KEY TAKEAWAYS:

• 2020 was a year that defied all expectations, proving the resilience of the wine & spirits consumer. Despite the COVID-19 pandemic, we saw 2020 close with case volume for wine & spirits growing 2.3% over 2019. 

• Traditional forecasting models that extrapolate from the recent past are of no use under COVID-19 circumstances. The solution is to imagine multiple plausible futures rolling towards us and make plans or all of them. We see four plausible scenarios for 2021 based on a combination of the effectiveness of the COVID-19 vaccine and the timing of economic recovery.

• We project 2020 growth to slow in 2021 with case volume growth ranging from -5.8% (worst case) to 3.0% (best case).

• Even in our best-case scenario, we do not project the on-premise reaching pre-pandemic consumption levels in 2021.

• With pantries stocked and expected modest recovery of on-premise consumption by mid-year, we see little chance that the exceptional volume growth experienced in 2020 recurs in 2021. If consumers return to pre-pandemic consumption behaviors, 2021 could see an unprecedented decline of up to 12% in off-premise sales volume as consumption returns to historic levels.

• E-commerce and DTC purchase volume accelerated 4 to 5 times since the onset of the pandemic. Moving forward, roughly two-thirds of consumers surveyed said they expect to use this channel for beverage alcohol purchases in 2021.

• Across these scenarios, we believe the most likely outcome for wine & spirits growth in 2021 is low single-digit growth.

• Decision-makers should engage in strategic scenario planning to prepare for the unprecedented uncertainty. Planning based on a single presumed future guarantees that you will be wrong. We see a portfolio of 5 strategic actions executives can take now to prepare for all scenarios:

  1. Build operational capabilities to ensure supply chain adaptability,

  2. Promote data-driven decision-making over intuition,

  3. Match cost structures to channel needs,

  4. Commit to adopting e-commerce and digital tools, and

  5. Evaluate potential partnerships to accelerate growth.