Consumer Shift to E-comm Not Just Maintaining, but Growing, Says Drizly
In mid-March, days after states started shuttering on-premise establishments, e-commerce bev alc platform Drizly shared that in their prior four days or so, they were seeing roughly 3.5 times the growth rate from earlier in the year. Beer, wine and spirits were all up tremendously, but wine and spirits were growing twice as fast.
The next week, the IRI data to March 15 bore out pretty much exactly that scenario.
But how long will that growth continue? Could we be turning a corner with off-premise growth soon?
Jenn Litz-Kirk, executive editor of sister publications Beer Business Daily and Craft Business Daily, sat down with Drizly’s head of consumer insights Liz Paquette (via Zoom) recently to discuss just that and other trends Liz is seeing play out on the e-commerce platform.
Liz walked us through the recent trajectory. “When we first started to notice a discernible impact was around the week of March 9th,” she said. “When we look now at this past week, the week of 3/23, compared to that of 3/16, we’re not seeing as big of a jump, however, we still are seeing growth.”
But it’s still significant growth compared to their “baseline” of earlier in the year.
What exactly do they consider their “baseline”? Their baseline is basically eight weeks prior to the date, according to Liz.
DRIZLY’S PHASES OF GROWTH. In that first week, the shift to off-premise juiced their numbers as the on-premise was starting to shut down (or at least become victim of a quarantining public).
From that, there was a “greater shift to e-comm.” And now, “what we’re seeing is that that is not only just maintaining, but it is growing.”
“If we look at our numbers last week, specifically, on average, we were up about 500% year over year. Prior to that, on average it was about 400%,” she said.
“Eight weeks prior to this past week was actually Super Bowl Sunday,” said Liz. “When we actually look at this past Sunday in particular, compared to eight weeks prior, we’re still about 150% over baseline. That’s 150% higher growth than we would have expected, even compared to Super Bowl Sunday, which is one of the biggest days of the year, always.”
So while growth has leveled a bit from two weeks ago, “it’s still explosive growth compared to what we would have expected to see at this point in time.”
W&S SHARE HAD SWOLLEN, BUT IT’S GOING BACK TO NORMAL. As aforementioned, when we last took a look at Drizly trends [see WSD 03-17-2020], wine and spirits were seeing bigger gains than beer.
“We were seeing a real acceleration in wine and spirits in particular,” says Liz. “That has slowed a bit. What we’ve noticed is that the mix of share amongst those categories has kind of tempered back a little bit to what we’d expect normally.”
For instance, wine typically represents about 40% of total sales on the platform, she says, and “there were points where that had risen to about 44% and had taken share away from beer in particular. That has kind of evened out a little bit. We’re back at around 40% to 41%, and we’ve actually seen beer rise back up,” to about 19% share this past week.
WHAT’S GROWING? When asked about top sellers by brand, Liz said White Claw continues to be one of the top sellers on the platform. For spirits, Tito’s and Bulleit top the list. For wine, Liz lists Kim Crawford and Oyster Bay as top sellers.
“We’re seeing kind of those regular ‘go-tos’ being the ones that folks are leaning on as well.”
BUT SO ARE APERITIVOS, AS PEOPLE MIX THEIR OWN COCKTAILS. Drizly has also seen a “major spike” in consumers purchasing things like liqueurs and cordials.
“Even vermouth actually saw crazy outpaced growth compared to some of the other categories,” says Liz. While they’re seeing “folks kind of sticking to their standbys, leaning on some legacy brands” in the larger bev alc category, “I do think where we are seeing experimentation is with people having more time at home, trying out some more home cocktails. I know lots of bartenders across the country are hosting virtual happy hours and classes. That is being reflected on the platform, too.”
You can watch the full interview here.
IWSR: 2008 RECESSION COULD INDICATE CONSUMER BEHAVIOR CHANGES AS A RESULT OF COVID-19
How the COVID-19 pandemic will ultimately impact consumer habits is still unclear. But the 2008 recession gives “some indication of changing consumer purchasing both before and after,” per a recent note from IWSR.
Between 2003 and 2008, total bev alc volume CAGR growth was about 1%. Volume growth softened to 0.1% between 2008 and 2013, largely driven by a drop in beer consumption post-recession, according to IWSR.
Taking a look at spirits volumes, the super high-end ($100-$200) and value end (under $10) post-recession volumes outpaced pre-recession volumes. Spirits brands priced $20-$30 maintained volume growth post-recession.
Currently, familiar brands and large-size formats are driving consumers’ alcohol purchasing decisions, per IWSR.
“As consumer panic leads to stockpile buying, and as consumers indulge in crisis comfort buying we expect beverage alcohol sales to continue to increase in the short-term,” says coo of the Americas at IWSR Brandy Rand, adding “short-term stockpiling will likely lead to a lag in sales in the medium-term. We expect overall sales to regulate over the coming months, with long-term forecasts predicated on COVID-19 mitigation and the re-opening of the US economy.”
TTB POSTPONES EXCISE TAX-RELATED FILINGS FOR 90 DAYS
Yesterday, the Alcohol and Tobacco Tax and Trade Bureau (TTB) announced it is postponing several filing and payment due dates for 90 days to assist businesses that are being severely impacted by COVID-19, per a notice from the agency.
TTB is postponing the following filings where the original due date falls on or between March 1 through July 1:
- Tax payment due dates for wine, beer, distilled spirits, tobacco products, cigarette papers and tubes, firearms, and ammunition excise taxes.
- Filing due dates for excise tax returns
- Filing due dates for submission of operational reports
- Filing due dates for claims for credit or refund by producers
- Filing due dates for claims by manufacturers of non beverage products
- Due dates for submission of export documentation
In addition, the agency is also considering emergency variations from regulatory requirements for affected businesses on a case-by-case basis, and reviewing requests for relief from penalties based on reasonable cause.
TTB has also created a dedicated page on their website for all updates and guidance in response to COVID-19.
HALEWOOD CLOSES US OFFICE, BEGINS LAYOFFS INTERNATIONALLY
UK-based Halewood Wines & Spirits announced plans to close its US office in Miami, “reduce the number of senior roles,” and “implement a voluntary redundancy scheme” across several locations in an internal company message earlier this week, reports just-drinks.
The company reported significant losses abroad as the impact of COVID-19 has led to reduced exports and the “effective closure” of its global travel retail chain.
“We’ve taken immediate steps to safeguard jobs and attempt to secure the long-term future of a business founded over 40 years ago,” says Halewood ceo Stewart Hainsworth. “Senior management are taking significant pay cuts and operations have been adjusted to reduce working hours and overheads.”
OPICI WINES INTRODUCES THE CRITIC CABERNET SAUVIGNON. Opici Wines has introduced “The Critic” Napa Valley Cabernet Sauvignon 2018. It is a blend of 90% cabernet sauvignon and 10% merlot. The wine was aged for 10 months in 50% American and 50% French oak barrels with a minimum of 1 month in bottle before release. It is available nationwide for approximately $23.
SAM SEBASTIANI RELEASES NEW ROSE. Sam Sebastiani has released the 2019 “Eye of the Swan” Reserved Aleatico Rose produced under his La Chertosa label. It is made with the rare red Aleatico grapes grown by the Serres Family at their Serres Family Vineyards in Sonoma Valley. With just 116 cases of bottles produced, it will be available at a suggested retail price of $20 at www.lachertosawines.com.
“It always seems impossible until it’s done.” – Nelson Mandela
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