The Iowa Alcoholic Beverages Division announced today that liquor sales for the months of March and April were $31.9 million and $28.6 million respectively, an increase of 26% and 2% over the same months in 2019.
Much of the sharp increase in liquor sales in March is believed to be attributable to changes in consumer behavior due to COVID-19. Iowa bars and restaurants were ordered closed to the public for sit-down service beginning on March 17 to help prevent the spread of the virus. As a result, Iowans appeared to shift to purchasing liquor by the bottle for at-home consumption.
ABD sells liquor to off-premises retailers – such as liquor stores, grocery stores, and convenience stores – and cannot track individual purchases of liquor by consumers. However, sales data for March 16 through April 1 indicates an 82% increase in the number of cases of 1.75 liter sized liquor products sold by ABD to off-premises retailers compared to the same time frame in 2019. Case sales of standard-sized 750 milliliter bottles increased by 51%. This surge in sales is believed to be due to increased by-the-bottle purchases by consumers.
We can’t be certain that these sales figures demonstrate an increase in personal consumption. Iowans may have simply changed where they are continuing to enjoy their favorite spirits products,” says ABD Administrator Stephen Larson. “Regardless, we encourage all Iowans who choose to consume alcohol to always do so in a moderate and responsible manner.”
New sales trends emerge due to COVID-19
Despite being ordered closed to the public for sit-down service, bars and restaurants have been granted temporary alcohol sales privileges to help generate much-needed revenue.
On March 19, Gov. Reynolds issued a proclamation allowing bars and restaurants to sell unopened bottles of liquor to-go. That week, case sales of 50 milliliter bottles of liquor by ABD increased 60% over sales the same week in 2019, coinciding with restaurants beginning to create to-go cocktail kits containing 50 milliliter bottles of liquor and various mixers.
On March 31, the governor signed another proclamation allowing bars and restaurants to sell mixed drinks and cocktails made on-site to-go. The following week, case sales of 750 milliliter bottles of liquor by ABD increased by almost 20%, likely due in part to returning demand for liquor by bars and restaurants.
“The governor’s fast action in this area was critical in helping to prop up Iowa’s bars and restaurants at a time when they were asked to sacrifice greatly to protect public health,” says Larson.
Sales to independent liquor stores down sharply
In Iowa, bars and restaurants are required to purchase liquor for resale to customers from off-premises liquor retailers, such as liquor stores.
Sales figures show that the state’s largest independently-owned liquor stores have reduced their purchases from ABD by 44% since March 17. Many of these independent retailers rely on selling liquor to bars and restaurants and have seen that portion of their business significantly decline due to the COVID-19-related closures.
On April 27, Gov. Reynolds issued a proclamation reopening restaurants in 77 of Iowa’s 99 counties for limited sit-down service effective May 1. A follow-up proclamation from the governor on May 13 reopened restaurants in the remaining 22 counties effective May 15. With these reopenings, demand for liquor by restaurants could begin to increase and independent retailers may see a rebound in business as a result.
Special event licenses at historic lows
COVID-19 has not only had an impact on liquor sales; it has also affected some licensing trends.
Licensing data shows a sharp decline in the number of 5- and 14-day alcohol licenses issued in March and April, as well as applications submitted for licenses for May, June and July. These temporary licenses are generally obtained for special events like fairs, festivals and concerts during spring and summer.
In March 2020, there were 38 5-day and two 14-day licenses issued. This was a decrease of 25% and 33%, respectively, compared to March 2019. April saw even larger decreases, with nine 5-day and zero 14-day licenses issued, a decrease of 84% and 100%, respectively, compared to 2019.
Applications for 5- and 14-day licenses effective in May, June and July are currently at their lowest levels based on historical licensing data available. A major contributing factor to this is the cancellation of popular summertime events like RAGBRAI due to COVID-19.
Annual license renewals remain strong
Liquor stores, grocery stores and most convenience stores hold a class “E” liquor license. This license allows for the sale of liquor for off-premises consumption. Renewals of this license type have been consistent with previous years, with 155 renewed in March and 106 renewed in April 2020, compared with 157 renewed in March and 107 renewed in April 2019.
Despite temporary shutdowns, bars and restaurants holding a class “C” liquor license – which allows for the sale of liquor, beer and wine for on-premises consumption – have been renewing at a rate comparable to, or stronger than, previous years. This year, 353 class “C” liquor licenses were renewed in March, and 343 were renewed in April. This was compared to 365 and 336 in the same months in 2019.
Class “C” liquor license holders whose license is set to expire may receive a temporary deferment of the expiration and the renewal fee. This relief follows a proclamation signed by Gov. Reynolds on May 6. ABD is in the process of notifying license holders of steps to take to ensure that their license can be renewed in a timely manner once this temporary relief expires.
Additional relief available
ABD is committed to assisting our licensees during this unprecedented public health crisis. More information on other relief measures that may be available to alcohol licensees can be found at abd.iowa.gov/covid-19-updates.
This column was written and provided by the Iowa Alcoholic Beverages Division.