Montana alcohol sales surge in pandemic
But an industry expert forecasts ‘dark days’ ahead
Liquor illustration (Photo by Darrell Ehrlick of the Daily Montanan).
When COVID-19 hit, people couldn’t go to their favorite restaurants and bars, and they started stocking up on alcohol supplies for home.
Montanans have purchased more beer, liquor and wine in the months since the pandemic hit compared to 2019, according to data from the Montana Department of Revenue. Gross liquor sales alone are up nearly $18 million, some 15 percent.
At the same time, one industry spokesperson forecast difficulties for the industry, and a brewing industry representative said local breweries are not benefitting as much as people might think even though beer sales up.
“This is a very tough time for the industry,” said John Iverson, government affairs director for the Montana Tavern Association.” Adding that if things don’t change “there are dark days ahead.”
As the pandemic drudged on, the numbers tapered off, but when COVID cases spiked again in late summer and early fall, alcohol sales began to rise again.
“I would like to say that it has slowed down but in reality, it’s the opposite,” said Benjamin Wiesner who works at Allen’s Manix Store in Augusta. “For a lot of people, I think it’s a way to cope.”
Data from Montana Department of Revenue comparing retail alcohol sales March through November of 2020 to the same period in 2019 show:
- Gross liquor sales are up $17.5 million (14.7%) and 100,857 (14.9%) more cases of liquor have been shipped from the Department of Revenue to agency liquor stores.
- The money collected from beer tax is up $140,745 (4.3%), and 27,906 (3.4%) more beer barrels were sold.
- The money collected from wine tax has increased by $166,692 (6%), and 616,113 (6%) more liters were sold.
The increased numbers among beer, wine and liquor do not necessarily reflect consumption. For example, some people may buy four or five bottles of liquor for a Zoom cocktail-making class or buy a dozen bottles to stock up their at-home bar, but they might not drink all their purchases right away.
“You could argue that people are drinking more at home,” Iverson said. “The bars are open less, but alcohol sales are up. But we don’t know if they are drinking more. People likely panic-bought liquor as well.”
If sales stay up in the years to come, that could indicate increased consumption, but if it dips that could mean people are working through their panic purchases, he said.
The greater sales also don’t mean that everyone in the alcohol business is thriving.
“ (Restaurants and bars) are going broke … They are all bleeding … We have already seen a number of licenses transfer from private to bank ownership,” Iverson said.
Matt Leow, executive director at the Montana Brewers Association, said the shift in consumer habits when the pandemic hit to stock up instead of go out has taken a toll on craft breweries that rely on draft and keg sales more than packaged beer sales.
“Everyone is feeling the pinch, but bigger breweries like Lewis and Clark and Big Sky have the benefit of having bigger, more diversified operations,” he said.
“One channel increases, other channels decrease and the channel that is decreasing there is more profit,” he said. “With beer there was a huge shift in consumer habits. People were stocking up, and people were not buying as much beer in draft.”
Leow said he has seen steady growth in the Montana craft brewery scene in recent years and said simply the pandemic has been “disruptive.” Between 2012 and 2017 the amount of craft breweries grew from 29 to more than 80, according to a 2018 report from the Montana Department of Labor and Industry.
Breweries are not the only ones hurting. Projections from SipSource’s third quarter report, which collects wine and liquor sales data nationally, indicate that on-premise liquor sales will only account for 9.5% of all sales and on-premise wine sales will only account for 7.5% of total sales. In February, on-premise sales accounted for 18.6% of total spirits sold and 14.0% of wine sold, according to SipSource.
In line with Montana, SipSource reported that off-premise sales have increased and have been the “lifeline of the industry this year.”
Beer, wine and liquor all showed an increase in sales in March followed by a decrease in April. But throughout the summer and into fall, with few exceptions, alcohol sales were up across the board.
“The real story is we are drinking in a totally different way than we were before, and not at totally different levels,” Bart Watson, chief economist for the National Brewers Association said. “People are substituting home consumption instead of having a beer with their coworkers after work.”
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