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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. 
  • More detailed information on these trends is available in the bw166 Total Beverage Alcohol Overview.
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TBA Servings +1.8% L12M through June & Industry Webinar August 6th

Today, bw166 released the Total Beverage Alcohol Advance for June 2020. Additionally, to review the impacts of COVID-19 on the beverage alcohol industry, bw166, in conjunction with Gomberg & Fredrikson, will be presenting a joint webinar hosted by industry veteran Jon Moramarco on Thursday, August 6th at 10:00 AM PT / 1:00 PM ET. 

Key industry trends through June:

  • The bw166 Serving Index has grown +1.8% over the last twelve months versus the LDA population growth of +0.8%, a slight increase in per capita consumption.
  • Three-month volume trends are:
    • Beer -3.6%
    • Spirits +2.4%
    • Wine +3.9%
  • Three-month consumer spending trends are:
    • Beer -23.5%
    • Spirits -22.3%
    • Wine -16.2%
  • Three-month equivalent wholesale value trends are: 
    • Beer -0.9%
    • Spirits +4.5%
    • Wine +1.9%

The  bw166 / Gomberg & Fredrikson webinar will discuss:

  • Six-month and three-month total U.S. market trends across beverage alcohol segments
  • Impact on per capita consumption and the share of Beer, Spirits, and Wine
  • Individual trends for Beer, Spirits, and Wine
  • Import & Export trends for Beer, Spirits, and Wine
  • A deeper dive into wine market trends due to direct-to-consumer activities  
  • Insights based on available excise tax payments for specific markets and economic data from various government sources 
    • This data gives a full market overview as opposed to many sources that measure only specific channels or rely on survey data.

To register for the webinar on August 6th at 10:00 AM PT / 1:00 PM ET

Registration for this webinar is limited — reserve your seat today.

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April Results Highlight Dynamic Industry

bw166 released The Total Beverage Alcohol Overview for April 2020 utilizing tax paid data, government data sources, and other resources to give a perspective on the US Beverage Alcohol market. While the COVID-19 pandemic has caused alterations to the methodologies to track the significant shifts, bw166 continues to use actual data to provide a complete picture of the US.

Critical insights for April, the first full month of “stay at home”:

  • The 12-month serving index is up +2.4% versus LDA population growth of +1.0% – indicating US consumers have increased their overall consumption slightly while being home.
  • The significant shift from On-Premise to Off-Premise has reduced total consumer spending (due to On-Premise mark-ups) despite increases in volume.
  • Texas tax receipts in On-Premise accounts are down -88% year over year compared to +6% for 2019 (note that this data only includes On-Premise accounts that can sell Beer, Spirits, and Wine).
  • NABCA markets (excl. PA) show Spirits volumes +14.6% for the month. As these stores sell to consumers and On-Premise operators, this represents a significant increase in Spirits share.
  • Several states have released official reports for April which show Beer volumes -0.6%, Spirits volumes +5.7%, and Wine volumes +4.2% (inc. AK, IL, MO, NE, OR, TN, and WI which represented 12% of the LDA population and 12% of TBA servings in 2019).
  • The equivalent wholesale value of Beer and Spirits were up in April versus a year ago. Wine’s wholesale value was down due to the combined impact of significant declines in On-Premise and winery tasting rooms (bw166’s equivalent wholesale value represents the value as if 100% of business sells through the three-tier system).
  • Ultimately, the US Beverage Alcohol market is sustaining the impacts of COVID-19 far better than most countries with the Spirits category, the clear winner in gaining market share during the pandemic.
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Total Beverage Alcohol Overview – March 2020

The March edition of bw166’s Total Beverage Alcohol Overview was released yesterday. 

The market has changed dramatically during March.  Some highlights include:

  • Pantry loading is evident in March with the Total Beverage Alcohol Index increasing 3.0% over the last twelve months – typically, this increases at an annual rate of 1.2%.
  • Off-Premise channels increased Beverage Alcohol sales by volume between 24% and 27%.
  • Volumes in On-premise Eating and Drinking Places declined by just over 50%.
  • On-Premise employee wages declined by 38%, which will continue in April.
  • In April, volume sold through the On-Premise will continue to decline between 80% and 90% versus April 2019.  The Off-Premise will likely make up this volume.  However, margins will contract as; generally, On-Premise has higher margins.

Recovery from the COVID-19 crisis will not be quick.  Some form of social distancing will likely be mandated until either a viable treatment is available or a vaccine is widely available.  The extension of social distancing implies that Off-Premise sales will be bolstered from reduced On-Premise consumption.  Considerations for the On-Premise include:

  • Limited seating, probably at 50% of standard capacity, will be the norm, challenging many restaurants to be profitable. 
  • Consumers will be hesitant to frequent restaurants immediately upon opening, so even building to 50% of capacity may take months.
  • Beverage Alcohol needs On-Premise for a healthy and vibrant market.  Suppliers and wholesalers need to support the slow recovery of the On-Premise.
  • Rumors have circulated of laying off or furloughing On-Premise staff at wholesalers or suppliers.  Companies should consider the short term benefits versus the long term challenges of hiring, training, and building relationships.
  • Wholesalers should reconsider supplier-dedicated teams in the On-Premise during this recovery to improve operational efficiencies and streamline the sales process for those accounts.
  • As the On-Premise opens to customers again, Wholesalers and Suppliers need to establish reasonable expectations given the slow recovery that will occur as well as be mindful of what is in the best interests of On-Premise operators during this phase.
  • On-Premise accounts will have low initial order quantities, which may lead wholesalers to limit deliveries or move to Tele-Sales.  While this may minimize expenses in the short term, wholesales must also consider the long term importance of building and maintaining relationships.

There is no doubt that Beverage Alcohol will not return to the old normal once this crisis has passed. Instead, a new normal will result, and a healthy and vibrant On-Premise market needs to be part of that norm.

For more details please subscribe to the bw166 – TBA Overview.

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The bw166 Serving Index up +1.2% in January to 123.1

The bw166 Total Beverage Alcohol Advance report shows overall consumer spending on Beverage Alcohol to be $277.5 Billion, +3.6% versus last year. Some key observations for twelve months ending January 2020:
  • The bw166 serving index is at 123.11, a 1.2% increase over the same period last year.
  • The legal drinking age (LDA) population is now 243.5 million, +1.0% versus last January.
  • 75% of the growth in the LDA population is represented by consumers over age 60.
  • Per capita consumption is only up marginally over the last year.
  • Spirits are driving all of the growth in servings in the beverage alcohol category.
  • Off-Premise Beverage Alcohol spending totals $158.5 Billion, +2.6%.
  • On-Premise Beverage Alcohol spending totals $119.0 Billion, +5.0%.
  • Consumers are shifting more of their On-Premise spending to Limited-Service Eating Places, where spending grew +10.5% over the last twelve months.  Full-Service Restaurants grew +3.7% during this period.

Note: The methodology bw166 uses to calculate total consumer spending has been revised in this current report to more accurately reflect the total market. This change has increased baseline spending by 4% though general trends have not changed.