'We Have To Adjust To New Reality' - Pandemic Leads To Surge In Americans Drinking At Home

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by Tyler Durden
Wednesday, May 06, 2020 - 10:45 PM

Alcohol sales for home consumption jumped $2 billion more since the start of March than last year, while a top beer producer said the increase in sales at home would not offset lost ones seen at restaurants and bars. 

A little more than half a month into lockdowns, around the first week of April, we mentioned how Americans were turning to beer, porn, pot, and chocolate, to cope with coronavirus pandemic stress. The Financial Times has now published alcohol sales data that shows drinking at home soared during lockdowns. 

Data analytics firm IRI reported that by mid-April, retailers' total alcohol sales hit $9 billion over the seven weeks. Sales of spirits increased, including tequila and gin surged 39% to $1.3 billion, and wine rose 28% to $2 billion. Beer also soared 20% to $5.5 billion. 

Gavin Hattersley, CEO of Molson Coors, in an earnings call last week, spoke about the "challenging" environment for producers as supply chains disruptions are materializing: 

"But obviously, there is no doubt that this is really a challenging time for us, not just for our business, but for everybody in our industry. And our focus, as I said, right now is mitigating the short-term business challenges and positioning our business to succeed in the long-term," Hattersley said. 

"From a sales to wholesalers point of view, the impact of the Milwaukee brewery tragedy as Tracey I think said was from a shipments point of view in February and early March and because of that our inventory levels at the end of March were lower than we would have liked."

While drinking in quarantine did not offset the collapse in sales from restaurants and bars, Molson Coors reported net sales fell 8.7% in 1Q20 YoY. 

The chief economist of the National Beer Wholesalers Association Lester Jones said: "I'm confident there will be plenty of beer, although I don't know if it's going to be in the right packages and the right formats that people expect."

What Jones is describing is exactly what is happening to farmers at the moment. Since restaurants, hotels, resorts, cruise ships, cafeterias, etc., have shuttered operations during lockdowns, these establishments usually order bulk food - and for farmers to rework supply chains from bulk to individual packaging, well that takes time and money. Hence, this is one reason why food supply chains have become disrupted across the country. 

Jones added: "Given that we all planned months ago to have a very different market, we have to quickly adjust to the new reality."

Anheuser-Busch InBev is expected to share new data later this week on drinking habits during the pandemic. 

To sum up, the pandemic is changing the way America drinks, lives, and how the economy functions. It has also allowed for people to save money in greater amounts as they have never done before. We noted last week the personal savings rate has exploded to decade highs. 

It only took a pandemic for Americans to figure out that drinking at home is much cheaper than going out (which allows them to save money) because what's ahead is an economic downturn that could last years