2021: The Year in Review

30 December 2021, Austin, Texas: With 2021 at its end, here is our review of the Texas on-premise.

Review

2021 was a vibrant year for the Texas on-premise channel, particularly compared to other markets across the United States. The rebound to 2019 levels started near the last week of January, but then severe winter storms paused that recovery. On March 2, 2021 the Texas Governor removed pandemic restrictions on bars, restaurants, hotels, and all businesses in the state, and the channel saw a quick return to its 2019 levels and shortly surpassed them. At present January and February 2021 remain the only months that have not seen increases over their respective months in 2019. We expect consumer alcoholic beverage dollars in the channel to end 3-6% over 2019 levels. The Spirit category has been the driver of this growth. Although positive, overall growth is still below inflation for the period.

Beer v. Wine v. Spirit

We expect Beer sales to end 2021 v. 2019 relatively flat in terms of consumer dollars. We expect Wine will end the year around 15 – 20% below its 2019 dollar levels. And we expect Spirits to end the year up 14-19% in terms of consumer dollars.

As you read through, some of the industry changes from pre-pandemic levels may be attributable to the type of establishments that were allowed to remain open or that people chose to frequent through the pandemic. For example, conventions, corporate trainings, large meetings, venues, company dinners have either been restricted or avoided by many for most of the year. Bars faced a decline in attendance, but restaurants faired relatively well throughout the year.

Additionally, as yDrink focuses on the Spirit side of the on-premise channel, the analysis continuing in this article is regarding Spirits and spirit-selling accounts.

Account Growth

The number of unique accounts saw grew 1-3% in 2021 from2019. The chart below illustrates the pandemic’s effect, as well as month to month seasonality that we see from accounts reporting in the channel.

*Account numbers run a large lag so November & December 2021 excluded; however, those numbers are expected to be above October numbers based on other indicators available to us.

Regionality

The channel has performed well across all the major markets of Texas, The Central Region, which compromises the cities of Austin & San Antonio and their peripheral communities, has performed particularly well in the number of new accounts over the year. However, this Region also saw the most negative impacts from the pandemic in the state which we credit to the larger share of events, music, sports, culture, and tourism has had in the area. However, it has attracted an overwhelming number of new businesses and residents over the past year. The Houston & DFW markets have also done remarkably well, but follow state trend lines more closely.

Shifting Tastes or Shifting Occasions?

The shift in occasions & experiences has changed the products that people are consuming in the on-premise versus 2019. Tequila now accounts for nearly 1 out of every 3 bottles sold into the channel. Vodka sits at a 22% share down from 24% in 2019. Whiskey has seen a decrease from 22% to 18%. Rum has seen a small rise, Gin, a small decline, and Brandy & Cordials remained flat. Spirit-based RTDs have done particularly well and have tripled their share of the channel, representing only 0.7% of the channel in 2019, today they compromise 2.1% of total spirit volumes.

We have seen Tequila share erode since its peak in the early parts of the pandemic when bars were closed in the state, and both Vodka and Whiskey have been successful in gaining a bit of their share in the last few months. However, we expect Tequila to maintain its dominance into 2022 and likely over the course of the next few years.

Pricing

We looked at the average nine liter case price purchased throughout the state from the start of 2019 to today. The chart below demonstrates the shift in average price over this period. The large spike in mid 2020 was due to the pandemic-related shutdown of the channel, and permission for only small packaged bottles which resulted in a much higher price per case. During the start of the pandemic we saw a decrease in average pricing and an increase of value products. Price and quality has steadily increased since. The average price of a liquor case sold to the on-premise in Texas at the end of 2021 was 12.5% higher than at the start of 2019.

We hope you have enjoyed reading our 2021 Review of the on-premise channel in Texas. yDrink is an independent Texas-based beverage data company. To learn more about yDrink, please visit our website yDrink.net or shoot us an email. From the yDrink Team, we hope you had a great holiday season, and wish you a successful New Year!

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