BevAlc Industry’s Top 5 Predictions for the Holidays
How industry experts are preparing for consumer purchasing shifts this holiday season
In an unpredictable year, it’s difficult to pin down exactly what holiday beverage alcohol purchasing will look like this year. However, industry members are planning for the 2020 holidays as best they can, looking to past holiday seasons and year-to-date trends to predict consumer purchasing behavior and in-demand categories and products.
BevAlc Insights spoke with retailers, wholesalers, and brand leaders to determine their top five predictions for the holiday season. Though 2020 may look different, shifts towards online purchasing, trading up on beverage alcohol, and the importance of gifting all mean that holiday sales do look bright.
A Shift Towards Online Holiday Purchasing
“This holiday season will be the first where we see the full effects of the structural shift the consumer has made to embrace online shopping for the beverage alcohol category,” says Wayne Duan, the vice president of e-commerce at Constellation Brands. Most agree that many consumers will be doing much of their holiday beverage purchasing online rather than in-store, driven by Covid-related safety concerns and increased awareness of alcohol delivery options. “I think we’re going to see much more online wine buying and delivery to people’s homes rather than people physically showing up to stores,” says Matthew Green, the national sales director for Europvin.
Louisville shop Cox’s Spirit Shoppe experienced an early preview of what holiday alcohol delivery demand could look like when the Kentucky Derby was held in September; alcohol sales were up 25 to 30 percent. “Our expectation is that the holidays will continue to see that growth,” says Mike Fisk, the chief sales and marketing officer for Cox’s Spirit Shoppe. “Our in-store sales are continuing to increase while having the increase of delivery we didn’t have last year.”
Many brands have already adapted their sales strategies for this shift to e-commerce; Perrier-Jouët, for instance, has produced a suite of online graphics for retailers to use on e-commerce websites. “We’ll certainly see the popularity of the e-commerce channel continue to grow due to things like convenience, expanded selections, the opportunity for gifting,” says Elise Cordell, the manager of Champagne trade engagement and events at Pernod-Ricard, which owns Perrier-Jouët.
This shift towards online purchasing may also change the typical last-minute holiday rush that retailers are used to experiencing. “December 23 is normally our biggest day,” says Fisk. “This year, I think that’s going to change, extending into the week or two prior to Christmas. With people not in their offices, they have more free time to plan out purchases earlier.”
Adding New Categories to Holiday Classics
Expect to see the categories that have been trending throughout 2020 — such as tequila, ready-to-drink (RTD) cocktails, and cocktail ingredients — play a newly prominent role this holiday season. “We expect beverage category demand trends that have played out throughout the year to continue through the holiday season,” says Duan, “punctuated with the typical gift-giving we see each year of hero and unique brands in beer, wine and spirits.”
Fisk notes is stocking up on historically popular holiday items like bourbon and other dark spirits, Champagne, and red wine. “We have that basic understanding of what we need to stock up on,” says Fisk, “but there has been growth in categories we wouldn’t have seen in previous years, so we have plenty of that on hand as well.”
The continued strength of spring and summer trends has been surprising. “We expected to see a slowdown after Labor Day, but we haven’t,” says Fisk. Hard seltzer and RTD cocktails (especially margaritas and piña coladas) have been popular, and cocktail supplies like mixes, olives, and shakers have continued to grow faster than expected due to the continued avoidance of on-premise establishments, he also notes.
“Covid-19 may have prompted the RTD cocktail boom, but the category’s success will outlast the pandemic,” says Felipe Szpigel, the co-founder of RTD cocktail company Five Drinks Co. “With indoor gatherings still not safe, people are hesitant to go to bars but still crave that bar experience.” Szpigel expects that classic cocktails like the moscow mule, margarita, and mojito will be popular this holiday season, along with higher-alcohol, seasonal cocktails like the recently-launched Americano 2.0 (a collaboration with Dante in New York City).
“The tequila category continues to grow,” adds Joel Paulino, the senior brand manager at Avión Tequila, “and we believe Avión is poised to ride that wave, especially this holiday season which historically is a very strong time for our brand.” He notes that in October, the tequila category was up 52 percent in retail sales.
Of course, classic holiday categories are likely to remain strong; Umberto Luchini, the founder and proprietor of Wolf Spirit Distillery, expects both vodka and bourbon to be fixtures of the 2020 holiday season, particularly given the uptick in home bartending this year. Q4 is also a pivotal time of year for Champagne, which took a hit early on in the pandemic due to on-premise closures; Cordell notes that October to December sales typically account for around 48 percent of total Champagne sales volume.
Happily, industry members expect Champagne to perform well through end-of-year. “I think people will look for whatever window of opportunity to celebrate with bubbles,” says Green.
“There will be fewer NYE parties being thrown in large venues,” adds Cordell, “so consumers may take the opportunity to flex their hospitality skills at home, and are showing a willingness to treat themselves to higher quality items in retail and e-comm since they haven’t been able to spend their money in the on-premise.” Perrier-Jouët has performed well this year, currently up 28 percent fiscal year-to-date.
In fact, some retailers report difficulties getting their hands on enough Champagne inventory this year because of excessive retail demand. “Champagne is going to be very allocated because the demand has been so high that it outstrips supply,” says Fisk. “I’m trying to get ahead of buying to make sure I have bottles of Champagne to sell.” Cognac and canned beverages may also experience shortages over the holiday season, he notes.
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Consumers are Trading Up
Despite difficult economic conditions, many consumers will be trading up on beverage alcohol this holiday season. With consumers unable to travel or dine out as frequently as they did pre-pandemic, their beverage purchasing budget could accommodate a few splurges.
“We are seeing splurges in the wine category from savings which otherwise would have been spent on travel,” says Maggie Curry, the director of marketing at Kendall-Jackson. “Ringing in the new year might also warrant some special alcohol splurging as we say good riddance to 2020.”
“I think people are going to treat themselves,” adds Green, “and if they go to other friends’ homes, people will treat themselves with more expensive wines. Sharing a special bottle together might take the place of gifting.”
The inability to gather as frequently may also translate to higher-priced gift selections. “The idea of treating yourself and your loved ones in small ways is a strong sentiment that has come out of the current circumstances,” says Cordell.
Gift Sets are in Demand
Because consumers will likely be avoiding large gatherings and traveling less, gifting remotely through e-commerce beverage alcohol platforms will likely play an important role this holiday season. “Knowing the holidays will look really different for a lot of people this year, the ease of sending gifts to loved ones that you’d normally see in person will take some of the anxiety off people’s minds,” says Szpigel.
Physical gifts, like wine, spirits, and beer, will likely become more popular because consumers are expecting to stay home for the foreseeable future. “With consumers limiting travel and taking heightened safety precautions, they are likely to also limit experiential gift giving this holiday season and instead turn to physical gifting, including beverage alcohol,” says Duan. “We encourage retailers to be prepared for this consumer demand wave.”
Traditionally, value-added gift package releases have been popular during the holidays, but some brands have scaled back on this packaging because of uncertainties over consumer interest this year. However, many retailers and importers note that gift sets are in high demand.
“We also see value-added services like personalization through customized notes or engraving as draws for retail and e-comm,” says Cordell, noting that the Belle Epoque Brut with two hand-painted flutes is one of Perrier-Jouët’s most popular gift sets. Retailers who want to capitalize on gift packaging demand might consider creating their own gift sets or adding extra touches to gift orders, like wrapping or handwritten gift notes.
Events Will Be Small or Virtual
Both consumer and corporate holiday parties will look quite different this year as social distancing restrictions persist. For consumers, in-person gatherings will likely continue, but they will be scaled down.
“We do anticipate more of an intimate affair when it comes to Christmas and New Year’s, with alcohol and food sales shifting from travel and restaurants to in-home dining,” says Curry. “Wine will surely play an important role as people do their best to navigate this tricky holiday season.”
“We think that consumers are going to default to small gatherings with their pods but they will want to elevate that experience,” says Szpigel. “That means cooking better meals, serving better drinks.”
Five Drinks Co. has started to see an uptick in both large and small companies looking to organize virtual events with canned cocktails. Perrier-Jouët has also noticed an uptick in corporate virtual “event in a box” requests, where employees or clients receive the ingredients for a specific cocktail and create it together with a virtual host.
“It’s a value-added opportunity that bridges the physical distance and allows teams to reconnect,” says Cordell. “Corporate managers are looking for ways to improve morale and maintain cohesion within their teams, so a sponsored event in a box gives them an additional tool to enhance the holiday season.”