What does the rest of the year have in store for bars, restaurants and nightclubs? According to Nielsen, the state of the on-premise in 2017 will continue to mean more competition. Innovation will push the boundaries of consumer experience and expectation, making it more likely that customers will continue to evolve their views that dining and drinking out is about experiences more than habit.
“In short, the On Premise channel remains a tough market for many and successes continues to be hard earned. Serious rewards do exist of course but channel-specific strategies are required to unlock them,” says the report.
According to Scott Elliott, SVP, Nielsen CGA, there are ways to take advantage of these trends. "Firstly, a clear channel strategy which is delivered via effective partnerships with distributors and national accounts” is needed.
“Secondly, suppliers must be able to use retailer-focused, on-premise insights to gain and protect space and visibility in bars and restaurants. For example, insights around optimal assortment, benefits of menu listings, effective pricing ladders, impact of specific outlet activation investment, etc.” He believes that 2017 will be the year when the game changes for the best suppliers out there and gets tougher for the rest.
According to Nielsen and Nielsen CGA, generally, growth rates across both on- and off-premise softened towards the end of 2016. The exception was wine in bars and restaurants, which had a strong end of year close. That allowed wine to grab the growth lead from spirits in the on-premise, Nielsen says.
In both channels, beer growth rates trailed other beverage alcohol in 2016. While premiumization and the growth of value versus volume is common across channels, that trend is less pronounced within the on-premise space.
Beer segment growth on-premise is being led by Mexican beers as well as domestic super premium. Craft is close to a third of the category dollars in bars and restaurants, significantly more than in the off-premise, and growth overall has finally dropped to single digits. Imports, too, do better on than off, while Mexican imports are less developed on-premise. Domestic premiums continue to suffer on-premise, and ciders have reached a two-percent share in bars and restaurants, according to the report
Wine growth levels strengthened on-premise in 2016, Nielsen says. Sparkling wine had been the main growth engine throughout much of 2016, but a resurgence in table wine helped move wine overall into positive territory. On-premise, the strengthening was led by red wine varieties, while imports continued to be better developed on-premise, accounting for about one-third of value.
Spirits, the top performing category in both channels throughout 2016, tailed off a bit in the last quarter. Growth is being led by Irish whiskey, cognac and tequila, with rum and cordials down. Canadian whisky is struggling to grow on-premise. Flavored whiskeys and vodkas are growing more off than on, with unflavored segments trending better in bars and restaurants.