Last year, amid renewed Covid-19 restrictions, many U.S. consumers kept their holiday gatherings small, limiting them to immediate family or a few friends. For a lot of shoppers, this meant trading up to higher-end products—but buying less—in the drinks department. As concerns about the Delta and Omicron variants continue, the 2021 holiday season will likely bring a mix of behaviors, from intimate family dinners to all-out celebrations. For grocery retailers, capitalizing on beverage alcohol trends will be crucial for maximizing holiday sales and ensuring a prosperous 2022.
NielsenIQ data from total multi-channel markets provides insights into current trends. While growth rates for the alcohol segment are down from 2020, they remain significantly elevated from 2019. In the 52 weeks ending Oct. 23, 2021, dollar sales for prepared cocktails increased 56% (up 177% vs. 2019), wine-based alternatives grew 20.1% (up 85% vs. 2019) and tequila gained 20% (up 83% vs. 2019).
In the wine category, dollar sales for wine-based cocktails jumped 58% (245% vs. 2019), French Champagne grew 26% (62% vs. 2019), and sparkling wine increased 12% (35% vs. 2019). Hard seltzer sales topped the beer category, gaining 20% (244% vs. 2019), followed by imported beer at 4.4% (17% vs. 2019).
Shoppers also reached for “zero-proof” beverages, which now account for $3.1 billion in sales for off-premise channels. “In 2021, we’ve seen a large shift toward non-alcoholic and low-alcohol beverages, which are up 10% versus a year ago,” says Kaleigh Theriault, beverage alcohol manager at NielsenIQ. “Within the segment, non-alcoholic beverage sales are far surpassing low-alcohol beverages, and 78% of these buyers also purchase alcoholic beer, wine and spirits—meaning shoppers are making substitutions, tying into their collective sentiment of promoting health and wellness.”
Theriault expects this trend to extend into 2022, with shoppers seeking out “low/no” beverages and reduced-calorie drinks. Consumers will also continue exploring new products. “Many shoppers have been straying away from their go-to brands and opting for alternatives like tequila or wine-based ready-to-drink (RTD) cocktails, CBD-infused beverages, convenient packaging sizes, and more,” she says.
Scott Moore, senior vice president of national off-premise accounts at Miami-based Southern Glazer’s Wine & Spirits, predicts that consumers will trade up to higher-end wine and spirits offerings, as they did in 2021.
“As gatherings happen this holiday season, we believe the pent-up excitement will translate to celebratory get-togethers,” Moore says. “We expect to see sales of premium wines and luxury spirits improve over the October, November and December selling season.”
In the coming year, Moore says he expects to see RTD and ready-to-serve products gather steam, along with drinks in cans, single-serve packaging and 3-liter boxes.
“With fresh offerings and new consumers entering the category every day, tequila is the most exciting category for the future,” he says. “Specifically, we expect to see those who have consumed blanco or silver offerings expand to reposado, añejo, cristalino, and even extra añejo.”
To maximize sales, Moore suggests that grocery retailers place big brands front and center. “Customers want to ensure that they can get the brands they know and love without inventory concerns,” he says. “Ensuring that the top SKUs are easily found within the store and are in stock are the foundations to success this holiday season and moving into 2022.”
For the 2021 holiday season and into 2022, Southern California grocery chain Bristol Farms, based in Carson, Calif., is promoting wine’s food affinity throughout its stores.
“We focus on the meal or the theme and build on that and try to incorporate value,” says Geoff Nicoll, director of wine and spirits. “Easy options include placing sake on the sushi bar, Sauvignon Blanc placed by seafood, Chianti in our pasta section, or finding great quality [wines] and pairing them up with some Italian cheeses. It’s subtle, but effective.”
Top-selling items are strategically placed in well-trafficked areas where shoppers can grab them on impulse without venturing into the wine department. “We like to build three-dimensionally,” he says, “and create a call to action, saying, ‘This is what we are excited about.’”
With popular products such as imported wines and high-end tequila in short supply, Nicoll is taking the opportunity to introduce customers to new products.
“If you are seeking a certain kind of wine, we have already begun the process of isolating potential concerns and have brought in excellent replacements,” he says. “It’s easier to do that with wine than it is for spirits. We all have our favorites, so we can only try to educate customers and provide them with options.”
Nicoll is seeing several trends with the momentum to carry into 2022.
“With the pandemic, we have seen a significant rise in spirts—almost a 25% jump,” he says. “Liqueurs, bitters, and the like have seen growth, but nothing compared to tequila. There is a huge demand, and coupled with shortages, there’s almost a frenzy.”
He also notes interest in premixed cocktails due to their grab-and-go convenience, as well as limited-run craft beers from local producers. “I think all of the last year’s stress has sparked considerable interest in non-alcoholic drinks,” adds Nicoll, “though it’s still small in the grand scheme.”
Bristol Farms is also promoting alcohol beverage sales through revamps of the stores’ wine departments, featuring soft lighting, a relaxed vibe, and a curated selection of wine and spirits.
“There is a beautiful open feeling with a glass wall that we populate with appropriate seasonal items and create theme displays,” says Nicoll. “It adds a lot of flair to this space.”
Increasingly, grocery retailers are reconfiguring their wine, beer and spirits sections to create experiences for shoppers. In spring 2020, Lowes Foods, based in Winston-Salem, N.C., converted former shopping-cart corral spaces into speakeasy-themed liquor shops at three of its stores in the Columbia, S.C. area. Dubbed “Knock Knock,” the stores are stocked with local spirits as well as national name brands.
In October 2021, Schnucks announced a fresh new look for its Kirkwood store, including a food hall concept and refreshed wine, liquor and beer department.
Some stores are even taking beverages directly to shoppers. This holiday season, Sam’s Club introduced home wine delivery in partnership with the Drinks alcohol delivery platform as part of its “Bring the Merry” promotion. Currently running in 16 states and the District of Columbia, the program allows online shoppers to choose curated 6- or 12-bottle cases of its Member’s Mark wines.
Hard Seltzer Sees a Slowdown
Sales for the hard seltzer category have exploded in recent years, but will the trend continue in 2022?
“We’re seeing declines from 2020 because consumers have officially ventured out of their homes and back into on-premise establishments,” says Theriault of NielsenIQ, “but they are still purchasing and consuming more hard seltzers at home than they were prior to the pandemic.”
In September, a press release from Boston Beer Co., the maker of Truly—the second most-popular hard seltzer brand behind White Claw—announced that due to uncertainty about category demand for the remainder of the year and limited product shelf life, the company would destroy millions of cases of Truly rather than sending them to market. Even so, Boston Beer Co. CEO Dave Burwick predicted that the hard seltzer category will remain an important segment of the beer market in the coming years.
To gain insights on the category’s future and shoppers’ most-valued potential product innovations, Amsterdam-based behavioral insights platform Veylinx studied eight top brands, gathering input from 2,700 U.S. consumers in the summer of 2021.
Among the added benefits tested, high alcohol, low alcohol, vitamins, kombucha, immunity, energy, sustainable packaging and CBD drove the greatest purchase interest. Adding CBD boosted consumer demand by 12% on average.
More than half of respondents listed “refreshing taste” as a primary purchase driver, with Truly, White Claw and Bud Light scoring highest in that category. Somewhat surprisingly, only 22% of participants named the perceived healthfulness of seltzer compared to other alcoholic beverages as a purchase driver.