San Francisco Chronicle - (Sunday)
Esther Mobley
Wine drinkers sipped but didn’t binge in 2020.
To a casual Internet scroller, it certainly looked like everyone was drinking a lot more during quarantine, with the emergence of new terms like quarantini, a catchall word for any cocktail made and consumed in quarantine.
But the quarantine binge narrative may have been exaggerated — or at least, it may not have lasted beyond the early days of the pandemic, according to preliminary yearend data for 2020. That was especially true for wine drinking, whose industry desperately needed a boost after reports that the country’s overall wine consumption had been trending downward.
“There was no real evidence of widespread binge drinking,” said Rob McMillan, executive vice president of Silicon Valley Bank’s wine division.
McMillan believes that news of the quarantine binge may have been a red herring for the outlook of the U. S. wine industry. In fact, at the dawn of 2021, the industry’s situation looks very similar to the beginning of 2020: not growing.
“I think we’re ending in just about the same place where we started,” said McMillan, who will publish more detailed findings on Wednesday, Jan. 13, in his annual State of the Wine Industry Report. Depending on which source you consult, U. S. wine consumption in 2019 was either flat or very slightly down, the first time in 25 years it had failed to grow. Though the final data aren’t all in yet, McMillan projects that wine consumption by volume will have grown between 0% and 1% in 2020, ever so slightly above 2019.
That’s a surprising conclusion, given what things looked like at the beginning of the coronavirus shutdown. During the week of March 15, when stayathome orders came down in the Bay Area and many other parts of the country, retail wine sales were up 66% by value yearoveryear, according to Nielsen. It didn’t take long for those rates to taper off a little bit, but in the following months, they remained in a positive growth pattern. At some point in the spring, warnings began to surface about the “quarantine 15,” a danger apparently posed not just by all the tiny pancake cereal but also by excessive boozing.
It now appears that the rise in retail wine sales didn’t tell the full story, and maybe even obscured it. The first way to explain that is that those skyrocketing sales in March and April represented panic buying. Fearful that the stores might run out of everything from meat to baking yeast to toilet paper, people stocked up. But just as with toilet paper, the fact that people were buying a lot all at once didn’t mean they were necessarily going through it any faster.
The second reason the retail growth figures are misleading, McMillan said, is because they were part of a phenomenon known as channel shifting. People simply moved their drink purchasing from bars, restaurants and tasting rooms to the grocery store. Again, they didn’t drink more; they just shopped differently.
Many of us may not have even actively realized we were channel shifting during 2020. If you looked at your recycling bin full of emptied bottles, you may have assumed you were drinking a lot more than usual while stuck at home. But it’s possible you would have consumed a similar amount if some of your drinking had taken place during happy hour after work or by sharing a bottle of wine with friends at a restaurants.
“How much of this was actual sales increases, and how much of it was just the fact that people who love wine aren’t going to go without wine?” said McMillan.
Ultimately, Nielsen numbers show, retail wine sales by volume grew 16% during the pandemic period, but that wasn’t enough to make up for the losses of wine sales in other sales channels. It would have needed to rise by 22%, in fact, “in order to merely level off from the detrimental impact that the pandemic has had on bars and restaurants,” said Greg Doonan, external communications manager for Nielsen.
Even within the retail tier, the spoils of the panic buying were not shared equally by all. The big surges were happening at supermarkets and big box stores, not at smaller, independent wine shops. That created a chasm between not only wine sellers but also wine producers. Smaller, boutique wineries, which are more
Wine sales at grocery stores, above, surged in 2020, but the big alcohol winner of the year looks to be White Claw.
likely to sell most of their wine in independent shops, restaurants or their own tasting room, suffered. Big wine corporations, who make largevolume SKUs that get stocked on Safeway shelves, thrived.
Wine producers of all sizes made significant gains in ecommerce in 2020. Whereas prepandemic, the average winery sold only about 0.5% of its volume via direct online sales — meaning bottles bought through the winery’s own website — that figure grew to a little over 10%, according to McMillan.
But as with inperson wine purchases, the bigger companies made the bigger strides in ecommerce. Total wine sales were up 68% by dollar value year over year, by Nielsen’s calculations, and the drivers of that growth were not the momandpop winery’s website. Rather, McMillan said, the major gains were made by “companies like Walmart.”
The real winner of 2020, however, wasn’t big wineries or big wine retailers. It was hard seltzer, which continued its meteoric ascent, exceeding $ 4 billion in retail sales during the year, according to Nielsen. As of September, hard seltzer’s dollar share of total offpremise alcohol sales in the U. S. grew by 2.3% over the previous year, while wine’s decreased by 2.1%, suggesting that many drinkers may have replaced wine with hard seltzer.
White Claw, Truly and their ilk had previously seemed designed for the sort of daydrinking party that became illegal in 2020, but they had a certain appeal for the housebound, too. These products market themselves as low in calories and come in singleserving containers, unlike a 750ml bottle of wine. The wellnessoriented message that hard seltzer has managed to convey is so powerful that it is now surfacing in wine marketing, in products like Avaline, Cameron Diaz’s socalled “clean” wine brand.
The final numbers for American drinking in 2020 won’t come out until later in January. It may be that the year’s wine consumption falls closer to the upper end of McMillan’s projection, at 1% growth. If it does, however, he expects that it won’t be traditional wine categories like Cabernet Sauvignon and Chardonnay that are responsible. It will likely be due to two fastgrowing, imported products that get categorized within the wine umbrella: agavebased wine, which is usually marketed as a lowalcohol Tequila alternative, and bottled sangria.