Hard seltzer is king. Big beer owns it
New York (CNN Business)The coronavirus pandemic has forced millions of Americans to stay home, and they’re drinking a lot of alcohol to pass time — for now.
Alcoholic beverage sales shot up 55% in the third week of March compared to the same time a year ago, according to Nielsen. That’s when several states, including New York, ordered people to “shelter in place.” Those social distancing guidelines limited people from hanging out and restaurants and bars were ordered to close. However, many stores selling alcohol — including liquor outlets or grocery stores — stayed open.
People quickly stocked up on spirits, wine and beer. Ready-to-drink cocktails, such as spiked lemonades or canned gin and tonics, grew the most: a 106% spike in sales, according to Nielsen. Hard seltzer sales also remained strong with White Claw and Truly remaining the top-selling brands.
Sales of beer, which has been gradually falling out favor with the American drinker, also soared. Nielsen said that larger packs of 24 or 30 both grew roughly 90% for the week compared to a year ago as people were preparing to limit their outside errands.
The week ending on March 21 will probably be the peak for alcohol sales, predicted Danelle Kosmal, vice president of Nielsen’s Beverage Alcohol Practice Area. Subsequent weeks will be a “better indicator of the new normal in how consumers are responding to the crisis,” as people consume the alcohol they’ve stockpiled and as more Americans lose their jobs.
Sales could fall this month if there’s a deeper recession and people shift their spending to essentials like food, noted Laurent Grandet, an analyst at Guggenheim. He expects sales to remain strong for cheaper beer like Budweiser but warns that the craft beer industry will be hurt. Around 70% of its sales come from the brewer’s taprooms or at bars, which are both currently closed in much of the US, he said.
“It’s a perfect storm for the craft beer business,” he told CNN Business. He said they will further be harmed since retailers pick larger brands to stock their shelves because they’re easier to get.
Even when social distancing rules are eased and the country gets back to something resembling normalcy, the recovery in alcohol sales won’t be immediate. People might still be wary of rushing back to bars or restaurants, and Grandet predicts 20% won’t reopen. It will also take time for the supply chain to ramp up production again.
Source: Read Full Article