I get a few daily e-mail summaries of wine news with teasers and links to articles. This headline in today’s Wine Business Daily e-mail caught my attention:
“Robust Wine Sales Growth as Consumers Turn to Brands They Know: Despite the economic impacts of the crisis, the average price paid at retail for off-premise across alcoholic beverages continues to increase. The wine brands that have led increases in volume and value in Nielsen tracked channels since early March include Barefoot, Black Box, Bota Box, Franzia, Josh, Stella Rosa, Woodbridge, and Yellow Tail.”
I spend a lot of time looking at these kinds of data, and I doubt very much that we can make the kinds of generalizations Nielsen is making for alcohol. Still, as the country’s largest market research firm, they collect worthwhile data, at least for part of the industry. What do those data tell us?
Danny Brager, the company’s Beverage Alcohol Practice Senior Vice-President says that off-premises wine sales growth is up over 20 percent from the previous month, and about 30 percent from a year ago. The other news is about the shift in brands that people are buying. According to Brager, 16 of the 25 brands with the biggest increases in sales since the coronavirus crisis started weren’t in the top 25 for increases at the same time last year.
Brager summarizes by saying that consumers appear to be making their wine buying decisions based on these three criteria:
- Bigger, more well known brands;
- Brands that better fit COVID-19 occasions, drinking at home rather than occasions where people might gather or ‘on the go’ type occasions; and
- Brands that offer a preferred pack size, for example, larger package sizes.
Lots to unpack here. As I wrote eight years ago, Nielsen collects sales data from in-store sales mainly at supermarkets and large chain stores, including some large liquor chain retailers. They don’t include Costco and maybe not state ABC stores, either. Brager reports that online wine sales are up five to six times what they were for the same time period in 2019. This figure is calculated from online purchases through stores Nielsen already covers, and from companies like ShipCompliant that assist wineries with shipping (and either share data with Nielsen or publish their own data).
So when you come down to it, it’s not certain exactly how much of the off-premises sales market Nielsen captures. Eight years ago I estimated it was 50 percent at most. It might be higher these days, but it still doesn’t include most independent wine retailers, either brick-and-mortar or online-only.
As for Brager’s trend summary, it tells me that consumers are buying their wine when they make their trips to buy groceries. That explains the brands that top Nielsen’s list, since they’re sold in supermarkets, and those are the data they have. Many wine shops and liquor stores are open for walk-in purchases, but customers might want to minimize their trips and potential exposure to the coronavirus, making the weekly grocery trip the catch-all for most wine purchases, too.
Given the situation, sure — they’re buying the things they’ve heard of and maybe tried before. It’s likely they don’t want to spend a lot of time browsing in the supermarket aisle, so that makes sense. And for the COVID-19 “occasions,” I guess if there are more of them than there were wine “occasions” pre-coronavirus, customers will likely want to spend less money on each one. Or buy value multi-packs to have on hand.
Brager also reports that there’s good growth in the $20-$25 range, so customers are buying a few extra nicer bottles to go along with their less-expensive bottles at the grocery store. What I haven’t seen, though, is an estimate of whether the increase in off-premises (drink at home) sales, both in-store and online, makes up for the loss of sales in restaurants and bars. Are the nicer bottles people are buying at the grocery store or online the wine they would have had with dinner at restaurants? And is the surge in sales of less-expensive wine more than people would have spent or consumed at after-work happy hours?
We may be able to get a handle on this question once we have sales tax data from alcohol sales to compare to the previous year. But for now, who knows? We can say that people are drinking at home and seem to be buying more of the alcohol they can purchase for drinking at home, at least as far as we know from the data collected. We don’t know how much, really, or what they’re actually drinking. I’m looking forward to getting the full story when we’re on the other side of the current crisis.