Spirits Performing Well but Beer Under Pressure

There's no use crying over spilled lager. Image: KariHoglund / iStock / Getty Images Plus

Latest report from Nielsen CGA shows bars and restaurants can expect continued trading up, but competition will be getting tougher.

New beverage alcohol data from Nielsen and Nielsen CGA points to consumers still willing to trade up in price and still building interest in spirits, but with growth heading away slightly from traditional on- and off-premise channels.

Data from the 52 weeks ending June 17 showed “on premise growth rates have remained relatively stable throughout the start of 2017 but competition remains fierce. This is an expanding market where supply continues to increase, particularly in the ‘Eating’ channel; however this growth has crossed into ‘Drinking’ channel as well,” according to the report.

"Looking for something that cannot be replicated at home, On Premise visitors are seeking out new experiences and outlet styles, with brewpubs, tasting rooms and tiki bars especially popular among younger Millennials,” says Scott Elliott, SVP of Nielsen CGA. “Given that On Premise visits continue to be rooted in 'experience' rather than a 'habit,' it has never been more important for suppliers and retailers to understand, and activate against, specific consumer needs, occasions and repertoires."

The report says that helping consumers navigate the growing number of choices is vital to encourage trade-up and to maximize spend per visit. “Food-led retailers (in particular, large chains) need help in developing more compelling beverage alcohol programs. Independent outlets, on the other hand, need support in driving traffic and in targeting specific consumer occasions.”

In terms of categories, Nielsen reports that the spirits showing the best percentage growth currently have been Cognac, Irish whiskey and tequila. Of those three categories, tequila and Irish whiskey show better strength in bars and restaurants compared to Cognac, which is better developed in the off-premise channel. Rums and cordials overall continue to struggle both on- and off-premise, while gin, based on bartender preference, cocktail creativity and emerging small distiller brands, is performing better in bars and restaurants compared to retail both in terms of overall share and growth.

News regarding the past year’s beer sales was as expected: challenged in both channels, beer is under even more pressure in traditional restaurants and bars. For example, Mexican and Belgian imports are growing at double-digit growth rates off-premise, but only up single digits on-premise. Declines of domestic premium beers are much steeper in bars and restaurants.

Craft growth rates are better developed in bars and restaurants than in off-premise channels, and cider is doing better on-premise than off, but those bright spots don’t make up for the continuing overall decline in most Big Beer leaders.

With wine, overall growth continued but slowed in bars and restaurants except for sparkling wine, which showed “impressive growth.” Rosé has done well on-premise but is booming off. Imported wines overall are better developed in bars and restaurants, with Spain, South Africa and Portugal in particular performing better.

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