Flat alcohol categories return to growth

September 17, 2020
By Alana House

COVID-19 has fuelled a dramatic turnaround in the fortunes of three alcohol categories that were either stagnant or in decline: bourbon RTDs, cask wine and classic beer.

New data from IRI shows the popularity of the three alcohol categories has surged since March, as consumers adapt their buying habits during the pandemic.

Total liquor sales are up more than 10% over the latest 12 months, while in the quarter to August 9 they’ve skyrocketed by more than 28%.

RTDs represent 15% of all liquor dollar sales however in the latest year have contributed to more than 20% of liquor growth. More recently, RTD growth has accelerated, outpacing glass spirits in the latest quarter.

Jack Daniel's RTD

IRI Lead Consultant – Liquor, Jarna McLean, said bourbon RTDs were “hit hard” in the early months of 2020, but are back to having more than 50% category share in the latest quarter.

“Jack Daniel’s was flat, but it’s now the third largest contributor to liquor growth with RTDs accounting for nearly 60% of the master brand’s growth,” McLean said.

Bourbon RTDs “on fire” in US

Australia is the birthplace of RTDs, which were were introduced here in the mid-1990s, then later into Europe, Great Britain and the US.

While they took off here, they struggled in other markets until recently.

Brown-Forman President and CEO Lawson Whiting noted while discussing alcohol categories during a recent analyst call: “Ready-to-drink beverages or RTDs are having a moment right now, but it’s a business we’ve believed in and invested in for a long time.

“Globally, Jack Daniel’s RTDs are now over 10 million cases with Australia, the US, Germany, and Mexico all over 1 million cases. This really has become a meaningful business for our company. Jack RTDs were created to expand occasions where Jack could be enjoyed. These RTDs serve as an important consumer recruitment vehicle due to the category’s light and really accessible flavour profile.”

Country Cocktails

“Country Cocktails remains the majority of our RTD business in the US and it is on fire. And it is up significantly over this past quarter. It’s a business that’s crossed two million cases at this point.

“These things have gone from sort of lukewarm growth rates to really spiking up and a lot of it’s just fitting lifestyles that are out there right now. It’s obvious that people are at home and they want it to be simple. And so people really do turn to these simple RTD drinks.”

Goodbye goon, hello cardboardeaux!

Dollar growth of wine sales is up 7.5% and more than 19% in the quarter to August 9.

Wine has also seen a sharp price-based divergence, there’s been a spike in sales over $50, but $30-50 brands are underperforming, and those priced under $20 are being cannibalised by 2-litre cask sales.

McLean speculates that during panic buying in March, consumers sampled 2-litre cask wine and found it comparable to the table wines they had previously been purchasing.

“Cask wine was declining less than a year ago,” McLean noted. “Now it’s in growth in the 2-litre segment, with its share up 6.3%.”

De Bortoli cask

Darren De Bortoli, managing director of De Bortoli Wines, recently told Guardian Australia: “The consumer’s obviously discovering the value that cask wines do offer, and is surprised at the quality of the cask wines.”

McLean noted that 2-litre and four-litre casks were appealing to different markets and not taking shoppers from each other.

At the other end of the spectrum, shiraz brands priced over $50 have seen 10% growth.

“Consumers who would have previously spent $100 on a bottle of wine in a restaurant are now splurging on luxury drops at home,” McLean said.

“We’re seeing similar trends in premium Champagnes, as customers treat themselves during the current restrictions. The trend became evident over the week of Mother’s Day, where we saw an additional 32,000 bottles of Champagne sold versus Mother’s Day 2019.”

“This shift to luxury across the wider wine category does not look to be slowing down either with wine priced above $50 growing two times faster than total wine.”

Classic beer makes a comeback

Classic beer has also joined the alcohol categories experiencing a significant return to growth in recent months after years of losing share to craft and contemporary.

Prior to COVID-19, VB and XXXX were the two largest drainers in classic beer sales. They’re now the two biggest contributors to segment growth.

“There’s been an amazing classic beer recovery,” McLean said. “It’s the same shoppers, but they are buying more in the off-premise as the traditional beer after work has been replaced by at-home consumption.

“For VB, we have seen the brand regain nearly 90% of the prior year’s decline in just the latest 13 weeks.”

How COVID-19 saved cask wine sales

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