US on-trade situation ‘catastrophic’ as sales fall

18th November, 2020 by Owen Bellwood

Spirits sales in the US on-trade were down 33.5% in September as the impact of Covid-19 on the channel “continues to get worse every day”, according to data analysis firm Sip Source.

The on-trade accounted for 12.1% of spirits sales in the US in September

According to a report from analyst firm Sip Source on wine and spirits distributor depletion data, on-trade wine and spirit sales went from being down 0.4% in February to a 23.4% drop at the end of June, and 33.5% fall in September.

The depletion data from Sip Source outlines the quantity of wines and spirits sold by retailers to consumers.

The report found that the US on-trade accounted for 18.6% of total spirits sales to retailers in February. By the end of September, the on-trade accounted for 12.1% of spirit sales.

Sip Source warned that rising cases of Covid-19 in the US “could lead to further restrictions and greater losses”.

“The situation in the on-premise is nothing short of catastrophic and continues to get worse every day,” said Sip Source analyst Dale Stratton. “We anticipate on-premise share of total depletions to be around 9.5% for spirits and 7.5% for wine by the end of 2020 – nearly halving pre-Covid numbers.”

In contrast, US off-trade sales have “been the lifeline of the industry” in 2020 and spirit depletions in the sector have risen 5.3%.

Total wine and spirit sales in the US on- and off-trade have risen from being down 0.6% in February to being up 2.4% at the end of September.

High-end brands prosper

According to Sip Source, Tequila remains a “powerhouse” in the US and has solidified its position as the third largest volume category in spirits. During the pandemic, US consumers transitioned to purchasing Tequila in the off-trade and opted for super- and ultra-premium expressions, which rose 13% and 22.7% respectively.

Cognac also witnessed “uncharacteristic seasonal growth” over the summer.

Stratton said: “Clearly the perception of Cognac as a winter-oriented drink did not hold true this year as growth rates moved from up 10.8% in June to up 27.4% in September. The growth rates are strong in all regions but especially so in the south, which is up 34.8%.”

Stratton added: “On the spirits side, consumers generally continue to drink the same products as they did prior to the pandemic. However, the price tier data shows all but one of the product segments in the popular price tier in decline, revealing that consumers are seeking out higher-end brands within those segments.

“Further evidence of a trade up in spirits is that the four fastest price tiers are super- and ultra-premium priced US straight whiskey and Tequila, growing between 11.8% and 22.7%.”

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