Dear Client: 

Off-premise trends really took off the week ended March 14. Across all CPG categories, weekly sales were up 39.2% compared to the same period a year ago, according to Nielsen. That shouldn’t be surprising if you’ve been to the grocery store lately.  

3L BOX AND CANNED WINE SALES SURGE. For wine, total off-premise sales were up 27.6% for the week through March 14 vs. a year ago. And compared to the week prior (ended March 7), sales were up 24%.

3L boxed wines and canned wines grew at a “significantly higher rate” than the wine category, according to Nielsen’s Danny Brager. 3L box sales were up 53% for the week vs. a year ago and canned wines were up 95%. Though Danny notes that canned wines were doing very well before the pandemic. 

Table wines between $11 and $25 on an equivalent 750 ml basis were also a hot spot. 

All sizes of glass bottles were up double digits. In fact, even the 1.5L glass segment posted a gain of almost 20% for the week, a segment that has been declining.

GIN, TEQUILA & PREPARED COCKTAILS REPORT LARGEST GAINS. For spirits, total off-premise sales were up 26.4% for the week through March 14. All categories were up double digits except for brandy. 

The categories that showed the largest gains were tequila, prepared cocktails and gin. Tequila and prepared cocktails topping the list is not surprising, but gin caught us off guard. 

Irish whiskey sales were down compared to last year thanks to subdued St. Patrick’s Day celebrations. But Irish whiskey sales were up 57% for the week through March 14 compared to the previous week. More on the impact on St. Patrick’s Day trends later. 

But the biggest gains were from grain alcohol. That’s likely because consumers are buying more to make their own hand sanitizer. 

 “At this early point, increased off-premise volumes are clearly offsetting much of what might have been sold in on-premise spaces, inclusive of some ‘stocking up’ activity,” says Danny. “But it’s also possible that this boom could slow over time, as a result of both the ‘rainy’ data mentality easing, along with the personal economic impacts of the crisis affecting individual’s livelihoods and ability to spend.”

NATIONAL ASSOCIATION OF WINE RETAILERS SAYS NOW’S THE TIME TO OPEN UP RETAILER SHIPPING

National Association of Wine Retailers executive director Tom Wark issued a statement today, saying if there was ever a time to open up interstate retailer shipping, it’s now. 

“If ever there was a moment that demonstrated both the utility and necessity of allowing consumers to receive shipments of wine from out-of-state wine retailers, it is now, as we isolate and require Americans to migrate even more of their lives into an online setting,” per statement, adding, “it’s not just a matter of convenience, modern supply chain economics, and free trade principles that underscore the need for interstate wine shipment laws, but it’s also a matter of health and safety.”

Moreover, Tom went after the Wine & Spirits Wholesalers of America, specifically the letter that WSWA chief Michelle Korsmo sent to governors last week. You may recall, Michelle urged governors to keep local alcohol retail locations open and that closures could “encourage black market activity” [see WSD 03-19-2020]. 

“Now Ms. Korsmo and the wholesalers she represents are working to shut down wine shipments from out-of-state retailers by using the fear mongering and the current health crisis to advance the middlemen’s financial interests,” per Tom’s statement. As you can see, he didn’t pull any punches. 

“Today, every single state in the Union ought to be enabling consumers and help them to stay safe by passing legislation to allow the receipt of wine shipments from both in-state and out-of-state wine retailers and wineries in a well regulated way. Every state should allow curbside pickup. Such policies should be obvious to anyone who is concerned not with the protection from competition that wine wholesalers demand, but rather with the health of the American economy and American consumer.”

DIAGEO NORTH AMERICA CHIEF DEIRDRE MAHLAN TO RETIRE

In case you missed this morning’s alert, Diageo announced that North America president Deirdre Mahlan will be retiring, effective June 30. Taking her place is Debra Crew, who will step down from the Diageo board to take the helm of the region.

Deirdre joined Diageo in 2001, and rose in the ranks over the years to cfo in 2010 and North America president in 2015. 

“I am proud and privileged to have enjoyed a long and exciting career in Diageo and its predecessor companies,” says Deirdre. “I have particularly enjoyed my last five years leading the North America business, seeing it grow and prosper, working with my colleagues, in partnership with our key distributors who support and drive our business in this market. It has been an honour to work alongside Ivan and all my colleagues in Diageo over these past 19 years.”

“Diageo North America is a strong business that has been very ably led by Deirdre since 2015. While we are sad to be losing Deirdre, I know that she leaves a great legacy in the North America business and across Diageo,” says Diageo chief Ivan Menezes. “I am very grateful for her exceptional contribution over many years at Diageo and wish her the very best for her retirement.”

Debra has served as non-executive director on the Diageo board since April 2019. She is also the former president and ceo of Reynolds America. Before that, she held various leadership positions at PepsiCo.

“Debra’s extensive experience in consumer businesses will serve Diageo and North America well as we continue to progress on our ambition to become one of the most trusted and respected consumer products companies in the world,” says Ivan. 

PERNOD EXPECTS OPERATING PROFIT TO DROP 20% GLOBALLY DUE TO COVID-19 

Pernod Ricard shared updated guidance today for fiscal 2020. The company currently expects an organic decline in total profit from recurring operations of about -20% due to the impact of COVID-19. 

In China, there was very limited business in February and March, with a slow recovery in April. Pernod expects to see an 80% business decline at travel retail from February to June. In other markets, they’re looking at about a 10% sales reduction from mid-march to end of June and no sales on-premise. For Pernod, off-premise represents about 75% of sales and on-premise accounts for 25%. 

“The environment has very significantly deteriorated due to the COVID-19 outbreak. We are encouraged to see that, thanks to the implementation of strong measures, China appears to be starting to make a gradual recovery. While we cannot predict the duration and extent of the impact, we remain confident in our strategy,” says Pernod chief Alexandre Ricard. “We are staying the strategic course while implementing a comprehensive action plan to mitigate costs.” 

Bernstein believes Pernod’s new guidance “represents a sensible worse case for F20 and should act as a floor on earnings estimates,” writes Bernstein analyst Trevor Stirling in a note.

WSD BRIEFS:

BACARDI PLEDGES $3 MILLION TO SUPPORT BAR AND RESTAURANT INDUSTRY. Bacardi announced the launch of #RaiseYourSpirits, an initiative to support bars and restaurants debilitated by the COVID-19 shutdown. The drinks company is pledging $3 million in financial aid and other support to help those directly impacted during these trying times. 

AVIATION GIN INTRODUCES TIP YOUR BARTENDERS PROGRAM. In a similar vein, Aviation Gin has introduced #TipYourBartenders. They kicked off the program with a $15K donation to the United States Bartender’s Guild and will be adding an additional 30% ‘tip’ for every Aviation bottle delivered through its major national partners through May 1. 

BLOOD OATH PACT NO. 6 LAUNCHES. Lux Row Distillers continues the Blood Oath ultra-premium bourbon series with Blood Oath Pact No.6. For Pact No. 6 head distiller and master blender, John Rempe, chose a 14-year ryed bourbon melded with an 8-year ryed bourbon complemented with a 7-year ryed bourbon rested in cognac casks and bottled at 98.6 proof, per a release. This limited edition expression is available in limited supply starting this spring with a suggested retail price of $100. 

Until tomorrow,
Sarah

“Most of us have far more courage than we ever dreamed we possessed.” – Dale Carnegie

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