2020 Hindsight: The Top 5 Consumer Trends of 2020
Changing regulations and new norms fundamentally altered American consumers alcohol purchasing behavior in 2020
While Covid-19 lead to seismic shifts in the way the U.S. beverage industry functioned, changing regulations also fundamentally altered the way American consumers purchased and enjoyed alcoholic beverages. Shifting perceptions of “normal” and attempts to socialize safely amidst the pandemic led to unexpected trends in the beverage industry.
These changing consumer behaviors are reflected strongly across e-commerce channels, as consumers found that purchasing alcohol online was a safe and convenient alternative to shopping in store. From March 2020 onwards, Drizly sales grew to a baseline of 350 percent year over year. From the uptick in gifting orders to new social norms that favored ready-to-drink (RTD) beverages, these were the top five consumer trends of 2020.
Bringing The Bar Home
As states shuttered on-premise venues and shelter-in-place orders sent consumers home beginning in March, retail alcohol sales skyrocketed. While Drizly sales of all alcohol categories spiked, consumers reached for liquor in particular, causing the category to overtake wine as the top-selling category on Drizly for the first time, holding 41 percent of sales share in 2020 (compared to 38 percent in 2019).
“This trend pointed to a clear shift in consumer purchasing behavior as on-premise drinking locations shut down due to the pandemic,” explains Liz Paquette, Drizly’s head of consumer insights, “and people turned to their stocking their bar carts to make their favorite cocktails.”
Without the ability to order a cocktail at their favorite local bar or restaurant, consumers experimented with at-home mixology, stocking up on spirits. Overall, tequila led growth in the spirits category as consumers recreated restaurant staples like margaritas, with sales increasing by 442 percent year-over-year. Much of that growth was driven by the silver/blanco tequila and reposado tequila subcategories.
As consumers built and continued to refresh their at-home bars, sales of key cocktail ingredients like liqueurs, cordials, mixers, and bitters also soared. Category sales for liqueurs, cordials, and schnapps grew 542 percent compared to 2019, while the mixers, syrups, and bitters category expanded by 662 percent year-over-year in 2020.
Covid Couldn’t Cancel Celebrations
Holidays and special occasions are traditionally high sales drivers for beverage retailers, and despite a changing ecosystem for celebrations — with virtual get-togethers and smaller, socially-distanced gatherings taking center stage — occasion-based sales trends were positive throughout 2020.
“With restrictions on gathering sizes and social distancing protocols in place, many across the industry wondered about the impact they would have on sales surrounding key occasions,” says Paquette. “However, throughout the pandemic, Drizly sales data showcased that despite celebrations looking different this year, people still looked to celebrate at home. Occasions remained strong sales drivers for our Drizly Retail Partners.”
Early in the pandemic, holidays such as St. Patrick’s Day and Cinco de Mayo drove sales significantly compared with average daily sales for the four weeks prior to each holiday. This trend only accelerated throughout the year, with strong sales spikes over Thanksgiving, Christmas, and New Year’s Eve.
On the day before Thanksgiving, sales were 174 percent higher than the average of the previous four Wednesdays, while Christmas sales spiked the entire week before the holiday itself. And as it was in previous years, New Year’s Eve was the best-selling day on Drizly in 2020. On Thursday, Dec. 31, sales were 134 percent higher than the average Thursday in December (excluding Christmas Eve).
Overall, despite celebrations looking different this year, consumers continued to commemorate holidays and milestones with alcoholic beverages, cementing occasions as strong sales drivers even amidst a pandemic.
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Gifting Instead of Gathering
Though Drizly has long welcomed gift orders on the platform, 2020 was the year that gifting really took off. Gift order sales were up 600 percent over 2019, and the share of gift orders among overall orders increased 51 percent year over year.
“As consumers spent milestones like birthdays and engagements as well as holidays apart from friends, family, and colleagues, they turned to alcohol delivery in order to celebrate from afar,” says Paquette. Overall, gift orders skewed heavily toward wine and spirits, with wine comprising 49 percent share of all gift orders and liquor holding 43 percent of share.
Consumers also spent more on gift purchases in 2020, with the average unit price of products sold as gifts on Drizly sitting 38 percent higher than the average unit price for non-gift orders. Premium, splurge-worthy bottles such as Veuve Clicquot Yellow Label, Dom Pérignon Vintage Champagne, Caymus Napa Valley Cabernet Sauvignon, and Johnny Walker Blue Label Scotch all landed in Drizly’s top 10 most-gifted SKUs of the year.
Bringing RTDs Outdoors
As consumers avoided indoor gatherings, the growth of RTD beverages boomed as consumers moved get-togethers outdoors. While categories like RTD cocktails and hard seltzers were already growing prior to 2020, this new way of socializing led consumers to value the convenience and safety of RTDs’ single-serving packaging even more.
“Particularly over the summer months, as the weather warmed and Covid-19 restrictions began to loosen in many parts of the country, we saw consumers looking for ways to enjoy drinks together, which significantly spurred growth in the RTD category,” says Paquette. Canned cocktails were a breakout category in 2020, with sales growing 1,518 percent in 2020 compared to 2019, and among the top RTD cocktail brands on Drizly were High Noon, Jose Cuervo, and Cutwater Spirits.
Similarly, hard seltzer secured its position as a staple in 2020 and held its spot as the top-selling beer subcategory on Drizly throughout the year. Brands like White Claw and Truly continue to dominate the category, and according to Drizly’s October 2020 retailer survey, 64 percent of retailers plan to dedicate even more shelf space to the hard seltzer category in the future.
At the same time, the consumer popularity of canned cocktails and hard seltzers led to the growth in new alternative subcategories, including hard kombuchas, hard lemonades, and hard iced teas. Though these alternatives are small for now relative to hard seltzer, hard kombucha, for instance, was one of the fastest-growing subcategories on Drizly in 2020, with sales growing 2,122 percent in 2020.
Continued Premiumization, Despite Economic Uncertainty
Over the past two decades, consumers have increasingly reached for more premium alcoholic beverages, driven by influences like societal wealth and broader options for high-quality beverages. But given the dramatic impact that the pandemic has had on economic conditions and unemployment, many wondered if 2020 would put an end to the premiumization trend.
“Despite an uncertain economy, the Covid-19 pandemic actually led to many consumers trading up in their beverage alcohol purchases,” says Paquette. With experiential spending on travel, dining, concerts, and sporting events curbed due to restrictions, consumers treated themselves by splurging on higher-end beverages. Unable or unwilling to dine and drink out as frequently — or at all — consumers also realized that their restaurant beverage budgets went further in retail channels.
Spirits categories like whiskey and tequila showed the strongest premiumization trends in the market. Drizly data reflects this as well; the average unit price on Drizly grew by 2.3 percent in 2020, driven primarily by the liquor category, which saw an average unit price increase of 3.2 percent year-over-year.