When it comes to alcoholic beverages, there will still be a good amount of holiday cheer in the coming months. American consumers are still looking to purchase beer, wine and spirits, and are more likely to seek value and entertain in the home compared to years past according to the latest Nielsen data.
The alcoholic beverage category has proven to be resilient, but not recession proof. Sales were up slightly—at 2 percent, for the 52 weeks ended Sept. 5 compared to the year prior. Wine saw the biggest spike at 5.1 percent followed by spirits (2 percent) and beer (0.7 percent).
Not long ago consumers were looking to trade up and experiment with the hippest new product. This is not the trend anymore. Consumers are increasingly shopping based on price which has helped domestic brands since the price gap between imported and homegrown brands is significant. American vodka and gin, on average, is 50 percent less than imports. Domestic beer is 35 percent less and wine is 25 percent cheaper.
As a result, sales of domestic brands have surged. Domestic wine led the way, growing 5 percent for the 26-week period ended Aug. 22. During the same span, domestic vodka grew 8.1 percent. Domestic beer sales grew 3.2 percent for the 24-week period ended Aug. 22.
Overall, pricing has been flat across all of the categories with certain exceptions in beer category (notably among craft brews). This hasn’t stopped consumers from trading down to private label offerings which are a small, compared to consumer packaged goods, but growing segment within the category. Private label wine and spirits sales were up more than 20 percent and nearly 10 percent respectively, for the 52-week period that ended Aug. 22 compared to the year prior.
These changes in consumer preference have created pressure on retailers to optimize their space. Retailers are reducing their assortments of flavored malt beverages, imported wines and cordials. Instead they are giving craft beers, vodka and mid-range wines ($9 to $15) more attention.
Retailers are benefiting from a shift in consumption behaviors—namely more consumers are drinking at home versus at a bar or restaurant. In April, 68 percent of consumers said they were doing less fine dining. Fifty-nine percent also said they were going to bars than less before.
This shift became highly noticeable last year when share of on-premise dollars fell 3.3 percent for wine, 3 percent for spirits and 1.3 percent for beer, according to the Beverage Information Group (2009 Handbook).
This has prompted a significant increase in off-premise channels adding beer, wine or spirits. The total number locations selling alcoholic beverages grew by 2,392 stores in Aug. 2009 compared to the year prior. Drug (684 locations), convenience stores (637) and mass merchandisers (432) led the way.
On the flip side, the number of U.S. on-premise locations offering alcohol has slipped. There were 944 less bars and clubs and 769 less dining choices. Overall, the number of new locations offering alcohol (on- and off-premise) minus the number of closed locations was a 5,445.