A Look at On v. Off-Premise Trends

Mark Willingham Uncategorized

A Look at On v. Off-Premise Trends

Source: Wine & Spirits Daily

August 6, 2020

Unless you’ve been living under a rock the last few months, you know off-premise bev alc sales have been growing double digits while on-premise sees major declines thanks to COVID-19-related containment measures. The question is: are off-premise gains enough to offset on-premise losses? The short answer: not quite, at least when it comes to consumer spending.

Alcohol consumption has remained fairly consistent over the last three decades, increasing in line with the growth of the legal drinking age population. While it would “be nice to think people would increase consumption of alcohol. I don’t see per capita consumption increasing that much,” said Jon Moramarco, managing partner of BW166 and editor of the Gomberg-Fredrikson report, during a webinar this afternoon.

Indeed, consumers are just shifting consumption from on to off-premise. That’s led to an increase in volumes but a drop in spending this year, largely thanks to the markup differential in the on-premise vs. off-premise.

FIRST HALF TRENDS. For the first six months of 2020, wine volumes were up 5.7% and consumer spending on wine was down 6.5%.

Off-premise was “up significantly” in Q1 and total wine volumes “did pretty well,” said Jon. But in Q2, wine “took a big hit” thanks to on-premise shutdowns, including tasting rooms. For the first half, by channel:

Total off-premise volumes were up nearly 16% and spending was up 13.7%.

Direct-to-consumer (including tasting room) volumes were down 28.6% and spending was down 23.2%.

Total on-premise volumes were down 44.2% and spending was down almost 43%.

Spirits follows a similar story, said Jon. Spirits volumes were up nearly 3% and spending was down about 12% for the six-month period. Breaking it down between on and off-premise:

Off-premise volumes were up nearly 14% and spending was up 15%.

On-premise volumes were down 44.2% and spending was down just over 43%.

Jon also shared a 2020 full year forecast and predictions. Stay tuned.