Americans Are Keen On Drinking During The Pandemic
During the pandemic, we cannot freely go to our favorite restaurants and bars with friends for drinks. And we cannot even have a meal outdoors due to the limitation of physical space. The hotel industry has taken the biggest economic hit, especially as more than 10 thousand bars and restaurants have been shut down, and some have languished in the wake of the pandemic.
But for Americans who like to drink beer, whiskey, cocktails, and wine, that doesn’t mean drinking is an unsolvable problem. Nearly every state loosened its alcohol laws in 2020, and all states but three have granted lockdown exemptions to alcohol stores. Many of which have classified these businesses, along with grocery stores and pharmacies, as essential services for COVID-19, intending to promote the development of the local economy. For these Americans, it is a great pleasure to relax with a glass of liquor a day in such a bad environment.
Changes in alcohol sales in the United States have been regarded as an indicator of household drinking throughout the pandemic. In the early stage of the epidemic, the retail sales of alcohol increased significantly and reached a stable level in the third quarter of 2020. From March 2020 to September 2020, liquor store sales were $41.9 billion, an increase of 20% and 18% compared to the same period in 2019 and the first seven-month period (i.e., August 2019 to February 2020). During the pivotal months of the pandemic, March 2020 to September 2020, retail sales at dining venues fell 27%. In September 2020, dining venues sales were about 15% below their pre-pandemic levels, while beer, wine, and liquor store sales were up 17% and remained at this level during the COVID-19 pandemic.
According to CouponBirds, during the nine-week period from the epidemic control in March to May 2, 2020, American spirits increased by 34.1% compared with 2019. White wine and beer rose by 30.1% and 12.6% respectively during the same period.
Because of the epidemic, sales of the entire alcohol industry in the United States have boomed, which has led to a massive increase in sales of online purchases. Online alcohol sales on April 18, 2020, were up 234% over the previous year.
Spirits lead the growth of the alcohol industry, and premixed cocktails dominate it. Similar to offline sales, spirits led the growth at 354%, followed by beer/FMB/cider at 274% and wine at 234%. While wine continues to lead in a share of online alcohol sales, that lead is narrowing, down 4.5 percentage points from last September. Within the spirits category, premixed cocktails were the fastest-growing spirits last year, with revenue rising 42% year over year to $1.6 billion, while tequila and mezcal grew 30% separately, and Irish whiskey grew 16% stated to the American Distilled Spirits Council.
Spirits, on the other hand, reflect the premiumization trend. For the past 10 years, spirits have consistently outpaced beer and wine in market share. According to IWSR, there is a growing premium category within spirits, which includes American whiskey, tequila, cognac, and gin. Brown spirits, especially whisky, are some of the most important products in the premiumization trend.
At the same time, tequila is also a driving force for premiumization, driven by the mass entry of premium tequila into the market. The biggest players in the alcohol industry are already investing in the category, either making their own brands or snapping up smaller brands. Anheuser-Busch InBev has acquired Cutwater Spirits, while Johnnie Walker distillery Diageo has launched offshoots of some top brands such as Ketel One Botanical and Crown Royal.
Given the consistent consumption habits of the American people during the pandemic, the sales and richness of various categories in the alcohol industry have been promoted. U.S. online alcohol sales in 2021 reached $6.1 billion. In 2022, online alcohol sales will grow another 3.4% for the whole year. But there will still be substantial growth through 2025, more than double the value of the market today.
Premiumization of spirits continues at a similar pace as the period of COVID. Ultra-premium spirits were up 50%, premium spirits were up 28.7%, mid-level spirits were up 13.4%, and low-value spirits were up 3.9%. Premium spirits are gaining share at a faster rate than in the pre-pandemic period.
By 2022, when it comes to beverages, people’s tastes change rapidly, and switching to a new product may only be instantaneous. IWSR research shows that beverages are endless, but consumers are not reluctant to try them, with a strong interest in new products in categories such as craft beer, alcoholic soda, wine, and Japanese whisky. In response to this consumer trend, beverage companies often respond by developing new products, diversifying their product portfolios, and actively optimizing or reducing core brands or categories. In this process, alcoholic beverages are closer to consumers’ tastes, and the boundaries between traditional soft drinks and alcoholic beverages are gradually blurred.
At the same time, beverage companies no longer target different types of consumers, but market products for specific consumption scenarios. The rich and diverse product portfolio allows them to plan a more comprehensive market strategy, have a clearer understanding of related and competitive products, and clearly position new products and marketing scenarios with a small investment.
In addition to declining consumer demand, numerous factors continue to impact the production and market of the global beverage industry. Rising packaging prices, container capacity, and other supply chain issues, as well as inflationary pressures and changes in the environment, are all profoundly affecting suppliers.
It is worth noting that brands should not repeat the blind optimism of 2020 and 2021. Although international trading has recovered, it will be hard to return to its historical levels. Although the purchasing scenarios and channels of alcoholic beverages have changed dramatically in the past two years, especially for intermediate to advanced level products, this trend may be reversed as the market normalizes. Similarly, although the sales of products in the local market have soared in 2020 and 2021, they may decline in the future as the global environment opens up. Therefore, it is important for manufacturers and companies to develop new products that are more in line with consumers and use more innovative marketing strategies in response to changes in the economic and market environment.
The epidemic has confirmed that alcohol is a category with steady growth as long as spirits become the most popular category. Various brands have also developed their own special products in this category to acquire more customers. While alcohol acts as a sedative for dealing with stress or depression, it is a poor coping method and alcohol is not beneficial to your body. Because they increase the risk of high blood pressure, stroke, heart disease, cancer, and liver disease. As a consequence, it is very necessary to drink in moderation. Please cherish your body, and do not become addicted to it.
