US off-trade sales continue to surge throughout summer

Sales of spirits, wine and beer continue to soar in the US off-trade as shoppers shun bars and restaurants in favor of drinking at home.

Spirits sales increased 18.6% year-on-year in value during the week to July 25, according to Nielsen. Wine was up 18.2% on the same period in 2019, while beer and cider sales grew 14.7%.

Hard seltzer falls into the beer and cider category, and that led the charge, with sales growing 132% year-on-year to smash through the $100 million barrier. Cherry and berry flavors declined in dollar share, while mango, pineapple, and fruit combinations all gained share within hard seltzers.

Danelle Kosmal, Vice President of Beverage Alcohol at Nielsen: “Beyond alcohol, other categories that have been driving growth throughout the pandemic and continue with strong growth rates for the latest week include frozen foods (+21.3%), meat (18.6%), seafood (+37.9%), produce (+16.5%), dairy (+14.5%), and of course household care (+16.1%).

“Similar to alcohol, many of these categories are experiencing a boost in sales due to closures of restaurants and the shift of eating occasions centered at home.

“As we continue in this ‘next normal’, which most likely will last for a while, it will be interesting to see how alcohol suppliers begin to leverage this understanding of other categories that are winning in-store and online, due to the obligatory home-body culture. We will need to continue to leverage as many insights and learnings as possible, to balance out the extreme on-premise losses for alcohol this year.”

Since May, sparkling wine has grown 34% year-on-year, outpacing still wine, which is up 14.3%. Champagne now leads the way, up 65% for the latest week, and Prosecco continues to enjoy strong double-digit growth, up 34.7%.

Ready-to-drink cocktails continue to lead spirits growth, up 117% in the week to July 25. Their share of the spirits category has grown from 0.8% a year ago to almost 2% now. Tequila and Cognac were the best performing spirits categories in the latest Nielsen data.

Leading producer Diageo addressed the firm’s underperformance in the US market in a call with analysts this week. Ivan Menezes, chief executive at the Johnnie Walker, Smirnoff and Guinness supplier, said it has “share-gaining brands and share-losing brands” in the US.

“Clearly, tequila, our North American whiskey brands are doing very well,” said Menezes. “Vodka and rum are tougher. What I would point to is, firstly, Nielsen and NABCA represent about 40 to 45% of the market. As I had indicated, our depletions ran ahead of our shipments. However, we’re slightly behind the market. If you go back the past 18 months, the US had got to be in line with the market.

“We were slightly behind right now when you look at our depletion growth relative to the industry growth. And we are very focused in our actions to make sure we improve that going into fiscal 2021.

“I have to say, overall, the strength of our US performance, I’m very pleased with, and you would see our price mix is higher than the industry, and one of the actions we have taken is not to chase share, but to really keep the quality of share growth strong. So our price/mix is running well ahead of the industry price mix if you look at the last recent few months.”