Many businesses remained open throughout the coronavirus pandemic, including liquor stores. And those who chose to keep their doors open have been busier than ever.
In fact, liquor sales are up about 50%.
What’s driving the sales increase? We decided to dive into the data so we can help our liquor store customers make better business decisions.
Our Hypothesis for Increased Liquor Sales
At first glance, it’s clear that people stocked up on liquor in March. But what are the factors behind the continued increase in sales?
Our initial hypothesis assumes that one of the following is happening:
- People are purchasing the same volume of alcohol, but they are trading up and buying more expensive brand names.
- People are buying standard brands at larger quantities because they don’t want to leave their homes to shop as frequently.
- People are purchasing the same brands in the same quantity, but they are drinking more and buying more frequently.
Diving into Liquor Sales Data During the Pandemic
We analyzed a sample of POS Nation liquor store customers’ data for February, March, and April 2020.
First, we looked at the average price per bottle purchased and saw an increase from $12.95 to $13.40 to $13.63. This increase is fairly significant in just two months considering thousands and thousands of bottles are being sold, so we decided to dig deeper.
Next, we divided all bottles into three tiers based on price. Not surprisingly, low-priced products (we defined as bottles priced below $13) declined as a percentage of overall units sold from 59.5% in February to 53.5% in April. Mid- and high-priced product segments (defined as bottles priced between $13 and $25 and as bottles priced over $25) each increased as a percentage of overall units sold from 31.9% to 36.5% and from 8.6% to 10.1%, respectively.
This data coupled with the increase in the average price per bottle sold presumably tells us that people are buying more expensive bottles. But are they more expensive bottles due to brand or size?
The final exercise using average price per bottle sold was to breakdown the data by the abovementioned segments. This is where things got interesting. The average price per bottle sold in the mid-priced segment was flat and the average price per bottle sold in the high-priced segment was actually down over 10%. Just as surprising, low-priced products saw an increase in the average price per bottle by 6.1%.
So, people are buying fewer low-priced bottles, but when they do buy a low-priced bottle, it’s slightly more expensive. To explain this somewhat contradictory finding, we next examined SKU-level data.
The biggest winners overall? Bottles 750 MLs and 1.75Ls of traditionally popular brands (e.g., Tito’s, Crown Royal, Smirnoff) increased the most in units sold.
And the products seeing the biggest sales decline? 50ML (i.e., airplane bottles) and 100ML bottles across all brands.
What This Data Means for the Liquor Industry
At the end of the day, our team doesn’t believe that people are necessarily trading up or down — but the variable that has changed is who is buying.
The decline in small bottle sales is driving up the average price per unit sold, but we saw no evidence of consumers trading up and actually buying more expensive brands. Anecdotally, 50 to 100 ML bottles are typically purchased by low-income earners, event-driven buyers, and consumers on the go. With money being tight and tailgates, concerts, and other large gatherings cancelled, it’s reasonable to believe buying from these groups is down.
Next, the increase in 750ML sales volume of the historically popular brands likely means people are buying the same brands, just more of them. The increase in 1.75L products is probably due to people wanting to limit the number of trips to the liquor store. We highly doubt consumers are trading airplane bottles of Fireball for handles of Tito’s.
So which hypothesis is right?
There’s no evidence of consumers trading up to more expensive brands. Instead, people are buying larger bottles and more quantities than before. And because this sales increase has continued for over two months, it’s safe to assume people are consuming more — and as a result, going back to purchase more.
According to our data, if you're a liquor store owner, it's time to pump the brakes on airplane bottles and stock up on more of the standard sizes and handles.
Working With Small Business Experts
Tracking business data like this is vital. For liquor store owners, it helps them make better decisions around which products, brands, and sizes to restock.
It’s much easier to get a hold of this data if you have a POS system with business reporting and analysis capabilities integrated with your inventory management. To see this feature in action, schedule a live software demo.
Our team is consistently analyzing small business data and diving into industry trends to help liquor stores grow and succeed.
We also offer a complete liquor UPC list available for download. See how easy management is with a preloaded liquor inventory!
If you have any questions or you’re interested in a custom point of sale solution, get in touch with our product specialists at 1-877-727-3548 or email@example.com.