The annual economic briefing by the Distilled Spirits Council of the United States (DISCUS), conducted virtually on Jan. 28, confirmed the grim state of on-premise in 2020, while highlighting areas of industry growth.
One of the winners from last year was pre-mixed cocktails. Driven by spirits ready-to-drink (RTD) products, this category was up 39.1% or $137 million to $489 million last year. Continued growth seems likely for 2021.
Premiumization was another major trend.
“The increase in spirits sales revenue reflects consumers’ willingness to spend a little extra on super-premium spirits during the past year since they were not traveling, going on vacations or dining out as often,” says DISCUS Chief Economist David Ozgo, noting that sales of super-premium spirits represented 40 percent of revenue growth. “It also reflected consumers’ desire to bring that special restaurant and bar experience they were missing into their homes. We saw a renewed interest in home bartending as people stocked their bars with a range of spirits categories to experiment with new drink recipes and create craft cocktails at home.”
American whiskey sales jumped 8.2% or $327 million to $4.3 billion. Rye remained an important part of the overall American whiskey category growth, with sales up 16.9% or $40 million, reaching $275 million.
Cognac sales rose 21.3% or $413 million to $2.4 billion.
Sadly, due to the pandemic, on-premise sales declined 44% last year, while sales at global travel retail (duty free) outlets dropped to nearly zero.
At the start of the pandemic in April, U.S. restaurants and bars lost 5.8 million jobs, almost one out of every two jobs, according to the U.S. Bureau of Labor Statistics. Through December 2020, 2.3 million jobs have not been recovered.
Additionally, a new survey of COVID-19 impacts on craft distilleries by DISCUS and the American Distilling Institute, found that 36% of craft distilleries reported a total revenue decline of 25% or more in 2020.
“The pandemic left a wake of destruction in the hospitality industry in 2020,” says DISCUS President and CEO Chris Swonger. “Permanently enacting marketplace modernizations introduced in response to COVID-19, from online delivery to cocktails-to-go, will aid in the recovery of restaurants, bars and craft distilleries.”