Drizly’s Top Predictions for the BevAlc Industry Post-Quarantine 2020
From the rise of home bartending to the surge in healthy alternatives, these are the trends to watch
When Drizly made its top predictions for the beverage alcohol industry in 2020 earlier this year, the company said it couldn’t predict the future. That couldn’t have been truer, as the impact of Covid-19 has completely upended the industry since shelter-in-place orders went into effect in March.
New trends, such as the rise of home bartending, have emerged in recent months, and some of the company’s previous predictions, such as the continued growth of hard seltzer and rise of indie brands, have only strengthened in the first half of 2020. And while Drizly predicted that online alcohol sales would continue to increase in 2020, the onset of Covid-19 has caused ecommerce alcohol sales to soar.
“We always believed that Drizly and technology as a whole would allow BevAlc to catch up to larger ecommerce trends,” says Cory Rellas, Drizly’s CEO. “Covid-19 has accelerated that adoption curve by two to three years.” And while the sales mix shift from on-premise to off-premise will likely normalize in the future, Rellas says he expects a permanent change in the mix between in-store and ecommerce sales.
In a changing alcohol consumption landscape, these are Drizly’s top predictions for what to expect in the BevAlc space throughout the rest of 2020.
Hard Seltzer is Here to Stay
In 2019, hard seltzers took over the beer/seltzer/cider category, first accounting for a majority of sales in the category on July 4 and maintaining that top spot ever since. Throughout the beginning of 2020, hard seltzer has continued to grow in popularity, accounting for 18.71 percent of the beer/seltzer/cider category on Drizly’s platform in the first five months of the year. Comparatively, light lager — once the category leader — accounted for 15.38 percent of sales, IPA accounted for 11 percent, and American-style lager accounted for 9.72 percent.
Considering that hard seltzer held just 4.75 percent of beer/seltzer/cider sales share in 2018, early 2020 sales indicate a remarkable jump — and summer has barely started. With another boom predicted for the summer months, it’s clear that this sub-category is here to stay.
Cans Will Take Over Shelf Space
Cans have the advantage of two macro consumer trends: Convenience and discovery. Cans are lighter, more durable, and easier to transport, and are allowed in more places compared to glass bottles. They also allow for greater discovery and tasting, providing consumers with the ability to experiment with new brands or styles without committing to the quantity and price of a standard format beverage.
Ready-to-drink beverages (RTDs) in particular have experienced massive growth amidst nationwide quarantines, seeing 841 percent growth above baseline on Drizly’s platform for the week of May 18 (compared to overall sales growth of 391 percent above baseline). In the past, this space was largely defined by inexpensive, mass-market producers, but the craft beer movement has opened many eyes to the prospect of drinking premium alcoholic beverages from cans, and Drizly is now seeing this trend expand into other categories. Given this boost, the company foresees more brands offering canned versions of their wine and spirits products throughout 2020.
“Healthy Alternatives” Will Continue Their Ascent
Consumers, especially millennials and Gen Zs aged 21 and over, are giving more thought to what they’re putting into their bodies. For some, that means being more aware of which alcohol products they consume; for others, it’s cutting alcohol out entirely. According to Drizly, this trend has only continued in the first half of 2020, as consumers have increasingly focused on physical and mental wellness during quarantine.
In the second half of 2020, Drizly expects to see more demand for beers, wines, and spirits with lower alcohol-by-volume (ABV) percentages than traditional products. Additionally, the company predicts that alcoholic beverages enhanced with health-beneficial ingredients will gain momentum nationwide. CBD-infused beverages will be among them, with almost a third of independent retailers on Drizly believing those products will meaningfully grow their sales.
The Rise of Indie Brands
Once only available in limited markets, many self-identified craft beer brands are now easily found in stores across the U.S., Drizly reports The increased availability of small, indie beers may be taking away the “craft” notion that many larger brands were built on; in 2019, Dos Equis, Goose Island, Magic Hat, Pabst, Shock Top, and Strongbow all experienced continued share declines on Drizly. Comparatively, many independent brands across beer, wine, and spirits experienced sales increases in 2019; among them are Clase Azul (+150 percent YOY), Gerard Bertrand (+140 percent YOY), and Mighty Squirrel (+230 percent YOY).
This continued in the first half of 2020. After shelter-in-place orders were mandated across the U.S., Drizly data showed a spike in market share for independent beer companies. While large companies and established categories like bourbon and red wine still dominate the industry, niche brands and categories like orange wine, sake, and soju will continue to rise in popularity.
Premiumization Continues, For Some
Consumers have been gravitating towards more premium alcohol products for nearly two decades, and despite the economic effects of Covid-19, premiumization remains strong across wine and spirits in 2020. Despite an initial spike in sales of lower-priced wines in March, the share of sales for wines below $10 on Drizly has steadily decreased to 19 percent, while there has been a significant share increase for wines $10 and up, even in ultra-premium categories. Lower-priced spirits, too, have seen a continuous share decrease since January, while those $30 and up have seen share increases — even for bottles priced $70-plus.
However, consumers will likely be looking for added value when purchasing premium products as 2020 progresses, Drizly reports. The company predicts that consumers will continue their shift away from older, name brands like Johnnie Walker, Lagavulin, Perrier-Jouet, and others — which had less growth on Drizly in 2019 compared to younger brands. Instead they will gravitate towards Instagram-powered, “awareness” brands backed by celebrities like Aviation, Casamigos, and Proper 12, which have shown significant growth in recent years.
The Rise of Home Bartending
With the closure of on-premise establishments due to Covid-19, more consumers are creating high-quality cocktails at home. According to Rellas, whereas wine has historically made up the majority of Drizly sales share, in the three months following shelter-in-place mandates, liquor comprised 39.6 percent of sales share (versus wine’s 38.4 percent).
Gin, mezcal, and tequila all experienced outpaced growth in the months of March, April, and May. For the week of May 18, the three categories respectively saw growth over baseline, or what Drizly would have expected to see during that time, of 595 percent, 1064 percent, and 546 percent. Sales of cocktail essentials like liqueurs, bitters, and garnishes have also increased dramatically; for that same week, liqueurs, cordials, and schnapps sales increased 826 percent over baseline, while sales of mixers, syrups, and bitters increased 970 percent.
Drizly predicts that this trend will continue even as restaurants and bars reopen, and consumers will be looking to purchase high-quality cocktail ingredients for an elevated home bartending experience. “With many home bars now more built out, we can anticipate this trend sticking around for a while,” Rellas says.
Online Alcohol Sales Will Continue to Boom
Consumers were already shifting to the selection, convenience, and immediacy that alcohol ecommerce offers before 2020, but the onset of Covid-19 and mandated shelter-in-place orders across the U.S. caused online alcohol sales to explode. As soon as on-premise businesses began to close across the U.S., Drizly sales jumped to 233 percent above baseline, or what Drizly would have expected to see, for the week of March 16. Since then, sales growth has averaged around 400 percent above baseline, with consumers purchasing larger quantities per order and new online alcohol shoppers entering the ecommerce channel.
Even as stay-home mandates are lifted, consumers will continue to reach for online alcohol sales options due to an increased awareness of the convenience and choice that e-commerce offers. “We do believe consumers will prove sticky post-quarantine as awareness grows,” says Rellas.
Before Covid-19 accelerated the shift to ecommerce, Drizly already predicted that 10 percent of all alcohol sales would be happening online in five years. As a result of this boost, Rellas now expects online alcohol sales five years from now to equal $20 billion or more in the U.S. alone.
“Consumer expectations only increase over time,” he says, “and there is much room to improve the ability for consumers to find, experience, and purchase their favorite brands in a technology- and data-enabled supply chain.”