American online alcohol distribution platform Drizly has made a new forecast for the alcoholic beverage industry in 2020. In view of the impact of Covid-19, the alcoholic beverage industry has been completely overturned, and some new trends have emerged, such as home bartending. The rise, the continued growth of hard soda and the rise of independent brands.
Although online alcohol sales will continue to grow in 2020, the outbreak of Covid-19 has led to a surge in e-commerce alcohol sales. In the context of the ever-changing consumption of alcoholic beverages, the following are Drizly’s predictions for 2020 and the future.
1, hard soda water
In 2019, hard soda surpassed the beer/soda/cider category, and occupied most of the sales share of this category for the first time on July 4, and has maintained this top position ever since.
At the beginning of 2020, the popularity of hard soda continued to rise. In the first five months of this year, hard soda accounted for 18.71%of the beer/soda/cider category on the Drizly platform. In contrast, light lager, which was once the category leader, accounted for 15.38%of sales, IPA beer accounted for 11%, and American beer accounted for 9.72%.
The sales share of hard soda in 2018 was only 4.75%of beer/soda/cider, and sales at the beginning of 2020 showed significant growth. Another round of growth is expected this summer, and this subcategory will continue to exist.
2, aluminum can packaging
Aluminum cans have two macro consumption trends:convenience and discovery. Aluminum cans are lighter, more durable, and easier to transport, allowing them to be used in more places than glass bottles. Aluminum cans also provide consumers with the ability to experiment with new brands or styles without having to commit to the quantity and price of standard format drinks.
During the quarantine period, RTDs in particular experienced tremendous growth. On Drizly’s platform, sales growth in the week of May 18 exceeded the baseline by 841%(in contrast, overall sales growth exceeded the baseline 391%).
In the past, this field was mainly defined by cheap, popular producers, but the craft beer movement has allowed many people to see the prospect of drinking canned high-end alcoholic beverages. Drizly is now seeing this trend expand to other categories. In view of this growth, the company expects more brands to offer canned wine and spirits products by 2020.
3, healthy alternatives will continue to rise
Consumers, especially millennials and Generation Z consumers, think more about what they eat. For some people, this means paying more attention to the alcohol products they consume; for others, it means abstaining from alcohol altogether. Drizly pointed out that consumers pay more attention to their health due to the impact of the epidemic, and this trend will continue.
Drizly predicts that by the second half of 2020, the demand for beer, wine and low-alcohol spirits will exceed that of traditional products. In addition, the company expects that alcoholic beverages with healthy ingredients will become popular. CBD beverages will be one of them, and nearly one-third of independent retailers firmly believe that these products will significantly increase their sales.
4. The rise of independent brands
The craft beer brands that were previously only available in a limited market are now easily available in stores across the United States.
According to Drizly, more and more small independent beers may be taking away the”craft brewing” concept that many big brands rely on. In 2019, the stocks of brands such as Dos Equis, Goose Island, Magic Hat, Pabst, Shock Top, Strongbow continued to fall on Drizly. In contrast, many independent brands of beer, wine and spirits experienced sales growth in 2019. These include Clase Azul, Gerard Bertrand and Mighty Squirrel.
This situation continues until the first half of 2020. After mandatory quarantine across the United States, Drizly’s data shows that independent beer companies’ market share has risen sharply. Although established brands such as bourbon and red wine continue to dominate the industry, the popularity of niche brands such as orange wine, sake and shochu will continue to rise.
In the past 20 years, consumers have been attracted by higher-end alcohol products. Despite the economic impact of Covid-19, the high-end trend of various wines and spirits will still be strong by 2020. Despite the initial spike in sales of low-priced wines in March, the share of wines under $10 on Drizly has steadily dropped to 19%, while the share of wines of $10 and above has increased significantly. Even in the ultra-premium wine category. The market share of low-priced wines has been declining since January of this year, while the market share of wines priced at $30 and above has increased-even for wines priced at $70 and above.
However, Drizly reports that as 2020 progresses, consumers may look for added value when buying high-end products. The company predicts that consumers will continue to switch from established brands such as Johnnie Walker, Lagavulin, and Perrier-Jouet, whose sales growth in 2019 will be significantly lower than that of younger brands. Instead, they will be attracted by Instagram and “well-known” brands supported by celebrities, such as Aviation, Casamigos, and Proper 12. These brands have seen significant growth in recent years.
6. The rise of family bartending
Due to the impact of Covid-19, more and more consumers have begun to make high-quality cocktails at home. According to data from Rellas, although historically, wine has accounted for the majority of Drizly’s sales, in the three months after the quarantine measures, spirits accounted for 39.6%of sales (wine 38.4%) .
Gin, Mezcal and Tequila all experienced more than expected growth in March, April and May. In the week of May 18, these three types of data exceeded the baseline, which is the expected growth rate of Drizly during this period of 595%, 1064%, and 546%. Sales of cocktail necessities such as liqueurs and bitters also increased significantly; in the same week, sales of liqueurs, sweet wines and gin increased by 826%, while sales of mixers, syrups and bitters increased by 970%.
Drizly predicts that even if restaurants and bars reopen, this trend will continue. Consumers will seek to purchase high-quality cocktail ingredients for a higher family bartending experience.”Now many home bars are newly built, we can foresee this trend will continue for some time.” Rellas said.
7. Online liquor sales will continue to prosper
Before 2020, consumers have already turned to the choice, convenience and immediacy provided by alcohol e-commerce, but the emergence of Covid-19 has led to a surge in online alcohol sales. In the week of March 16, Drizly’s sales rose 233%. Since then, as consumers’ purchases per order have increased and new online alcohol buyers have entered e-commerce channels, sales growth has averaged about 400%higher than the baseline.
Consumers will continue to buy alcohol online because people are becoming more aware of the convenience and choices provided by e-commerce. Rellas said:”We believe that as awareness increases, consumers after the epidemic will become more stubborn.”
Before Covid-19 accelerated the transition to e-commerce, Drizly had predicted that in the next five years, 10%of all alcohol sales would be sold online. As a result of this growth, Rellas now predicts that in the United States alone, online alcohol sales in five years will reach US$20 billion or more.
”Over time, consumer expectations will only increase. In a supply chain based on technology and data, consumers’ ability to find, experience, and purchase their favorite brands has been greatly improved Space.”