It’s March 2021—do you know where your Champagne coupes are?
Headlines from outlets like CNN, Bloomberg, and Fortune have evoked a new “roaring ’20s” this spring and summer as people in the U.S. get vaccinated against COVID-19, and as restrictions are loosened on capacity for bars and restaurants. Drawing parallels to the 1920s, some analysts predict a wave of spending, alcohol consumption, sexual freedom, and general jubilation similar to the one that followed the end of World War I and of the 1918 Spanish flu pandemic.
While the general mood heading into spring is hopeful, there are reasons—related to the economy, public health, and consumer behavior—to be critical of a too-tidy “roaring ’20s” analogy. The current U.S. economy is shaky at best, with the Federal Reserve and government stimulus payments continuing to play massive roles in keeping the guardrails on. A great number of young consumers (a major drinking demographic) have been disproportionately hard hit by the turbulence. Many economists also believe the U.S. is experiencing a “K-shaped recovery,” in which wealthier people rebound while poorer people increasingly struggle. Wealthy Americans saved more during the pandemic while the unemployment rate climbed as high as 14.8% last April.
In that sense, perhaps, the 1920s parallels are apt: The already-rich popped Champagne while the vulnerable squeaked by. So who will get to celebrate this so-called return to the roaring ’20s? And how do we know that’s what’s ahead?
People are still, on the whole, quite wary of returning to bars in particular. A March 18 report from RBC, a large Canadian bank, cites a Numerator report that found among all vaccination groups—those already vaccinated, those waiting their turn to be vaccinated, and those who refuse to be vaccinated—going to a bar or nightclub ranked the lowest among activities they feel comfortable doing now.
Meanwhile, many of the legislative and technological gains for alcohol in the past year—e-commerce, direct-to-consumer shipping, new permissions for to-go alcohol sales—incentivize at-home consumption rather than a return to the on-premise. Any “roaring ’20s”-themed parties may be more likely to happen with a few close friends at home than in a packed bar or restaurant.
But what was so “roaring” about the 1920s anyway? As Mark Hulbert points out for The Street, citing data from the National Bureau of Economic Research:
Three recessions occurred between 1920 and 1927
Half of all months of the 1920s were recession months
Americans were ecstatic to put the devastation of WWI and the flu pandemic behind them. But our contemporary understanding of the decade tends to forget its melancholy undertones, including survivor’s guilt and a cold sense of fatalism. We also gloss over the fact that Prohibition loomed over the entire decade, and with it, police raids, bathtub gin, and mob control of alcohol.
Instead, our collective consciousness cherry-picks the “roaring” part of the decade that only applied to some people during certain points in time. The Great Gatsby, for all its glitter, is not a book about happy people. Many Black citizens at the time were fighting for their very lives and rights, demanding an end to lynchings and segregation in public accommodations. Women had barely just earned the right to vote. Times were changing, but the confetti didn’t rain down equally.
And given today’s socioeconomic climate, the post-pandemic recovery isn’t expected to fully arrive until 2022.
Spring optimism obscures it, but the U.S. is still in dark waters. Unemployment rates are climbing out of their 2020 hole, but long-term unemployment numbers remain stubborn. According to Harvard Business Review, people who have been out of work for at least six months represent 40% of total unemployed people, an increasing rate that’s comparable to the Great Recession of 2008 but otherwise unparalleled by any other time in the last 60 years. Even taking into account the most recent round of economic stimulus payments, to think that long-term unemployed people will suddenly be flush with cash to spend at bars and restaurants this spring is unlikely. Even people who are spending are lately choosing budget-conscious items, like store-brand groceries and practical fashion items.
Consider that nearly a quarter of people who lost jobs during the pandemic have not gone back to work. The rate is slightly higher among young people; 25% of workers aged 18-24 who lost jobs during the pandemic say they are still unemployed one year later. Young, legal-age drinkers with less disposable income are a problem for bars, restaurants, and alcohol producers generally. If they don’t have spare cash, they can’t spend on alcohol.
“There are signs that Gen Z was going to drink a little bit less anyway, so I do think that reality, coupled with economic hard times, could be a double whammy that hits the on-premise,” says Bart Watson, chief economist for the Brewers Association. The on-premise refers to bars and restaurants, which are likely to be slow to recover as drinkers are wary of returning to those venues.
Watson also notes that the employment rate of men aged 21-34 is one of a handful of economic indicators that economists in the beer industry take into account when modeling consumption patterns. (While unemployed young men may spell trouble for beer in particular, that might not translate to alcohol overall. A December report from Rabobank found that in the past 15 years, women and people of color have increased their share among alcohol consumers relative to white men.) Watson cites a line coined by Lester Jones, the chief economist for the National Beer Wholesalers Association: “No dinero, no cerveza.” That’s particularly true for young consumers, Watson adds.
Meanwhile, wealthier people who have saved at high rates during the pandemic might be willing to spend more on alcohol when they return to bars and restaurants, often referred to as “pent-up demand.” Watson says he’s “somewhat skeptical” that there are enough of these people, spending at a high enough rate, to entirely jumpstart the bar and restaurant industry. He’s encouraged by this year’s St. Patrick’s Day on-premise numbers, which show people returning to bars and restaurants, but those sales were still roughly -20% below 2019 spending levels for the same holiday period. Full economic recovery for bars and restaurants isn’t expected to occur until at least 2022.
“I’m dubious that we’re going to see enough of a swing to push us to big positive numbers versus where we were in 2019, especially when you add in some of the negatives hanging over this,” he says.
In short, the outlook for bars and restaurants is looking up compared to last year, but that’s still a long way from 2019 normalcy—or from the roaring ’20s.
By early March, the U.S. was vaccinating 2 million people per day. Eighty percent of states say they’ll meet President Joe Biden’s May 1 deadline to open vaccinations to all adults. This is unequivocally good news, but it doesn’t mean every adult will have full immunity by summer—a necessary precursor to the hospitality industry’s full recovery.
Recently, the Penn Wharton Budget Model—a widely used economic forecasting model— estimated 25% of people in the U.S. will opt not to receive the vaccine. If social activities then surpass 70% of pre-pandemic levels, the model shows an additional 4.6 million people could catch the virus in 2021. Those new cases would come just as researchers are beginning to understand more about the long-term impacts of the virus on patients’ health, a phenomenon referred to as “long COVID.” This is to say nothing of the potential repercussions of COVID-19 variants, which have thus far caused the biggest impact in California, Colorado, Florida, Michigan, and Texas—while rapidly spreading to other states.
Depending on how many people get the vaccine and what the virus’ long-term health effects turn out to be, summer may still be a liminal period in the long slog out of COVID. By May 1, the U.S. is only expecting to open vaccination to all adults; it would then, presumably, take months for all adults to schedule appointments and receive their full doses.
Fred Fettinger, a 39-year-old software engineer in Chicago, is feeling apprehensive about returning to bars, even as vaccines roll out. He hasn’t been inside a bar or restaurant in more than a year, and he wants himself and his friends to be fully vaccinated before he’d return. And even then, he has doubts.
“Honestly I think it’s going to take a few months after that before I feel comfortable again,” he says. “I don’t even know how much of it is even rational. … It’s been a while since I was in a crowded bar situation so now it’s almost like I have to prove to myself that this is okay again.”
He says he’d also take into account how roomy a bar or restaurant is, and whether it was continuing to require mask wearing, which would make him more comfortable. Given the timetable for vaccinations, plus his few months of readjusting to the idea of bars and restaurants, that would mean Fettinger might not feel safe returning until mid-to-late fall—just as Chicago’s weather is turning cold and prohibitive to some forms of outdoor dining.
Fettinger isn’t alone in his unease. RBC’s March 18 report stated that of people who are already vaccinated, almost 60% say they are still waiting for experts to say it is safe to return to pre-COVID activities without restrictions. Even among people who say they won’t get the vaccine (the group most comfortable doing almost all activities), 40% aren’t comfortable returning to a bar or nightclub right now.
Fettinger says he and his friends plan to keep getting together outdoors this summer for drinks on a patio or for socially distanced disc golf. Maybe by next winter, he says, he’d consider visiting a bar or restaurant, depending on how COVID case numbers look. In the meantime, he’s taking advantage of breweries’ to-go sales, particularly of special-release beers. Like most people, Fettinger has developed some new behaviors during COVID—like drinking those special-release beers at home rather than at the brewery—that might continue for years to come. Breweries, which have adjusted their own sales models, are likely to keep offering such options.
Before the pandemic, the experience of drinking in bars hadn’t changed much in the past decade. Technology has slowly made its way into the average bar, but the basic script for drinking there hasn’t really evolved. As Daniel Levine, a futurist, trends expert, and director of the Avant-Guide Institute, put it: “When the pandemic is in our rearview mirror, I think a lot of the future is going to look a lot like the past did.”
But within just a few short years, legislative and technological advances have shifted the paradigm around eating and drinking at home, making it easier and more entertaining. Coupled with permanent closures of bars and restaurants during COVID, that could spell a long-term trend toward off-premise drinking. Small hospitality business owners are nervous: Axios found 52% of bar and restaurant owners are “highly concerned” about staying open through the end of June.
Consider the greater availability of at-home entertainment like on-demand video, streaming sports, multiplayer video games, and—thanks to COVID—virtual beer festivals. Then, factor in growing alcohol delivery options, new ready-to-drink packaged cocktails that replace the demands of at-home mixology, and loosened regulations around restaurants or bars selling alcohol to-go. For many people, Saturday nights in with Netflix, DoorDash, and a few bottles ordered from Drizly have replaced weekly bar visits. Uber Technologies, in acquiring Drizly for $1.1 billion this February, provided the strongest evidence yet that e-commerce alcohol sales will grow to a greater portion of the U.S. alcohol market.
Chikuan Wu, a 40-year-old who works in banking and real estate in Chicago, says cooking more and drinking at home over the past year has made him realize how easy and enjoyable that experience can be. With more free time on his hands, Wu started growing his own herb garden and learned to cook some of the Taiwanese dishes that his family ate growing up.
“Before the pandemic, I was always out doing something,” Wu says, describing a busy social life at bars and restaurants as well as a part-time job DJing. “For the past year, I’ve done this life where I stayed at home, so now I know I’m not missing out on anything.”
Wu thinks he’ll be “hesitant” to get back to bars and restaurants, even once he and his parents, who he sees weekly, are fully vaccinated.
“It’s been a whole year of living this kind of life,” he says. “It’s a slow flip to get back, mentally, to how it was.”
A report released this month by the American Psychological Association (APA) found the pandemic has indeed wrought profound emotional effects, with 31% of U.S. adults reporting their mental health had worsened during the pandemic. To expect that switch to flip back to “normal” instantly is unrealistic.
Even before the pandemic, a shift in the U.S. from drinking at bars and restaurants to drinking at home had been underway for years. According to IWSR, which provides data and analysis about the alcohol industry, the U.S. saw a 20% decrease in the number of businesses serving alcohol between 2001 and 2019. By September of last year, the National Restaurant Association found 100,000 restaurants in the U.S. had permanently closed as a result of the pandemic. All this leaves consumers with fewer options to drink beer in public, while technology makes it easier than ever to drink at home.
The Brewers Association’s Bart Watson says this is one reason he’ll be taking the next few months of on-premise data with a grain of salt.
“With the number of outlets going down, the places that have stayed open probably are busier. But that doesn’t mean the total on-premise is busier,” Watson says. “We’re going to get some places saying, ‘Oh we’re super busy!’ or see BeerBoard data that maybe spikes up, but it misses that that’s partly because the other four bars that were around that location have closed.”
It’s too early to say whether the pandemic’s nudge toward at-home drinking, combined with fewer bars and restaurants at which to drink, will fundamentally change consumers’ habits long term. But again, the trend lines already pointed that way. Data from the Alcohol and Tobacco Tax and Trade Bureau (TTB) shows draft beer sales as a proportion of overall beer sales have mostly been growing since 2002, increasing from 9.2% that year to 10.8% in 2017. But between 2017 and 2019—to say nothing of the plummet in 2020—draft beer as a proportion of overall beer began to fall again, to 10.5% in 2019.
It’s imperative, over the coming months and years, that breweries or other alcohol producers meet customers where they are, says Julia Herz, a beverage industry consultant and CEO of HerzMuses Enterprises. That might be in restaurants or taprooms, but many drinkers have been and will continue to be at home or socially distanced. Herz cites brewery drive-thrus, outdoor dining “bubbles” or gondolas, virtual events, webstores, and taproom table reservations as tools that are all likely to remain relevant for years to come.
Rather than talking about what consumers want “during COVID” or “after COVID,” Herz says there’s no such distinction. Whether it’s the actual virus circulating in the population, or simply the habits we’ve built during COVID, its impacts are long-ranging. “Before” or “after” are now simply “life.”
“This is no longer a situation to think of as a pandemic that’s one and done,” Herz says. “It will likely be endemic and cultural for the rest of our lifetime.”
To that end, she’s dismissive of the roaring ’20s parallel. A war has a definitive endpoint, a date that a treaty is signed and the troops begin to return home. COVID abides by no such calendar.
“You’ll see pockets of the roaring ’20s and then kind of a boomerang effect—spikes in COVID exposure, crackdowns on capacity limits—that brings it back in,” she says. “You’re not talking about the roaring ’20s across the U.S. on one date, at one time.”
Words by Kate Bernot
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