SALES UPDATE FOR WEEK ENDING JUNE 20TH

The MHW and Nielsen partnership continues to provide you with the latest weekly update for beer, wine, and spirits sales in Nielsen measured off premise channels along with our commentary.

Again, please note that this represents retail sales in certain key off premise trade channels – not ALL trade channels. As you all know, while the on premise had begun to re-open to varying extents across the country, there have been pauses and/or retreats more recently, and so off premise volume growth will have to still be very significant to offset on premise declines vs year ago. We’ll be watching these shifts carefully along with our on premise partners (Nielsen CGA). As always, a reminder that this also represents a total category view – and we recognize that the impacts on individual companies within the alcohol industry are not equal.

TOTAL BEVERAGE ALCOHOL

Unless otherwise noted, all trends below are for Nielsen off premise channels for the week ending 6/20/20 compared to the same week in 2019. We continue to remind our readers that we are only measuring sales in some specific off premise channels, and that the impact of the health crisis on sales is uneven across companies in the Alcohol industry.

Despite the RE-OPENING of on premise (remember this is for w/e 6-20-2020, and before more recent pauses and/or re-tightening of restrictions), alcohol off premise sales trends continued to grow with very strong double-digit gains, up 25.4% for the latest week ending 6/20/20 compared to the same week last year. Spirits in particular had a very strong week, up 39.5%, representing the strongest growth since the week of Cinco de Mayo, with almost every segment up 30% or higher for the latest week. Last week we reported that wine fell behind beer/FMB/cider in growth rates for the week ending 6/13/20; however, wine is back to the second fastest growing category for week ending 6/20/20, up 23.7%. Beer/FMB/cider grew 21.2% for the latest week.

Comparatively, total FMCG (fast-moving consumer goods) had a relatively strong week, up 12.5% vs year ago, but essentially flat (-0.2%) compared to the prior week ending 6/13/20. Aside from off premise alcohol, other consumer goods categories that are driving growth include food essentials in the frozen department, dairy, meat, seafood, and produce.

With the July 4 holiday and long weekend almost here (typically more of an off-premise holiday), along with a string of “pauses” and “closures” caused by rising COVID-19 cases in many parts of the country, we should expect to see strong off premise growth rates in the next couple of weeks.

PREMIUMIZATION — a BIT MUDDIER and NUANCED

While consumers are continuing to ‘trade up’ to more expensive price tiers in the Off Premise, often referred to as Premiumization, the dynamics beyond this are muddier and more nuanced than in the more stable and straightforward pre-COVID days. Why is that?

Retail in-store promotions have declined, leading to increased ‘average’ selling prices for individual items

Every time a consumer purchases a product in a store instead of ordering that same drink on premise (given the COVID impacted shift from on to off premise), it actually represents trading down, not up

It’s likely that on-premise prices are also down, as operators tighten up their ranges to focus on the most popular selling brands, offer welcome back incentives to bring people back, and/or try to compete more effectively with off premise pricing especially with their ‘alcohol to go’ initiatives

Average bottle selling prices in the more ‘premium’ direct to consumer wine shipment channel are actually down from year ago levels

ON PREMISE

Based on Nielsen CGA surveys over the weekend of June 19-21 in Texas, Florida, New York, and California, of those who drank alcohol in the last 3 months:

36% have been in bars/restaurants primarily for an eating occasion in the last two weeks (vs 30% two weeks ago), and 11% have visited the on premise primarily for a drinking occasion (about the same as two weeks ago). Pre-COVID, those going out for a meal over a two week period was over 80%, so significant anxiety and concern about COVID-19 remains, while obviously at the same time significant upward potential

Looking ahead to the next two weeks, 38% said they were planning to visit the On Premise primarily for an eating occasion, and 16% for a drinking occasion, though very recent closures and/or pauses across several states may negatively impact those numbers

Of those who did go out to restaurants/bars, over 80% of consumers said that they were satisfied with the experience, vs 74% two weeks ago

70% of consumers claimed to have ordered takeout/delivery of food in the last two weeks (a new high), and 12% ordered a delivery that included alcohol.

BEER/FMB/CIDER

Beer/FMB/cider dollar sales in Nielsen measured off premise channels grew +21.2% in the most recent week vs year ago, just slightly above last week’s +20.3% gains. For COVID year-to-date, off premise beer/FMB/cider is 21.4% in dollars. Core beer (excluding FMBs, seltzers, and ciders) is up 13.1% for the latest 16 weeks compared to year ago.

Drivers of growth are consistent with previous weeks, with seltzers +234%, super premium +22.3%, FMBs +19.3%. The seltzer segment had its fifth consecutive week in dollar share >10% of the total category.

Craft also had a strong week, up 17.1%. The 5 biggest growth-driving brewers in craft were Blue Moon, New Belgium, Sierra Nevada, Firestone and Lagunitas — all accounting for 42% of craft beer dollar growth for the latest week.

WINE

Wine dollar sales in Nielsen measured off premise channels grew +23.7% in the most recent week vs year ago, up from +20.1% the last week. The increases were led by Table Wine price tiers $20+. Within table wine, Oregon again led percentage gains among major domestic producing states, while among imports, Italy, New Zealand, and Portugal led the way. It is likely not a coincidence that the last round of tariffs (now back in the news again given another upcoming round of reviews) did not impact any of these countries.

SPIRITS

Spirits in particular had a very strong week, up 39.5%, representing the strongest individual week’s growth since the week of Cinco de Mayo. Ready-to-drink cocktails and tequila were the leading off premise growth drivers, up 172% and 82% respectively. However, they weren’t the only categories fueling spirits off premise remarkable growth, as nearly every category in spirits grew 30% or higher for the latest week.

Digging a bit further…

While RTD’s of all package types have grown at huge levels, Cans have led the way with triple digit percentage gains in every weekly period since mid-March. That package format now represents almost ⅓ of the RTD Cocktail category in Nielsen measured off premise channels. And with a significant set of consumers concerned about “others” preparing their food or drinks there is likely an opportunity for pre-packaged ready to drink offerings in the on premise as well.

While Ultra Premium spirits lead in growth overall for the last 16 weeks in aggregate compared to other price tiers, that lead is not consistent across segments. In fact, Super Premium spirits (the next price tier down) are outperforming Ultra Premium in each of whiskey, rum, cognac, and brandy, while the Premium tier leads in vodka.

It’s noteworthy as well that consumer at home pantry levels for Spirits are above the amounts typically on hand pre-COVID for the ‘average’ consumer, and higher than the ‘on hand’ levels consumers reported for beer or wine vs pre-COVID levels.