Off-trade and on-trade alcohol retailers have been affected by the COVID pandemic in various degrees. The former have been faced with supply chain issues and had to essentially simplify them and reduce their SKUS, whilst the latter have had to close during long periods and restrict their offerings to take out and delivery. Both types of retailers adjusted to the pandemic by taking action, mostly through price reductions, SKU reduction, home delivery, online experience development, and curbside pickup. Below is a list of trends that resulted from actions taken in response to the COVID crisis.
1: ON-TRADE RETAILERS REDUCING ALCOHOL PRICE
- Due to the lock down restrictions which have affected restaurants and bars by forcing their closure, and then only allowing them to provide take out orders, on-trade food establishments have started offering alcohol for sale alongside food orders, but at prices that were below their pre-COVID level.
- This strategy has been applied by on-trade retailers in order to boost their alcohol sales and try to compensate for the previous losses due to their total closure for months.
- As an example, bars in Michigan have been allowed to offer 2-for-1 deals on their takeout alcohol sales following a change in the state law passed by the governor in July 2020.
- Pizza Plex is one of the Michigan bars taking advantage of this loosening in regulations to sell discounted cocktails.
- Another example of a restaurant that has decided to reduce its alcohol price during the pandemic is Cote in New York City, which has reduced the price of one of its hand-selected bottles of rare wine from $500 to $200. The bottle is provided to go along with its packages of steak for take-out and delivery.
2: SKU REDUCTION IN SUPERMARKETS
- Previous to the COVID crisis, off-trade retailers in the U.S. had already started reducing their number of beer offerings. With the pandemic having a negative impact on the supply chains worldwide, U.S. off-trade retailers reduced further the number of beer items that they stocked to simplify their supply.
- As a result of the pandemic, supermarkets have opted to reduce SKUs for all products, including alcohol, and focus on well-known brands and larger pack sizes for items such as beer.
- Supermarkets are focusing in providing the main beer brands with larger shelve space, to the detriment of smaller brands.
- As a result, during a period of 6 weeks up to April 11th, Nielsen reported that the number of beer, FMB, and cider items sold in U.S. off-trade retailers dropped by 8.3% compared to the same period in 2019. This is equivalent to a reduction of 1,900 items. Small brands were the ones that were affected the most.
3: HOME DELIVERED COCKTAILS POPULARITY
- During the pandemic, restaurants and bars were allowed to home deliver cocktails to support their business in spite of their closure for onsite customers.
- According to Nielsen, this sector grew by 75% in March 2020 in the U.S.
- The popularity of this type of service was also prominent across the world.
- In the UK, some cocktail bars have adjusted to the pandemic by offering their award-winning cocktails, usually consumed on-premise, for delivery.
- This is the case for an agave-specialist bar named Hacha, which had decided to deliver some its cocktails in 500ml bottles.
- This initiative was heavily promoted by Instagram stories.
- In India, trendy bars in large cities such as Mumbai and Delhi are also proposing some of their best cocktails to be home delivered.
- An example is Masque, a high-end Mumbai restaurant that offers two types of cocktails to be ordered from home alongside food.
4: BARS DEVELOPING ONLINE EXPERIENCE
- In the UK, some bars are trying to create an online experience for their customers by creating virtual cocktail-making sessions.
- Viewers can use this session to try to make the same cocktail as the bartender at the same time or just watch the tutorial and try it later.
- This type of initiative is meant to keep customers connected to their favorite venues during lock down.
- An example of bar that has launched a similar initiative is Top 50 Cocktail Bar in partnership with Kuckoo.
- Some cocktail bars are also trying to boost income by creating an online store where customers could purchase their favorite cocktails in a bottled form online.
- Hacha us is another UK-based bar that is further developing their online store experience.
5: GROWTH IN RESTAURANTS AND BARS ONLINE SALES
- In the U.S., some states have allowed on-site alcohol retailers, such as restaurants and bars, to temporarily be able for the first time to deliver and sell wine and cocktails for takeout.
- This has boosted online sales of alcohol in the country and contributed to offsetting the declines in on-premise sales.
- This is demonstrated by a 10% jump in March 2020 sales compared to a year before for wine sales and a 9% jump for spirit sales.
- An example of a restaurant that has embraced this change is Niche Niche in New York, which has started offering wine deliveries, to go along with snacks such as cheese and charcuterie.
- Previously to the rule change, restaurants were not legally allowed to deliver alcohol with food.
6: ALCOHOL RETAIL STORES ONLINE SALES AND CURBSIDE PICKUP
- Some liquor stores have decided to suspend their in-store sales and replace them with 100% delivery sales, due to concerns over the safety of their customers and staff.
- Companies decided to launch websites and convert their stores into storage and fulfillment centers, used just to pack items.
- An example of such a company is Gary’s Wine & Marketplace in New Jersey.
- Previous to the pandemic, Gary’s Wine only used to deliver around 3-5 orders per day, and has seen this number grow to 150-200 during the COVID crisis and after having setup their website.
- An already existing mobile App has seen its download explode to around 10,000 in two weeks in April 2020.
- Curbside pickup has also increased, with employees dropping the online orders in the customers’ car trunks.