Rising supermarket sales mask overall decline in alcohol sales during lockdown
John Timothy, CEO Portman Group
As the country was just entering a nationwide lockdown in response to COVID-19 we all became familiar with photos of shelves stripped of products. Along with baskets filled with toilet paper, eggs, flour, bread and milk, news articles were keen to point out that consumers were stocking up on their favourite tipple whilst preparing for a long stay at home.
You could be forgiven for thinking that alcohol sales rose during lockdown. However in reality overall alcohol sales fell drastically. This was due to a combination of the pubs and bars closing and the impact of COVID-19 on British drinking patterns causing many to cut their alcohol intake.
COVID-19 has led many Brits to cut down
Our most recent survey with YouGov in August 2020 suggested that just over a quarter of UK drinkers were currently drinking less alcohol compared to before lockdown and around 7% had cut out altogether. A similar picture emerges when analysing 22 polls conducted since the start of lockdown, with around a quarter of Brits cutting down their alcohol consumption.[i]
Furthermore, around 46% of alcohol sold in the UK occurred through the on-trade – pubs, bars and restaurants. Whilst some consumer spending has undoubtedly shifted to supermarkets, with sales through the major retailers rising to £1.9bn during the lockdown[ii], it has not been enough to make-up for the drastic shortfall which was caused by the closure of pubs and bars during lockdown.
Overall alcohol sales have fallen
Figures from Nielsen Scantrack and the CGA suggest that the total volume of alcohol sold during lockdown (the 17 weeks to 11 July 2020) fell by over a third to 1.3bn litres, compared to 2bn sold during the same period in 2019.[iii]
Commenting, Nielsen senior client business partner Gemma Cooper challenged the perception that Brits were drinking their way through lockdown, saying “Without being able to go out or socialise with others during the peak of the pandemic, and no access to dine-in pubs or restaurants, we have seen a natural decline in alcohol consumption even as at-home drinking increased.”[iv]
The Nielsen figures are further reinforced by data from HMRC which shows that there has been a £151m drop in alcohol duty receipts in the period from January to July 2020 compared to the same period in 2019, highlighting the overall fall in alcohol sales.[v]
This has led to market research agency Mintel to predict a £7 billion fall in overall alcohol sales for the year, from £49bn in 2019 to around £42bn in 2020, due to the closure of UK hospitality.[vi]
Separately, whilst retail alcohol sales have risen, sales in supermarkets and off-licences should not be seen as a proxy for immediate consumption such as in the on-trade, where the vast majority of products are consumed shortly after sale on premises. Consumers in the off-trade buy products to consume later over a longer period of time. This is reflected in broader shopping trends witnessed during lockdown, where consumers visited supermarkets less frequently, but were buying more, increasing the size of their shopping basket.[vii]
Consumers continue move towards premium product and low and no alcohol
Furthermore, COVID-19 has accelerated previous ‘premiumisation’ trends in the UK, where consumers were purchasing less alcohol but spending more on higher end ‘premium’ brands. Kantar data indicates that 70% of premium brands grew their category share over lockdown compared to the same period in 2019.[viii] Previous upward trends on sales of low and no alcohol alternatives have also continued this year, with a 30% increase in low and no alcohol supermarket sales compared to 2019, rising to £188m.
Therefore, we should take the alcohol retail sales figures trumpeted in the press with a pinch of salt, as they only show a partial view of the overall market. The evidence so far suggests that overall alcohol sales in the UK have fallen, driven by the closure of UK hospitality and changing drinking patterns, and could fall further yet as the UK looks towards further restrictions on both UK hospitality and off-sales this Autumn and Winter.[ix]