Pandemic Has Changed the Landscape in the Spirits World
Some are calling it the ‘drinking at home’ phenomenon — a reference to how people who can’t go to bars, nightclubs, or (until recently) casinos have been doing all or most of their imbibing at their residence instead.
Others are calling it the ‘drinking while working at home’ phenomenon, and that’s another story, one that has a number of employers understandably concerned.
Whatever it’s called, it’s a fact that people are not going out to drink nearly as much as they did BC — before COVID. And they’re drinking more, by most all accounts — according to a Morning Consult poll of 2,200 U.S. adults conducted in the spring, 16% of all adults said they were drinking more during the pandemic, with higher rates among younger adults — and for reasons ranging from coping with all the additional stress from the pandemic to not being in the office for eight or nine hours a day, to being able to stay up later on ‘school nights’ because they don’t have to dress for or commute to work in the morning.
All this has created opportunities for some area business owners, especially liquor-store owners — always deemed essential by the governor — who have seen sales volumes rise (in some cases dramatically) and a number of trends emerge.
That list includes everything from more bulk purchases to buying less-expensive items to keep overall spending down; from ordering online to getting items delivered or picking them up at curbside.
“April, May, and June were just … crazy,” recalled Sean Barry, owner of Four Seasons Package Store in Hadley. “It was just constant — the phone ringing off the hook some days, and you never knew when your busy days would be.”
Mike Quinlan, fine wines manager at Table & Vine in West Springfield, agreed. He said overall business volume has increased, as have visits to the store, but what has really ratcheted up has been online ordering and curbside pickup. The company has always featured the former — it’s been especially popular with wine buyers — but not the latter until the pandemic created a huge need for it.
“April, May, and June were just … crazy. It was just constant — the phone ringing off the hook some days, and you never knew when your busy days would be.”
“The impact on our business for online orders went up dramatically — it was a huge increase in the number of orders we were getting,” he said last week, noting that, while it has tapered off lately as restaurants have reopened, recent holidays, such as the Fourth of July, saw huge volume, and orders continue to flow in. “There’s a stack of orders for us to pick today, and then we keep up with it throughout the day.”
For others, this trend, which would appear to have some staying power — because, in this state, bars won’t open until there’s a vaccine, and in others where they’ve opened, they’re closing down again — is simply shifting business from one type of client to another.
Indeed, Paul Kozub, founder of Hadley-based V-One Vodka, said that, while his sales to liquor stores are certainly up — 30% to 40% over last year, by his estimation — sales to restaurants and bars are way down. And the scale is not exactly balanced because the latter has traditionally been the source of more business than the former, especially at certain times of the year, like spring, when COVID-19 shut most everything down.
“In March and April, I lost 50% of my business because I do so much in bars and restaurants during those months, while I do a lot more in liquor stores in November in December, so that was quite a shock,” Kozub said. “The package stores are up, but that certainly doesn’t make up for what we’ve lost in those bars and restaurants.”
Overall, as with most sectors of the economy, the pandemic has created some opportunities for those making and selling spirits, and also eliminated others. For this issue, we take a look at how the numbers provide some hard proof — yes, that’s an industry term — of how buying and consumption habits have changed.
Case in Point
Barry, like many liquor-store owners, reduced his hours early in the spring and closed earlier at night. There were many reasons for this, he said, listing fewer people being on the roads, the fact that almost all surrounding stores were closed, and a desire to limit the risk of exposure to customers and employees alike.
But there was also what he called simply the “fatigue factor.”
“My staff was just overworked, so we needed to cut back,” he explained, noting that, while things have settled down somewhat since then, with restaurants now open, many people are still wary about going to such eateries, and in the meantime, large numbers of people continue to entertain and, yes, work from home.
Which means they’re buying more at the liquor stores. And their buying habits are changing in all kinds of ways, said Barry and Quinlan, noting that in-person visits are still popular, but curbside is flourishing as an option, and delivery, offered by some but not all, has certainly gained significant traction as well.
And while business is up generally, there have been periods of especially heavy volume, including some holidays that have historically been dine-out occasions but are now, like most things, stay-at-home affairs.
“When Mother’s Day came, and Father’s Day … those are occasions where a lot of people go out to a brunch or something like that — but not this year,” Quinlan said. “And so we saw our business jump significantly during those weeks when people would be having meals at home instead.”
Barry noted that, while it’s logical to assume that the closing of the five colleges located near his store in the middle of the spring semester would certainly have impacted his bottom line, he said that’s not really the case.
That’s because the vast majority of students are underage, he noted, and also because his store, unlike some in that area, does not directly market to the college crowd.
But the crowd it does cater to is definitely buying more these days, adding that he’s seen several trends develop. One is that many people — meaning those who can — are buying in bulk, on the theory being that, as with trips to the supermarket, many are trying to make as few as possible.
“What’s of note to us is that, in the wine department, the average price of a bottle that we’re selling has gone down a little bit. People who would drink a bottle or two of wine a week were now drinking three or four bottles a week, so they’re spending less on those bottles.”
So they’re coming less often, and they’re also buying in larger quantities, which is better for them than it is for the liquor-store owner.
“Sales are up, customer counts are pretty flat, and overall, net profit is slightly down,” Barry said. “That’s because everyone is buying bulk items and taking advantage of case discounts and all that stuff.”
Quinlan concurred, to a point. He noted that, while buying the large, economy sizes, or full cases of products, is less profitable for the store, Table & Vine — and other stores, he presumes — have been able to sell more in fewer hours, thus yielding greater overall productivity and profitability.
But while consumption of alcohol is increasing — statistics nationally confirm that — overall spending in individual households may not be. People are buying in bulk, as noted, but they’re also buying less-expensive items in some cases.
“What’s of note to us is that, in the wine department, the average price of a bottle that we’re selling has gone down a little bit,” Quinlan said. “People who would drink a bottle or two of wine a week were now drinking three or four bottles a week, so they’re spending less on those bottles; the number of bottles we’re moving has increased significantly.”
As for what people are buying … it’s generally across the board, said Barry, noting that wine and vodka probably represent the biggest increases.
Speaking of vodka, Kozub, while referencing the shifts in consumption and buying and some changes at his company as it expands nationally, said the pandemic has certainly helped his business in some ways — but definitely hurt it in others.
Indeed, while he’s done much better with liquor-store sales — in large part because the company is now working with a distributor, which has opened a number of new doors — he’s suffered greatly from not having bars, restaurants, and other gathering spots — from the Hadley American Legion to the South Deerfield Polish Club; from MGM Springfield to the Big E — open for business.
And there are other missed opportunities as well.
“We were going to be the official vodka of the Pro Football Hall of Fame,” said Kozub, noting the company’s current push into Ohio, where that shrine is located (in Canton). “And we were going to sell a lot at the induction ceremony and Hall of Fame Game, but that just got called off.”
As for his liquor-store business, he’s been helped by the work-from-home and stay-at-home trends, and also by ‘Zoom mixology’ sessions, as he called them, Zoom happy hours, and other vehicles to educate the public, bring them together (online, at least), and share experiences somewhat like being in their favorite bar.
Meanwhile, as noted, the distributor he’s hired has certainly reduced the profitability of each bottle he sells in his liquor store, but it has greatly increased volume.
“Without the change to a distributor, we would be down 40% overall for the year,” Kozub said, emphasizing, again, just how much he’s lost through restrictions on people gathering in large numbers or confined spaces.
And this ongoing trend — and even taking steps backward in some states, including Florida, Texas, and others — is slowing V-One’s efforts to go national.
“We’re going to do Ohio and Michigan next, but we’re going to wait a little bit for Florida, Texas, and California,” he said, adding that those states, among the current hot spots, are closing many of the bars and restaurants that were open just a few weeks ago. “The timing of us going national is good in some ways, but tough in others.”
Meanwhile, in the current climate, getting into new liquor stores and expanding that footprint, which is among Kozub’s many goals, is somewhat of a challenge.
“The liquor stores are so busy that they’re not necessarily excited about bringing in new products right now,” he explained. “Because they’re selling everything they have, they’re selling a lot of the staples — the brands people know.”
Beer with Us
This is yet another emerging trend at a time when there have been many changes when it comes to what people are buying, when, where, how, and in what quantities.
The pandemic has certainly changed the landscape in so many business sectors and aspects of society — and alcohol is just one of them.
For some businesses, this will be a vintage year — another industry term — while for others, like Kozub, it will be a mix of new opportunities and lost opportunities, with the former hopefully outweighing the latter.
And, as with those other sectors, it’s a matter of waiting and seeing what happens.
George O’Brien can be reached at [email protected]