Beer, Wine and Liquor – The Alcoholic Beverage Industry During Covid-19
Social distancing has redefined business operations and everyday life throughout the country. Companies are changing their traditional business models to adapt to rules and regulations put in place to keep customers safe. Those that remain open or are starting to reopen are adapting to significant changes in consumer buying habits. One of these significant consumer buying habits is an unexpected surge in sales within the liquor industry.
In comparison to last year’s sales, beer and cider purchases went up by 20% from March 29 to April 4. Packs of beer containing 24-30 beverages grew by 90% that week compared to the previous year, and ready-to-drink cocktails like spiked lemonades and seltzers increased by 106%. Everyone doing their part and staying home means no more refreshments at restaurants or bars. Aside from restaurants that sell craft or specialty beverages in addition to their food, stocking up at a liquor store has been the only remaining option for many looking for a drink. Liquor stores can expect to profit from this surge for a while – it’s going to take some time for all customers to be comfortable going into restaurants again once the lockdown has ended.
Not all branches of the liquor industry are experiencing a positive surge in business, however. Craft beer companies are hurting. A significant portion of their revenue is from being served on tap at restaurants. Without restaurants catering to sit-down clientele, they have to depend on liquor store sales. The number and variety of craft beers varies from store to store because they’re more expensive for retailers to carry and consumers to purchase. As a result, craft beer sales within liquor stores aren’t consistent. Experts say that majority of the 8,000-plus craft brewers in the U.S. don’t sell their product in grocery stores and can’t afford to produce larger cases. With so many consumers shopping in bulk to spend as much time home as possible, they are even less likely to pick a smaller pack of specialty beers.
Many breweries have the kegs they were supposed to distribute to restaurants and bars to worry about. Bell’s Brewery in Michigan reported that even though they have seen an increase in sales through stores, they are struggling to determine what to do about the 50,000 kegs – about 6.2 million pints – of their summer beer they were supposed to distribute. While packaging and selling the beer in 12-packs makes sense, bottles and cans aren’t easy to come by. Craft breweries still have to compete with larger beer manufacturers for supplies.
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As the world adjusts to social distancing even as economies begin to open back up, it will be interesting to see how craft and specialty breweries entice consumers as liquor store profits continue to rise. Supporting these successful small businesses in this uncertain time is both refreshing to consumers and rewarding to the industry!