Since COVID-19 hit the United States, restaurants and bars have been hit hard with closures. While some states are eager to reopen, there is no definite date for when life will regain some normalcy and consumers will be able to safely dine out. With on-premise alcohol sales taking a big hit, suppliers are having to shift their focus to try to find a new balance that leverages retail sales.
Based on current market conditions and the loss of on-premise alcohol sales, sales would have to reach and maintain a growth of 22% just to reach pre-COVID-19 numbers. That is a tall order under the best of circumstances, but even more challenging as people are scared to venture out to alcohol retailers. For many establishments, the best they can do is focus on the safest and most effective ways to handle reopening once the quarantine is lifted.
To provide a better idea of how on-premise alcohol sales have been affected, consider the fact that after just a few weeks into quarantine, sales had dropped by 24% compared to the same time period in 2019. For the average on-premise outlet, that amounts to about $28,000 in lost revenue. Operating for two weeks at that deficit can be enough to tank a business, so imagine how bars and restaurants dealing with losses after months of shelter at home orders.
Changing Liquor Laws
Some states have decided to loosen liquor laws in order to provide restaurants with a much needed boost in alcohol sales. Consumers can order a to-go cocktail or wine. These can be served up at a delivery window or added to food orders depending on the state.
Meanwhile, alcohol delivery services, like Drizly, and grocery stores that can sell alcohol are experiencing exceptional growth. According to Drizly’s bi-monthly reports, the company experienced a slight drop in sales growth before numbers soared to 488%. Since March, this rate has been holding steady as consumers stock up on alcohol with the same fervor as toilet paper.
While on-premise sales will continue to struggle, the alcohol industry as a whole is thriving. Increases in off-premise sales may be enough to maintain the right balance for the market. The real concern is how bars and restaurants will weather these unprecedented times. We may see more states taking measures to relax liquor laws in order to provide on-premise sites with some much needed relief.
How do suppliers level the lack of alcohol being sold on premise?
Suppliers are looking to off-premise sales level off the market and make up for a loss of on-premise sales. Overall, the alcohol market will need to achieve a 22% growth rate across all categories to make up for on-premise sales deficits.
How did Covid 19 impact on premise alcohol sales?
As early as March, bars and restaurants were losing $28,000 in revenue for an average loss of 24%.
How are restaurants making up for lost on-premise alcohol sales?
In certain states, restaurants are allowed to serve to-go cocktails. These relaxed liquor laws are helping restaurants increase sales.
How is off-premise alcohol consumption changing?
Overall, alcohol consumption is up. Consumers are buying alcohol at off-premise retailers, including large grocery stores, and taking advantage of delivery services to have alcohol brought right to their door.