known, mainstream brands. In the US, sales of Jack Daniels and Jim Beam kicked up in March, and space was overallocated to large familiar beer brands in supermarkets at the expense of craft beer. In the short-term, US retailers are seeking to address supply chain challenges and demand for big brands by reducing SKU counts on beer and cider by as much as 8 per cent in April versus the same time prior year, a drop of more than 1900 items.
As job insecurity increases and disposable income decreases, people are now trading down from premium to mainstream brands. This has been observed in wine in the UK, where fine wine merchants are reporting rapidly increasing sales of ‘everyday’ wines. Meanwhile in Australia, the spend per bottle has also decreased.
The longevity of going mainstream as a consumer mindset, given the previous trend towards the premium in most liquor categories, will depend on the pace of economic recovery and job security. The UK fine wine merchants are optimistic and foresee a rapid recovery to more premium price brackets once the on-premise reopens, with people predicted to enjoy post-lockdown celebrations.
Another recent trend has been the rise of people creating cocktails at home, which may partially account for the growth of large format spirits. Sales of ready-to-drink cocktails in the US off-premise have increased markedly, fuelled by online recipes and bartender masterclasses. This is echoed in Australia, where a rise in popularity of pre-made cocktails is exemplified by the rash of takeaway orders from bars and pubs offering ‘iso-cocktails’.
Sales have increased dramatically at online wine subscription retailer Good Pair Days, although co-founder Tom Walenkamp doesn’t believe this necessarily means there is a rise in overall alcohol consumption in their member base.
“People are spending a lot more time at home and a glass of wine does make it more bearable, I’m not going to pretend otherwise. But before, most people went out once or twice to bars and restaurants and would have a couple of glasses of wine,” he says.
“So they’re not drinking more – all the drinking they were doing outside of home has just moved inside. Obviously we want to make sure everyone’s drinking responsibly, but I don’t see any indication of otherwise from our member base.”
Takeaway and delivery
Kerbside collection has made an appearance in off-premise liquor in the US. For example, Gary’s Wine and Marketplace in New Jersey, one of the earliest Covid-affected US states, moved to a 100 per cent kerbside and local delivery model placed through a mobile app and temporary website they quickly built. Likewise, Urban Grape in Boston placed customer limits in their physical stores, while shifting the majority of its business to digital delivery and kerbside pickup.
Other businesses are exploring direct-to-consumer delivery. In the space of just a few weeks, Metcash’s Independent Brands Australia created its own direct-to-consumer site in April called Shopmylocal, incorporating Cellarbrations, The Bottle-O, Thirsty Camel, IGA Liquor, Porters Liquor, and Big Bargain. As reflected in its name, the site aims to encourage Australians to support and buy from their local bottle shop.
Asahi UK also announced the development of an online store and next-day home delivery service of its brands called Beer Pronto. On the other hand, Carlton and United Breweries announced that due to retailer concerns about channel conflict, they had nixed their direct-to-consumer plans for the time being.
In the on-premise, during closure, there has been a wholesale shift to takeaway and delivery from cafes to high end restaurants. A number of these are choosing to sell liquor along with their meals, often from their own cellars.
In partnership with some of Sydney’s top bars, whiskey brand Monkey Shoulder launched a free door-to-door service on World Cocktail Day in May, delivering cocktails to consumers directly from bars and bartenders.
Some bars and pubs have also canned or bottled their tap beers onsite for customers to take home. In May, CUB provided 20,000 resealable growler and squealer bottles free of charge to 100 pubs in Melbourne, Sydney and Perth to better enable this.
NSW Treasurer Dominic Perrottet has said he is keen to see takeaway cocktails, wine and beer from licenced venues become an ongoing service. Now that consumers have had a taste of home-delivered and takeaway upmarket meals and liquor, demand may also continue.
Extending a helping hand
The famously collegiate nature of the liquor industry has evidenced itself during the pandemic, with a raft of suppliers offering initiatives to support on-premise venues both while they are closed and in reopening.
During closure, major brewer Lion announced measures to assist on-premise customers, including taking back unused kegs and offering customers credit. In addition to crediting customers for full kegs, CUB also donated more than 20,000 litres of hand sanitiser to frontline medical staff. The business also launched a ‘For the Love of Your Local’ initiative in conjunction with the Australian Hotels Association. For every consumer who pre-ordered a pint to drink at their local pub when it reopens, CUB matched it with a free pint.
Spirits distributor Spirits Platform is supporting Australian bartenders who have lost their jobs by paying them each $250 for approved cocktail video tutorials dubbed ‘Home Five O’Clock-tails’. The lessons are then shared and promoted on the company’s Simply Cocktails Facebook page and on the bartender’s personal social channels.
Globally, Bacardi pledged US$3 million to support the bar industry, in addition to the US$1 million pledged by Patron Tequila.
To aid venue reopening in Australia, craft brewery Endeavour offered 100 free kegs to Sydney pubs and bars on a first-in, first-served basis. Accolade Wines’ ‘Your Venue, Our Shout’ program will replace as free stock all of its wines sold in a venue in the first month of reopening. By early June, 350 venues had already subscribed to the program.
Taylors Wines’ ‘Local Night In’ program has been followed up with discounts, offers, and bonus cases with no minimum order limits when they list a Taylors wine by the glass, to aid in restocking venues.
Overseas, France-headquartered Pernod Ricard has partnered with an initiative called ‘1000 Cafes’ to reopen cafes in rural French towns with communities of fewer than 3500 residents. In Australia, Pernod’s initiative, ‘Meals for Mates’, provides $25 meal vouchers for unemployed or partially stood-down hospitality workers in Victoria, New South Wales and Queensland. In June, approximately 4000 vouchers had been sent, exhausting the initial allocation.
In New Zealand, Lion announced a ‘Cheers to Your Local’ social media campaign in May, encouraging Kiwis to support local venues, aided by a social media kit for on-premise customers to download and share on their own social sites.
Finding the new normal
Consumer sentiment, with an easing of on-premise restrictions, is currently split between people excited to enjoy a nice meal or drink, and those cautious of crowds and public spaces and opting to avoid going out.
This dichotomy is set to last for at least six months. In the meantime, now that cautious consumers have had a taste of upmarket meals and drinks home delivered for the past few months, this trend may continue for some time. Likewise, those discovering the convenience of online and home delivery may shift some of their shopping trips to this medium. Brands and retailers are well advised to maintain their new additional routes to market via e-commerce, takeaway and home delivery, and cashless payments in the short to medium term.
For some consumers, elevated levels of drinking at home may decrease as they return, even only if part-time, to office-based and out-of-home work environments.
Post-pandemic, a leaner on-premise universe for liquor is likely, both in terms of the number of venues and craft beer and spirits brands available on- and off-premise. But as the economy gradually recovers and consumer confidence and disposable income increases, the search for innovation and creativity may resume.
Norrelle Goldring is an executive director at DBM Consultants. She has 20 years’ experience in retail, category, channel and customer strategy, planning, research and marketing. Contact: 0411735190 or email email@example.com
This story appeared in the August 2020 issue of Inside Retail Magazine. To receive a print copy, click here.