eProbe | Spirits down as live entertainment events go on ice - Not the flattening of the curve we wanted, says distributor

Alcohol consumption and parties usually go hand in hand, but where there are no parties, social gathering and other entertainment events, it is expected that there would be significant losses for alcohol companies and distributors.

Earlier this week, it was reported that rum sales by J. Wray & Nephew Limited (JWN) slid €2.4 million, or the equivalent of $400 million, in the March quarter, as the company’s revenues have been pressured by social-distancing rules, including the shuttering of bars and places of entertainment as a coronavirus containment measure.

Rojah Thomas, retail sales manager, Caribbean Producers Jamaica Limited (CPJ), says having done a rough check, there were indications that “spirits generally are down by about 75%, but premium spirits would have suffered more”.

Thomas tells eProbe that “premium spirits, predominantly, were driven through the urban party space”, for example, “wholesalers that sell to parties on consignment”.

So for premium brands like Hennessy, Remi Martin, Moet, etc, that are not necessarily driven by home lifestyle – “they’re really driven by urban party lifestyle” – sales have below projections “with wholesalers not necessarily stocking up (on premium brands) any more or even wanting to return those products”.

PEAK PARTY SEASON

Thomas also noted that the carnival season, which starts in January and ends in April after Easter, would have been a prime period for alcohol consumption, but with carnival in Jamaica being postponed until October because of COVID-19, there was nothing to be gained for alcohol distributors.

“This is the carnival season, so where a lot of wine and spirit distributors would have projected a certain spike during the time, because there are usually a lot of pop-up fêtes and parties leading up to Road March, … there would have been a huge spike in alcohol consumption from December (last year) all the way to April,” he said.

However, with the coronavirus outbreak, Thomas says, “That entire thing took a stall … . The peak would have really been for April, because for road march, every band uses so much alcohol, that once you’re in that space, you would have seen a play and the cooler fêtes (leading up) would have encouraged a lot of purchases from consumers going to these fêtes,” Thomas explained.

Now, he says, most alcohol distribution companies are left overstocked because “there has been a flattening of the curve … not the flattening of the curve that we would have wanted, but there has been a real flattening of the curve in terms of consumption. There are no outlets right now … bars are closed, hotels are closed. So in addition to events, on-premise establishments/accounts took the greatest hit.”

Community bars and taverns are set to reopen under strict conditions on Tuesday, for an initial period of 14 days, after being shuttered for weeks as a coronavirus containment measure. Sports bars, nightclubs and other places of amusement, where alcohol would normally be sold, will remain closed.

Red Stripe, another major corporate brand that is widely known for its involvement within the entertainment sector, though unable to provide details at this time as to the extent of the fallout from COVID-19, has revealed that there has been an obvious hit.

Luis Prata, Red Stripe’s managing director, tells eProbe that “including hotels, close to half of product volumes are consumed via this sector, and given the impact to the entertainment sector, volumes have been impacted versus the year prior”.

However, as part of their contingency measures in getting products out to consumers, Prata says that as of April, “we have supplemented our typical route to market with online options and home delivery” via distribution partners Celebration Brands Limited (CBL).

WHITE RUM RUSH

On the upside, where sales are concerned, Thomas says that on the heels of the coronavirus surfacing on local shores, “white rum was sold out for a while” because of its use in making sanitisers and the myth that if consumed, it could kill the virus.

“People were using white rum for so many things. We distribute Monymusk white rum and we had a run on it, and I’m sure Wray & Nephew would have had a run on their white rum as well, being the market leader,” Thomas said.

But now, Thomas says, “Things are normalised, but the cheaper spirits are moving, because people are home. You are home, so you’re going to buy the bottle that is below $2,000 and white rum kinda falls within that bracket.”

In an article published on theconversation.com, it was noted that in the United States, “evidence thus far (during the pandemic) is that people in general are buying more alcohol, and in larger quantities”.

According to Nielsen figures, for the week ending March 14, off-premise outlets such as liquor and grocery stores saw sales of wine up 27.6 per cent, spirits by 26.4 per cent and beer, cider and malt beverages by 14 per cent, compared to the corresponding week a year earlier.

‘Some of this increase is undoubtedly stockpiling,” the article noted, “especially given that in many locations, bars and restaurants are closed. But based on prior experience and studies, periods of economic and psychological stress like this have two effects on alcohol use. People have less money to spend on alcohol, which drives their spending down; at the same time, they are likely to drink more to alleviate the stress they are feeling. In short, they are buying larger quantities of cheaper alcohol.”

Locally, however, reports have been different.

“Jamaica recorded a decrease in sales … [due] in particular by closures in the on-premise channel and a sharp fall in tourist flows caused by the COVID-19 pandemic. The effect was exacerbated by an unfavourable comparison base in the same period in the previous year,” Campari said in its latest earnings report.

teino.evans@gleanerjm.com