Despite supply chain issues related to the ongoing Covid-19 pandemic, retailers met tall orders for top-shelf wines and spirits to end 2020 on a high note. Hard seltzers, RTDs, and boxed wines continued thriving. “The average wine bottle price has increased as our guests are eating at home more, inspiring them to select better wines to enjoy,” says Gary Fish, founder and CEO of New Jersey-based Gary’s Wine & Marketplace, which also has a storefront in Napa, California. “We expect this trend to continue into 2021.”
Sales at Gary’s four New Jersey locations notched 19.6% growth in 2020, and fourth-quarter sales grew 17.9% year-over-year. “The growth in revenue was predominantly driven by online sales and our virtual wine tasting program we offer for corporations and large groups,” Fisch says. “We fulfilled more than 250 virtual wine tasting events throughout November and December 2020, with groups ranging from 10 to 300 participants.”
In Pennsylvania, consumers traded up at retail, with unit sales decreasing 0.8% but dollar sales increasing 6.7%, according to the Pennsylvania Liquor Control Board (PLCB). The PLCB’s retail sales grew approximately $20.5 million to $324.45 million from November 24 through December 31, compared to the same 2019 period. “In spirits, the higher-priced segments, super (plus 22.95%) and ultra (up 25.33%), had the highest increase in dollars,” says Tim Holden, chairman, PLCB.
Gary’s top three selling sparkling wines during the holidays were Champagnes: Veuve Clicquot Yellow Label Brut ($50 a 750-ml.), 2010 Dom Perignon ($165), and 2012 Louis Roederer Cristal ($260). “There were major challenges with sourcing Champagnes this year. We ran out of many of our top selling Champagnes prior to Christmas,” Fisch says. “We also had products arriving late due to supply chain issues, resulting in stock-outs and lost sales.”
The chain’s leading wines were 2016 Caymus Special Select Cabernet Sauvignon ($165), 2019 Santa Margherita Pinot Grigio ($23), and 2017 and 2018 Stag’s Leap Wine Cellars Artemis Cabernet Sauvignon ($55). Rosé wine sales at Gary’s remained in overdrive in November and December with 41.6% growth due to a wide available selection.
The PLCB’s top-three wine brands at retail stores were sparklers: La Marca Prosecco ($17 a 750-ml.), Martini and Rossi Asti ($16), and Korbel ($16). Table wine sales leaders were Kendall Jackson Vintners Reserve Chardonnay ($16), Apothic Red Winemaker’s Blend ($13), and Black Box Cabernet-Sauvignon ($25 a 3-liter box) , while Tito’s vodka ($36 a 1.75-liter), Hennessy V.S. Cognac ($40 a 750-ml.), and Baileys Irish Cream liqueur ($30 a 750-ml.) led spirits sales. In other action, Skrewball Peanut Butter whiskey ($30 a 750-ml.) increased dollar sales by more than six-fold and New Amsterdam Pink Whitney Pink Lemonade vodka ($14) nearly doubled in dollar sales.
E-commerce sales in Pennsylvania increased more than fivefold in 2020. “Last March we had a single e-commerce fulfillment center, averaging a few hundred orders per day. As our stores shut down as a result of the pandemic, demand at Finewineandgoodspirits.com increased beyond our imaginations,” Holden says. “We were doing thousands of orders a day for a period of time, and expanded our fulfillment network from a single location to—at its peak—more than 120 locations picking, packing, and shipping e-commerce orders.”
As the retail tier adjusted to Covid-19 by leaning in to e-commerce to keep the industry moving during 2020, the price of doing business continued rising with deliveries and curbside pickups. “These fulfillment methods are labor intensive; they drive up labor costs and require additional packaging and vehicle costs,” Fisch explains.
Gary’s fulfilled approximately 7,000 curbside pickups and 9,000 delivery orders in November and December through the store’s mobile app and Garyswine.com, not including delivery volume from third party marketplaces. “Retailers not investing in their own digital properties—website or a mobile app—and relying on online business from third party marketplaces will likely face challenges,” Fisch says. “Third party marketplaces drive lower margin sale, high marketplace take rates, and the lack of access to customer information, posing challenges to retailers.”
Under heavy pressure, the delivery business remains extremely competitive. “Amazon has created the expectation of free shipping, and we are seeing our customers continue to expect free shipping or delivery for all orders,” Fisch says, adding he’s experimenting with creating a Gary’s Fulfillment Membership program to offset costs of offering free shipping.