BOSTON — The effects of COVID-19 on the alcoholic beverage industry that began in 2020 are likely to continue into 2021.
Many pandemic-induced trends and behaviors are likely to persist in the months to come even as a return to normality begins, according to BevAlc Insights by Drizly.
"The most significant difference in e-commerce for 2020 was simply the increase of consumer awareness as to the ability to purchase alcohol online," said Cory Rellas, CEO of Drizly, North America's largest e-commerce alcohol marketplace. "While we are all excited for the return of on-premise, we believe the e-commerce landscape has fundamentally changed in how consumers will discover and shop the BevAlc category."
Top predictions for 2021 include:
Pandemic trends will persist.
The pandemic introduced some industry trends and accelerated others, and they are unlikely to disappear. Fast-growing categories such as ready-to-drink (RTD) cocktails, triple sec and citrus liqueurs, bitters and hard kombucha are expected to remain strong in 2021.
At-home bartending is also likely to remain popular, particularly due to its cost effectiveness. "We expect customers who learned how to make the perfect margarita or whiskey sour in 2020 will continue to stock their bar carts with ingredients for those cocktails," Rellas said.
Additionally, consumers still have safety concerns, which should benefit single-serve items like RTDs and hard seltzer.
Technology will transform and connect the industry.
Drizly more than doubled its number of online retailers in 2020, and data indicates growth will continue as the United States continues to fight COVID-19, according to the company. Online sales should play a key role throughout 2021 as traditional shopping venues remain closed or have severely limited capacity.
"In 2020, e-commerce and general technology adoption went from a progressive strategy to a business necessity," the chief executive noted.
Consumers who have been introduced to the accessibility and convenience of buying alcohol online will likely continue to visit online retailers as regular beverage sources. Suppliers and distributors have also begun to embrace online sales due to the shift in consumer purchasing behavior.
Mexican spirits will solidify their position.
Mexican spirits such as tequila and mezcal have transcended holidays such as Cinco de Mayo to reach the mainstream. Data indicates that premium brands will boost this segment's upward trajectory.
"In recent years, tequila has become a breakout in the liquor category as consumer perception of the drink has shifted from occasion-based to a versatile everyday spirit," commented Rellas.
The at-home cocktail trend paired with the broad popularity of classic cocktails such as margaritas prompted tequila sales to spike in 2020, with Casamigos Blanco and Espolòn Blanco brands ranking in Drizly's top 10 best-selling liquor SKUs for the year. Mezcal also saw major gains, with its share of liquor sales up 57 percent year-over-year in 2020.
This trend is expected to accelerate in 2021, with early data indicating that consumers will explore more sub-categories of tequila, such as añejo and reposado, and premium sipping tequilas will be stronger competitors with their whiskey counterparts.
Sales will reflect a divergence in price point trends.
The arrival of vaccines begins a potential return to normalcy, but 2021 will also hold factors such as continuing economic uncertainty that will impact consumer spending on beverage alcohol. Some premiumization will likely occur even as value brands grow in importance. Early in the pandemic, Drizly observed accelerating premiumization as consumers spent money on at-home indulgences instead of other experiences.
At the same time, premium growth may be accompanied by growth in high-value brands as economic difficulties push consumers to limit spending and shift to lower-priced, value-driven wine, beer and spirits brands.
"In 2021, there is a question of whether the premiumization trend will persist, or consumers will shift towards a focus on value," Rellas said. "The reality will likely be a combination of both. Depending on their target audience and customer base, retailers should be utilizing local data to understand consumer trends and what that means for ideal selection and pricing on their shelves.
Consumers will be more conscious of brand values.
Widespread protests in 2020 pushed consumers to be more aware of their purchasing power and values.
"Beyond the impact of COVID-19 on the world, 2020 was also a transformational year in terms of social justice and the fight for equality," Drizly's chief executive noted. "From the Black Lives Matter movement to awareness about immigration and women's rights, the year had many businesses and consumers increasing consciousness of the impact of their decisions on minority groups. Businesses must lead from the front."
Consumer consciousness regarding the values of the brands and establishments they patronize will cotinue to be a focus in 2021. In response, individual businesses will likely be increasingly transparent about their own values.
"Drizly has a responsibility to connect brands' and retailers' stories with customers to help make informed and conscious decisions when shopping on the platform, and we will continue to improve how we do so in 2021," Rellas concluded.