Leading beverage alcohol retailers adjusted to the Covid-19 pandemic this spring and were poised to meet heavy consumer and public health demands throughout the summer months. The summer of 2020 was indeed an unprecedented time; the beverage alcohol industry faced many hardships, with both on- and off-premise entities turning to e-commerce to save sales.
Beverage alcohol retailers saw a spike in consumer demand this summer as people stocked up their home bars rather than venture out to bars and restaurants. Powerful sales of RTDs, hard seltzers, rosés, Tequilas, gin, and boxed wines kept many stores afloat.
“Box wines are booming,” says Gary Fisch, founder and CEO of New Jersey-based Gary’s Wine & Marketplace, which also has a location in Napa Valley. “It’s unbelievable. We’re double- to triple-digit growth since the beginning of the pandemic through the summer.” Fisch also speaks to the success of single-serve offerings. “Single-serve beverages continue to do very well across the board, including canned beer, canned wine, RTDs, hard seltzer,” he explains. “If you’re having friends over, it is much easier to put a bunch of cans in the middle of a group and let people grab it themselves.”
Fisch notes that craft RTDs are up 429% year-over-year, and have become the “fastest growing category” of spirits. “Hard seltzers are up, too, by 101%,” he adds. And tequila, gin, and rosé sales were also on fire at Gary’s this summer. Led by Clase Azul Reposado ($126 a 750-ml.), Tequila sales jumped 83% year-over-year for the retailer. “Tequila was booming before the lockdown, but with guests making their own cocktails at home, we started seeing this category continue to take off,” Fisch says, noting that Tequila now represents 20% of his overall spirit sales and is tied with vodka as the top-selling spirits category at his stores. And, led by Tanqueray ($36.09 a 1.75-ml.), gin sales grew 29% at Gary’s this summer, compared to last year.
The Pennsylvania Liquor Control Board (PLCB) also experienced strong growth in RTDs and hard seltzers, but many of its trending items this summer were new, high-proof products. Among them: New Amsterdam Pink Whitney vodka ($14 a 750-ml.), Skrewball Peanut Butter Whiskey ($30), and Jim Beam Peach whiskey ($18). Jack Daniel’s ($24), Hennessy Cognac ($38), and Tito’s vodka ($20) also experienced notable growth at the PLCB, as did fruit liqueurs and sparkling wines.
At Gary’s, rosé sales increased 28.9% this summer. Led by Whispering Angel Cotes de Provence rosé ($19 a 750-ml.), rosé sales comprised 10% of Gary’s total wine sales this summer. “With hard seltzers and RTDs I thought rosé would back down a little, but we have been up every month this year in rosé, so clearly it isn’t backing down,” Fisch notes. In Pennsylvania, though, rosé lost momentum. Tim Holden, chairman of the PLCB, attributes this to supply chain issues and delays from the pandemic. “Fine Wine & Good Spirits lost three good rosé selling months in March, April, and May due to store closures,” he explains. “Sales in June, July, and August improved, but were still below last year’s sales.”
Interestingly, in what appears to be a nationwide trend, beverage alcohol consumers reduced the number of times they shopped this summer—but increased average order sizes. Fisch definitely noticed this phenomenon with his customers. “The average basket size is up 40%, whereas the number of total transactions is down 11.5%,” Fisch explains.
Online And Curbside
The summer of 2020 reinforced a historical paradigm shift, with online sales and curbside pickup becoming integral to the retail tier. Driven by online sales, Gary’s experienced a nearly 25% year-over-year sales jump from July 1 through September 13. “In-store sales remained flat during this period, but online sales increased 231%, resulting in the overall 24.8% increase,” says Fisch. “Online sales through our mobile app and website currently comprise 30% of our total business, whereas in past years, they comprised 12%.”
When the pandemic unfolded in the spring, Gary’s expanded its e-commerce team and digital platform so as to keep up with online demand. “We hired a team of customer success representatives tasked with bringing the same level of in-store service to our digital marketplace via live chat, email tickets, and phone calls,” says Michael Fisch, director of innovation at Gary’s. “We’ve also hired team members focused on developing captivating product content.” In all, Gary’s hired six new e-commerce employees. When demand for alcohol surged in New Jersey in March and April, Gary’s also quickly scaled up its in-store fulfillment team to meet the demand. In total, 60 new drivers and fulfillment associates were hired during that time period across the four NJ stores. Gary’s has since scaled this team down by 50% as the store’s processes have become more efficient and online demand subsided off its March and April peaks.
The public health crisis brought changes to the PLCB, too, which also had to increase its online presence. After shuttering retail operations at approximately 580 retail stores for two weeks in March, the PLCB implemented a curbside pickup program in April. By summer, retail was firing on all cylinders, including online sales and curbside pickup, with sales increasing 15.4% in July and August.
While curbside pickup sales slowed from peaking this spring, they are now absolutely essential in Pennsylvania. Between June 1 and August 31, PLCB retail operations processed about 150,000 curbside orders totaling $9.51 million. “We’re taking technology and operational steps to support a new normal elevated level of online sales,” Holden says. Perhaps the biggest industry takeaway from this summer is that e-commerce rising at retail. “Investment in online sales, e-commerce, and fulfillment technology continues to pay off,” says Fisch.
Some retailers are are continuing to struggle with hardships sparked by the pandemic. “All categories are down due to reduced traffic,” says Peter Granoff, master sommelier and co-owner of California’s Ferry Plaza Wine Merchant & Wine Bar, Mission Bay Wine & Cheese, and Oxbow Cheese & Wine Merchant. “Nothing is level with last year. Since we have derived significant sales historically from our wine bars at each store, and that activity is limited, overall sales remain down.”
Granoff estimates that retail sales at his three locations decreased by 30%-40% this summer. “We don’t expect anything resembling normalcy until at least the middle of next year, at the earliest,” he says. One bright spot for Granoff, however, is the Wine Club membership at his Mission Bay location. “This is entirely walk-in customers signing up who generally live in the neighborhood, and they are all pick up at the store memberships,” he says.