Months after the outset of the pandemic, sales of high-end liquor are still nowhere near their 2019 levels. However, analysts are offering hope that they may be on the road to recovery. Prior to the start of 2020, they had been steadily on the rise for some time. But that all changed when stay-at-home orders decimated the bar and restaurant scene overnight. Now it seems that premium alcohol sales may be set to resume their steady ascent. Let’s explore the factors that caused these shifts, and where they might be headed in the future.
The sale of top-shelf alcohol products has always been closely tied to people visiting bars and restaurants. When going out for food or drinks, people are much more likely to order a nicer cocktail or glass of wine than they would usually get elsewhere. Even though ordering drinks is significantly more expensive than just drinking at home, people who are going out are already expecting to spend more, and so the added cost is not much of a deterrent. It may also be the case that these customers are trying new or more expensive beverages because they are only committing to a single glass, rather than an entire bottle.
When bars and restaurants were temporarily closed down at the beginning of the COVID-19 pandemic, it was no surprise that sales for premium spirits dried up. Not only were people staying at home, they were also spending less money on non-essentials. Many establishments tried to keep their in-person business going by creating space for outdoor tables. These were partially successful, and kept may places in business, but did not revitalize premium alcohol sales as much as anticipated. Although it was initially predicted that this would bring back a substantial amount of on-premise drink consumption, the actual numbers were less exciting in reality. Although they were allowed to go out again, it seemed that customers were still playing it safe and not spending more money than they needed to.
With days shortening, temperatures getting lower, and coronavirus cases on the rise, it would seem that the bump to high-end liquor sales from on-premise dining has mostly come and gone. However, there seems to be hope for premium wine and spirits in spite of this. In fact, ISWR (International Wine and Spirits) predicts that the volume share of premium spirits will increase 13% by 2024. Perhaps as going to bars and restaurants becomes more and more of a special occasion, people will be willing to splurge on the occasions when they do.
People have always tended to buy premium wine and spirits to drink at home much less frequently. However, this may change as time goes on. People who are no longer able to go out, but whose incomes haven’t been disrupted, may begin spending more while at home.
Additionally, the holiday season has always been a very important time for the wine and spirits industry. November and December account for a large portion of the total yearly sales for alcoholic beverage distributors. While a sizable share of those sales are likely for parties and social gatherings, most of which will not be happening this year, that doesn’t mean that there won’t still be a bump. Even at very small family gatherings, people will likely want to celebrate the time spent with loved ones by getting high-end drinks to share.
While sales of premium wine and spirits have not yet returned to where they were, their future ultimately looks bright. In other countries, particularly China, high-end beverages are still selling quite well. They will eventually rebound in the United States as well, even if it is not until after a vaccine is deployed.