Changing consumption habits have opened up new opportunities in the alcohol sector, some of which are detailed in a new study of independent alcohol retailers by Drizly. Drizly is the largest ecommerce alcohol marketplace in the US; it’s a platform that connects people shopping for adult beverages like beer, wine, and spirits with local retailers that can facilitate delivery within less than an hour. Through its new market data and insights offshoot, BevAlc Insights, Drizly conducted an in-depth study of over 500 adults who managed or owned their own independent liquor stores during October 2020 to find how the pandemic has changed them — and will continue to impact business.
“It goes without saying that 2020 was an unprecedented year,” said Drizly Group CEO and co-founder Cory Rellas in a recent news release, describing the surveyed businesses as a “meaningful barometer for what’s to come”: “These retailers have a front row seat to all the happenings in the beverage alcohol industry and have been an invaluable pulse on its future.”
This second annual audit of North America’s independent alcohol landscape provided a unique and in-depth look into how the retailers have adapted to the unprecedented times. One of the most interesting findings is that many independent retailers are experiencing higher in-store sales now than before COVID-19 became widespread. In fact, 70% of independent retailers say their sales have increased — 78% say their online sales went up. Understandably so, the internet has begun to play a more prominent role in purchasing alcohol as people are constrained to their homes and unable to visit liquor stores. Online sales, which those surveyed said made up less than 5% of their total sales prior to COVID-19, now account for 11% for over half (56%) of those surveyed. A substantial share of respondents said that online sales now make up nearly a third or more of total sales.
A testament toward the prevalence of a shift in consumer preferences toward online alcohol shopping is Drizly’s own sales figures. The marketplace has sustained 350% growth in 2020 compared to last year, according to the company. Furthermore, the number of retailers selling on the Drizly platform has boosted from just over 2,000 to more than 4,000 since January. “We feel fortunate to have played a role in helping our Retail Partners continue to serve consumers during these times, and in many cases, actually growing their businesses,” said Rellas.
As a result, many retailers are actually looking forward to the holiday season and predicting that it may be very positive for their growth. Nearly half (44%) predict that their sales will be significantly higher during this holiday season than prior periods, while 63% expect sales to at least match a typical Q4, which many markets cannot commit to right now. The longer, it seems, that the coronavirus pandemic drags on, people have begun to shift their habits to accept this as at least a medium-term reality. More acceptance equates to more profits for retailers.
Certain types of alcohol have done particularly well during this strange period, according to Drizly, with the hard seltzer category showing particular promise. White Claw and Truly lead the category, but the report notes that “nearly a third of retailers are looking to fast-proliferating craft entries to keep the hard seltzer category thriving.” Another trend is “ready-to-drink” cocktails, which 51% of retailers said they planned to give more room over the next year. In terms of spirits, Mexican spirits like Tequila and Mezcal are expected to see significant growth in 2021 and beyond. “Mezcal placed behind only Tequila, hard seltzer and RTD cocktails among emerging categories that retailers expect to stock more next year,” explains Drizly.
The global alcoholic beverage market has grown steadily over the past few years and was anticipated to reach $1,579 billion by 2020. However, this year has been extremely disruptive, despite the promising doors that have opened. As explained by Beverage Daily, “Although there’s been an uptick in liquor retail and ecommerce, this has not been enough to offset losses in the on-trade.” The IWSR is estimating double-digit declines for this year, which will take a long time to recover from — particularly in the US and UK. Nonetheless, “consumption habits changing as a result of the pandemic … does open up new opportunities in certain sectors.”
About the Author
Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.