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Leading Wholesalers On The Outlook For 2023

December 21, 2022

As the holiday season gets into high gear, the U.S. market’s top wholesalers say the widely noted supply chain challenges of the past few years are improving, although some key categories like Tequila and Champagne continue to be affected. They’re also eyeing the trends that they believe will shape the market’s performance in 2023.

Regarding underlying supply and supply chain issues, Breakthru’s incoming chief commercial officer Kevin Roberts tells SND, “While many suppliers are recovering from the worst of the shortages, it’s still too soon to say we’re out of the woods. We expect the material shortages will continue throughout 2023. Glass container plants around the world are running at full capacity, which leaves little to no flex for growth or mistakes. All of this points to the need for strong collaboration and joint problem solving with our partners.”

“Supply chain and product outages are still an issue but have been subsiding as the year has progressed and the industry has gotten closer to a ‘steady state’ more similar to 2019,” adds Chris Williams, EVP of national accounts at Southern Glazer’s. “(Shortages of) imported items such as Champagne and periodic outages on Tequila and Cognac continue.”

Jenn Engel, chief commercial sales officer at RNDC, says, “While we’ve seen significant improvements, we’re still experiencing interruptions, most notably with glass shortages and getting products from Europe. We are not back to pre-Covid rates yet, however our fill rates have significantly improved over the past six months.”

Regarding the business outlook for 2023, economic uncertainty is the elephant in the room. “At the macro-level we remain optimistic,” Engel says. “Spirits remain on track to pass beer as the number-one category sometime around 2024, and premiumization remains a long-term megatrend.” Still, she sees some potential hurdles for the ongoing on-premise recovery looking into 2023. “Beverage alcohol pricing has gone up in the on-premise at nearly double the rate of that in the off-premise. While the on-premise recovery has been strong, it’s notable that nearly 60% of restaurants have reduced hours compared to 2019. About 41% of restaurants are open past 9:30pm today, compared to 57% three years ago.”

“We’re anticipating that the drinks industry in 2023 will be operating in an unstable environment, making it challenging to accurately forecast,” Roberts explains. “Overall, still wine is projected to donate some share in 2023, while the sparkling category fuels overall category growth. For spirits, spirits-based RTDs, Tequila, and whiskey are leading category growth. As for emerging trends, we see the continuation of non-alcoholic options, featuring playful cocktails and innovative digital marketing.”

At Southern Glazer’s, Williams says the distributor is anticipating “a more cautious consumer as we close out 2022.” With the economic forecast still cloudy, the macro environment will no doubt have a significant impact that’s currently hard to gauge. “Our belief is that spirits growth will likely be flattish in 2023 depending on economic conditions, with some price/mix growth,” he says. “We believe wine volume will likely decline low to mid-single digits in 2023 as the largest price tiers remain under pressure and growth continues to slow in higher price tiers.”

As for the channel mix, “rebalancing of on- and off-premise is most likely complete as we’ve seen little change over the last six months in terms of share of business by premise,” Williams reports, noting that “on-premise closings have stopped and new account openings have remained muted given the labor challenges that still exist.”

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