Pandemic Pantry Loading: A Half Bottle of Wine and a Half Bottle of Spirits
The Beverage Alcohol market has been relatively resilient through the pandemic, although the impact on individual industry members varies broadly.
Some data, such as Nielsen trends, highlight the remarkably strong growth of the industry. However, at times, these trends are misconstrued to suggest that alcohol consumption is up significantly – this perception may pose a risk to excise tax increases or pushback against the industry.
Instead, for the twelve months ending September, the bw166 Total Beverage Alcohol Index stands at 125.3, a +1.9% increase over a year ago.
Official data from states representing 30% of the U.S. Legal Drinking Age (LDA) population has been released through August and for the six months ended August 2020 reflect:
Beer shipments are flat.
Spirits shipments are +7.6%.
Wine shipments are +6.3%.
While the Legal Drinking Age (LDA) population is up +1.0%, the increased growth of beverage alcohol translates to an incremental half bottle of wine and a half bottle of spirits per LDA adult. This small increase is more likely the result of incremental pantry loading than an indicator of increased consumption.
On-Premise trends are more difficult to monitor; however, several states (representing 12.5% of the LDA population) have released official tax data through August.
In April, On-Premise spending for Beverage Alcohol was down -84.4%.
In August, On-Premise spending for Beverage Alcohol partially recovered and is only down -38.6%.
Note that these states generally re-opened On-Premise earlier than other markets, so National trends are likely weaker.
Ultimately, the current forecast model developed by bw166 indicates that overall beverage alcohol consumption will grow slightly faster than the LDA population in the calendar year 2020 – likely a result of minimal pantry loading, as noted above.