After a challenging and unexpected 2020, many are looking forward to the normalization of everyday life in 2021. Nearly a year into the pandemic, however, consumer purchasing behavior remains unpredictable. Covid restrictions can change on a dime, and as we enter the winter months, consumers are less likely to socialize as they did when the temperatures were warm enough to convene outdoors in many parts of the country. Combined with increasing economic uncertainty, Q1 2021 beverage alcohol sales are likely to continue to be impacted by ongoing pandemic-related factors.

Despite this unpredictability, looking back at Drizly sales data from Q1 2020 and the Covid stocking period (March 15, 2020 to April 30, 2020) can provide insights that will help retailers navigate these uncharted first months of the new year.

Consumers Will Stock Up More Moderately

Covid-19 vaccines are rolling out, but pandemic purchasing behavior is expected to continue into Q1 of 2021. As many markets tighten stay-at-home mandates due to case surges, consumers may begin stocking up as they did in the early weeks of the pandemic — but they won’t be quite as panicked this time.

“We do anticipate some stock up behavior,” says Liz Paquette, Drizly’s head of consumer insights. “However, there will likely be less uncertainty among consumers as restrictions are put in place as customers will have a clearer idea of how it will impact businesses and can prepare accordingly.”

During both Q1 of 2020 and the Covid stocking period, the top four subcategories were consistent for both as well — red wine, white wine, vodka, and bourbon — so retailers should expect these to continue to drive sales. 

Drizly’s Top Subcategories, Q1 2020

1. Red Wine
2. White Wine
3. Vodka
4. Bourbon
5. Scotch Whisky
6. Hard Seltzer
7. Silver / Blanco Tequila
8. Light Lager
9. Champagne
10. Rosé Wine

Drizly’s Top Subcategories, Covid Stocking Period

1. Red Wine
2. White Wine
3. Vodka
4. Bourbon
5. Silver / Blanco Tequila
6. Scotch Whiskey
7. Hard Seltzer
8. Light Lager
9. Rosé Wine
10. IPA

In addition to looking at nationwide stock-up trends, Brandy Rand, the COO for the Americas at the IWSR, suggests that retailers look at their individual data from that same time period last year to pinpoint their own top-selling brands and the SKUs that ran out of stock. 

“Each retailer has a different consumer base depending on urban versus suburban, chain versus independent,” says Rand, “so the product needs vary, but there should be clear indications over the past eight to nine months of what consumers are buying and how the pandemic has changed habits, whether that be package size, price, or SKU.”

Much of the stock-up purchasing is likely to take place online, as evidenced by the dramatic shift to online alcohol purchasing in the early days of the pandemic. As consumers work to avoid in-person interaction, online ordering and delivery are seen as a safe and convenient option for alcohol purchasing.

“We anticipate delivery will continue to be an important service to many consumers across many industries in 2021,” says Paquette. “Specifically in the alcohol category, we anticipate customers’ awareness of this offering will continue to grow and therefore will play a key role in alcohol retail sales.”

Soaring Spirits Sales

Liquor became the top category on Drizly in 2020, holding 41 percent of share of sales. Liquor has seen tremendous growth amidst pandemic impacts. Mid-year, liquor began to overtake wine as the year’s top-selling Drizly category, and Nielsen reported that off-premise dollars of distilled spirits surpassed those of wine during the Covid-impacted, 34-week span ending October 31. Therefore, retailers should expect spirits to continue to drive significant sales during Q1 of 2021.

Within the liquor category, retailers should invest in whiskey, a historically solid Q1 sales driver, and Mexican agave-based spirits, one of 2020’s fastest-growing subcategories. The top-selling liquor brands on Drizly remained consistent during both Q1 2020 and the Covid stocking period: Tito’s, Bulleit, Jameson, Jack Daniel’s, and Casamigos. However, Casamigos jumped from the No. 5 spot for Q1 2020 overall to the No. 3 spot during the Covid stocking period — a sign of tequila’s increasing sales amidst the pandemic.

Whiskey is a safe bet, considering past sales data on Drizly. “Popular whiskey subcategories like bourbon and Scotch typically see share gains in Q1,” says Paquette. “We predict the same trend will persist in 2021, particularly as liquor sales increase during the initial Covid stocking period.”

Though tequila share trailed many other major spirits categories in Q1 of 2020 — silver/blanco tequila held the No. 7 spot among top Drizly subcategories over that time period — its prominence has steadily increased over the past year. The subcategory has more than doubled its share on Drizly over the past four years and experienced a 22 percent share growth in 2020. 

“Tequila gained share during the early days of Covid last year as at-home cocktail making became popular among consumers,” says Paquette, “with tequila-based cocktail ingredients like citrus and triple sec liqueurs for margaritas seeing substantial year-over-year growth.” Tequila’s growth shows no signs of slowing, either; according to Nielsen, off-premise tequila sales were up 55.5 percent in September and October compared to the same period in 2019, and the category increased its share by 2.1 percentage points.

In Q1 of 2021, we expect to see the tequila fervor carry over into mezcal sales as well. “Mezcal will be one to watch in Q1,” says Paquette, “as the category becomes increasingly popular and we see innovations among new and celebrity-backed brands like Dos Hombres.” Mezcal was among the fastest-growing liquor subcategories on Drizly in 2020, with share increasing 57% percent year-over-year. 

Prominence of Beer Alternatives and Ready-to-Drinks

Though the overall beer category held a lower share of sales in Q1 of 2020 than it did throughout the whole of 2020, the pandemic has cemented the status of hard seltzer, which holds the beer category’s largest share on Drizly. Though hard seltzer is typically associated with warm weather and outdoor imbibing, its popularity has continued into colder months; in October, Nielsen reported a 99.6 percent year-over-year sales increase across off-premise channels.

This is likely due to a combination of new entrants into the category — while brands like White Claw and Truly continued to dominate the space in 2020, major players like Bud Light and Corona increased competition, and local, craft products emerged as well — and the increasing prioritization of safety and convenience in the era of measured socialization.

“Though hard seltzer is typically more popular during the summer months,” says Paquette, “we still expect these alternatives to play a key role in Q1 as brands continue to innovate and release new products, and the portability and safety of these products appeal to customers amidst Covid.”

In 2020, consumers moved beyond hard seltzer to embrace other beer alternatives and ready-to-drink (RTD) beverages; RTD cocktails skyrocketed on Drizly, experiencing 1,114 percent growth year-over-year in 2020, while the small but growing hard kombucha subcategory experienced a whopping 2,195 percent growth year-over-year. 

In Q1 of 2021, expect that momentum for beer alternatives and RTDs to continue. “Anything within the RTD category will grow as more innovation comes to market,” says Rand, “whether that be new flavors or styles or increased awareness of hard kombuchas, hard teas, hard coffees, and premium pre-mixed cocktails.” She also notes January is an especially popular month for low or non-alcoholic alternatives, as many consumers look for “lighter” options in the first month of the new year.

Prepare for Premiumization

While some may assume that consumers are more budget-conscious after the holidays, retailers should expect premiumization to continue in Q1 of 2021. Last year during Q1, the average order on Drizly increased by 12.9 percent year-over-year, and it was even up 5.8 percent from Q4 2019. 

Though this was largely pre-Covid, premiumization seems to have continued despite a precarious economic environment. “Despite a weakened economy, so far Covid has driven premiumization among consumers as they celebrate occasions and milestones at home,” says Paquette.

Rand believes premiumization could continue into Q1 of 2021 as consumers seek out small ways to treat themselves at home. “Trading up in beverage alcohol is generally a few dollars extra,” she says. “If people are still saving money from lack of on-premise and travel expenditures, we may still see premiumization occur across at-home categories like food, beverage, and entertainment, which becomes a small indulgence during lockdown.”

Nielsen data shows that the spirits category especially has benefited from premiumization. Amidst the pandemic’s impact from March to October, ultra-premium spirits were up 50 percent and premium spirits were up 28.7 percent year-over-year across off-premise channels, gaining share at faster rates than they did pre-Covid. Retailers should consider optimizing inventory for premium whiskey, tequila, mezcal, and gin SKUs, which are seeing the most growth. 

Spiking Sales for Q1 2021 Occasions

Though major Q4 holidays that boost spending will have passed, Q1 of 2021 will bring its own occasions for celebration: primarily the Super Bowl, Valentine’s Day, and St. Patrick’s Day. These occasions typically drive increased sales on Drizly, but retailers should stock their shelves more than usual because most consumers will be celebrating at home as restrictions on bars and large gatherings continue. 

Data from 2020 occasions and holidays provide some indications of what Q1 2021 sales could look like. St. Patrick’s Day 2020 sales were higher than a typical day on Drizly, despite it being the first occasion celebrated under Covid restrictions, so retailers will likely see similar results this year. 

Though large Super Bowl parties won’t happen this year as social distancing measures remain in effect, we expect the event will still drive online alcohol sales for delivery. “In 2020 during the pandemic, televised events like the presidential election drove sales on Drizly as consumers watched from home and looked to get their favorite drinks delivered,” says Paquette. 

Like Thanksgiving and Christmas 2020, Valentine’s Day 2021 is likely to be dominated by gifting — specifically, gifting from afar. “Gift orders will be an important sales driver as customers spend the holiday apart from loved ones,” says Paquette, “and look for ways to celebrate from afar with a bottle of Champagne or red wine.”