Spirits Sales Climb During Pandemic

Americans Are Splurging on High-End Liquor

As the pandemic drags on, changing consumer habits are impacting the alcohol industry. Recently released data shows that revenue for US distilleries climbed 7.7% last year to hit $31.2 billion. This marked the fastest growth and the highest sales the spirits industry has seen in at least 40 years.

Americans seem to be splurging on higher-priced whiskey, tequila, and other spirits during the pandemic since they are unable to spend money on travel, entertainment, and other activities. Alcohol costing more than $40 per 750 milliliters was responsible for 40% of growth for the US spirits industry last year. The liquor company Diageo (DEO) reported that sales of its higher-end tequila brands, Don Julio and Casamigos, spiked by 55% and 137% during the second half of 2020.

New Products and Delivery Offerings

Americans typically buy more at-home drinks than consumers in Europe and other parts of the world. Even pre-pandemic, four out of every five alcoholic drinks were purchased at a grocery store or liquor store rather than at a bar or restaurant in the US.

Now that trend has been significantly accelerated. Companies have launched new products like ready-to-drink cocktails for consumers at home. Alcohol home delivery companies have also gained popularity. For example, online alcohol retailer Drizly said in January its annual sales were up 350% compared to a year earlier.

Looking Ahead

As demand for spirits has climbed during the pandemic, sales of wine and beer have dropped. Restaurant closures have put a damper on wine sales in particular. Beer sales have been hurt by bar closures as well as a shortage of aluminum cans and other supply chain challenges during the pandemic.

Analysts in the alcohol industry are eager to see how consumer behavior will change when bars and restaurants are able to open, and when people have more options for how to spend their money. It is possible that habits like making cocktails at home and ordering alcohol online will stick around. Alternatively, people may be more eager than ever to socialize and drink outside of their homes.

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