IN: U.S. alcohol sales went up amid coronavirus. Here’s how it affected local liquor stores, breweries
By Robby General, Muncie Star Press
May 12, 2020
MUNCIE, Ind. — During the early stages of the COVID-19 pandemic, panicked shoppers cleared grocery store shelves of food, cleaning supplies, toilet paper… and booze.
According to a study by Nielsen, in-store alcohol sales in the United States were up 54% for the week ending on March 21 compared to the same time period last year. That increase in sales began a week earlier, where sales jumped 21%, and has continued as weekly alcohol sales have been up 16-27% ever since.
The largest weekly nationwide surge came before Indiana Gov. Eric Holcomb announced a statewide shelter-in-place order on March 23. Unsure of which businesses would remain open (considering that two years ago Hoosiers weren’t allowed to buy alcohol on Sundays) people began stocking up on beer, wine and liquor.
Even while stay-home orders have been in place, residents in Indiana and surrounding states have been able to buy alcohol. On May 4, liquor stores were allowed to open at 50% capacity after weeks of curbside pickup. Restaurants and breweries have continued curbside pickup and, as of May 11, were allowed to open their dining rooms at 50% capacity if they served food, according to the state’s phased reopening plan.
But what has that meant for alcohol sales locally? And what does it mean for area liquor stores and breweries going forward?
Liquor stores see spike, not necessarily increased sales
When Delaware County enacted its emergency disaster deceleration plan, local liquor stores were uncertain of what it would mean for business.
On March 20, Melissa Hook, co-owner of Friendly Package Liquors, sent out a video message through the store’s Facebook page, in which she encouraged people to stop by. She told The Star Press that she originally thought Friendly Package’s three locations in Muncie, Yorktown and Chesterfield “were going to have to shut down.”
The next day, all three locations were open for curbside service. Hook said she saw an uptick in customers in March, which she said was likely due to the uncertainty surrounding shelter-in-place orders.
“We did see a surge and I think that part of that took place because we as business owners were not given any heads up into that (shelter-in-place), either,” Hook said. “We were caught off guard with that, as well.”
That surge doesn’t mean alcohol sales have been through the roof, however. While there were often multiple cars in the parking lot at one time, it took more work for Hook and her employees to bring out items to customers who often didn’t know the exact product or size of what they were ordering.
David Hartley, CEO of Indiana Liquor Group, which owns 11 Muncie Liquors and Save-On Liquor locations in the area, temporarily closed three locations and moved those employees to other stores to keep up with demand.
Like Friendly Package, Muncie Liquors and Save-On Liquor cut their hours. Indiana Liquor Group also paid bonuses for those who chose to keep working due to the increased amount of work it took to do curbside service. As a whole, Hartley said that business “wasn’t near as bad as we probably thought,” as sales figures were near identical to what he projected before the coronavirus.
“What we saw is what I would call the natural balancing,” Hartley said. “Our sales were way up in March and then they were down in April. But when we look at the two months, it’s almost exactly what our budget was in our projection. It just balanced itself out.”
Hook echoed that message.
“Sales-wise, I don’t really think that they were up, I think that it’s just smushed into a different time period,” Hook said. “It’s not like we’re going to go ‘Oh my goodness’ when we look back next year at this time and say, ‘Did you see how great April was?’ That’s not going to be the case.”
Both Hook and Hartley did thank customers for shopping local rather than at big box stores. Friendly Package, Muncie Liquors and Save-On Liquors have since re-opened their doors at 50% capacity, which they hope will draw eyes to new products and slowly bring back a sense of normalcy.
Breweries only bring in a fraction of usual profits
Bill Lett, owner of Elm Street Brewing Company, kept his doors open for curbside business.
His was one of several local brewing companies to do so. The Heorot Draught House, home to Wolves’ Head Brewery, remained open for curbside while The Guardian Brewing Company began taking online orders and delivering to residents in Delaware, Henry and Madison counties.
Lett worked with what he called a “skeleton crew,” and added that he’s excited to reopen even at 50% because, when asked if business was successful in the past month, his answer was succinct: “It wasn’t.”
“I mean, people came and everybody tried to come out and support and stuff, but it wasn’t – it was fine to do because it kept a bunch of people busy,” Lett said. “It kept some people busy and sales weren’t that good, but it was better than nothing.”
Even with bars, breweries and restaurants selling alcohol to-go, Nielsen reported that weekly off-premise alcohol sales have dipped below 67-75% of weekly sales throughout the month of April compared to last year.
That has been felt by local breweries, some of which chose to remain closed rather than offer curbside pickup.
Lett had to lay off three-quarters of his staff as sales in the past six weeks dropped to “a fifth or a sixth” of normal. While he did note that they “blew out” of 64-ounce growler fills, like Three Floyd’s Zombie Dust and Gumballhead, during their “Tap Takeover” events, it didn’t result in profits.
For example, Elm Street sold 64-ounce growler fills of Zombie Dust for $12, which normally goes for $6 by the pint. One night, it also dropped the price of its in-house beer to $8 per growler fill, normally $16 per fill.
“We didn’t do curbside to make money; we did curbside to establish a consistency,” Lett said. “You’ve got to keep the joint clean, you’ve got to keep everything working in the place. In my mind, it’s worse shutting everything down. … To me, it makes more sense to keep things running and using it, so that’s why we did it.”
Just a few blocks away, Heorot and Valhalla owner Stan Stephens used a similar tactic. Stephens said their in-house Wolves’ Head beer sold “really well” curbside, but he also slashed prices to $8 per fill.
“We’ve lowered our prices on everything to turn the beers, keep the lines going,” Stephens said. “… We’ve been lucky enough to sell the beers that we needed to sell. We had a couple big sales and stuff, so we’ve moved a lot of that product out and we were happy with that. So far, we have not lost any beer, it’s been all good. We’ve actually replaced some kegs and put some new things on.”
Still, Stephens estimates that sales have been about 15% of a usual month. He’s eager to see how business does at Valhalla, which opened on May 11 and has an in-house restaurant that seats 90 people at half-capacity. In the next couple of weeks, Stephens also plans on opening the Heorot, which can seat 60 people at half-capacity.
What’s next for the alcohol industry?
While in-store and online alcohol sales saw significant increases across the country, Nielsen said “the reality is that the alcohol industry has a long road ahead to get where conditions were before COVID-19.”
Nielsen’s investigation also estimated that “the U.S. alcohol market needs to sustain 22% volume growth across all alcohol categories sold off premise in order to merely level off the impacts of closed bars and restaurants.”
“Meeting that volume threshold would mean total alcohol sales growth gets back to levels prior to COVID-19,” Danny Brager, senior vice president of Nielsen’s Beverage Alcohol practice said in the article. “However, unquestionably, we expect the total dollar spending on alcohol will decline. Consumers are shifting the dollars they would have spent on alcohol in a restaurant, bar, or tasting room to alcoholic beverages they can buy at a lower mark-up from retailers, online merchants and even directly from the supplier in the instances where it is legalized to do so.”
As restaurants and bars reopen, Stephens expects sales to return to 30-50% of what it is normally early on as people get more comfortable with the idea of going out to eat.
“That’s a guess; I don’t have anything to go by except what I hear from people,” Stephens said. “There’s no music, we can’t do any music or anything until well into June, so that makes a difference.”
Stephens added: “A lot of it is just the public’s opinion on how things are going to be. If they don’t feel safe, they’re not going to come in.”
Along with customers walking back through the doors, there is some uncertainty on how fast employees will feel comfortable returning to work, Stephens said. Both Valhalla and Elm Street reopened May 11 but they won’t go completely back to normal for a while. According to Gov. Eric Holcomb’s phased reopening plan, restaurants and bars with food can expand to 75% capacity on June 14 and full capacity on July 4, depending on the spread of the virus and its effect on hospital systems.
Like the Heorot, Elm Street and its staff have continued to make changes to abide to social distancing guidelines. Lett and his employees have continued to spread out tables and install sneeze guards throughout the brewery. Elm Street also plans on dedicating the first hour or two for older customers.
“The people who are more susceptible to the coronavirus can come in early and beat the crowd and the place will be the cleanest,” Lett said. “I mean, everybody is always wiping stuff down but, you know, when night time comes and morning before we open everything is cleaned down, so they can get anything before it’s touched.”
For liquor store owners, re-opening will give them the opportunity to launch new products for summer and allow their customers to browse the shelves: over the past couple of weeks, Hartley realized how important in-person shopping is to their business model.
“If a customer doesn’t come into our store, how are they supposed to know what’s new?” Hartley said. “If you’re really only allowed to come to the curbside, you’re pretty much just going to buy whatever it is you’ve already bought. … It’s fantastic to be back. You know, fantastic is not a strong enough word.”