t's hard to believe that we've been living with the COVID-19 pandemic for two years now. In that time we've seen a lot of channel shifting and acceleration of other trends including e-commerce and ready-to-drink.
SipSource analysts Danny Brager and Dale Stratton along with vp of research for Beer Institute Danelle Kosmal dug into the trends over the past two years during a recent webinar hosted by the Wine & Spirits Wholesalers of America to see where we are now and where we're headed.
THE HEADLINES. Pandemic-related issues and comps have certainly made for messy data. But this year, trends should normalize.
The presenters compiled insights from data across various sources including SipSource, Wine Market Council, NielsenIQ, Sovos ShipCompliant and Beer Institute. After two years, here are the headlines:
. For beer, Danelle said Mexican imports and non-alc are major growth drivers.
. For wine, Dale said the headline is "trade up on steroids."
. And Danny called spirits the current "darling of the industry."
According to SipSource data, for the rolling twelve months ended February, spirits depletions were up 5.4%, beer depletions were down 2% and wine depletions were down 6.5%."Underneath that there's ready-to-drink- or whatever you call them," said Danny, adding it's the "talk of the town underlying each category."
Digging a little further into category trends, wine price tiers were highly impacted by COVID, according to Dale. Indeed, depletions for table wine under $11 were down around 10% in the latest SipSource data set through February. Meanwhile, table wine over $15 is up nearly 7%. Sparkling wine follows a similar pattern.
Turning to the direct-to-consumer wine channel- which reached $4.2 billion from 8.5 million cases in 2021- is still up so far this year (January and February), up about 11.6% in value. But volumes are down slightly at -1.6%. 2022 is expected to be a key year for DTC trends.
As for spirits, RTDs, tequila and Irish whiskey have been growing strong (and still are). Spirits, too, are seeing strong growth at the higher end. But, unlike wine, the mid tier and lower tier are still hanging in there. Indeed, depletions for spirits under $10 are up 2.4%. Meanwhile, luxury spirits, $50+, are growing double digits.
In 2021, the entire ready-to-drink category (spirits, wine and malt-based) reached $9.6 billion. The biggest growth drivers within the channel were spirits seltzers and spirits RTD cocktails, up 142% and 114.8%. Wine cocktails also logged strong growth, up nearly 35%. However, spirits- and wine-based RTDs are still just a small share of the total RTD category, with malt-based hard seltzers representing more than half of RTD dollars.
CHANNEL GROWTH AND RECOVERY. We all know the on-premise was hit hard at the start of the pandemic thanks to shutdowns. The channel is recovering, but still not fully recovered.
In 2021, off-premise was down compared to 2020 but up compared to 2019; and the reverse is true for the on-premise. Meanwhile, online alcohol sales are 3x pre-COVID levels, still largely driven by new buyers.
