According to latest Nielsen and Nielsen CGA data, the end of 2016 finds that spirits continue to lead beverage alcohol growth in bars and restaurants, with beer trailing and wine somewhere in the middle.
In a snapshot of annual performance comparing the on- and off-premise marketplace, the report highlights the commonalities and differences between the channels during 2016. Some telling high level similarities were found. For example, spirits are performing the best with wine and then beer following. Premiumization was also a growth factor in both channels.
Perhaps more interesting, though, are the differences. In 2016, off-premise marketplace growth generally outpaced on-premise. And while premiumization exists in both channels, that trend was less pronounced within bars and restaurants, according to Scott Elliott, SVP, Nielsen CGA. "The last 12 months for the US On-Premise has been an on-going story of increased competition. It really is brand-on-brand combat out there, driven by continued growth in outlet supply set against reasonably flat demand for total beverage alcohol, a population of ever-more discerning consumers with an expanding drinks repertoire and an increasing expectation that On-Premise operators must deliver experiences that are truly worth leaving the house for.”
But Elliott said bars and restaurants represent a huge opportunity, the preeminent place to control brand interaction and engagement, via signature serves or tap takeovers. “Smart suppliers to the on-premise are able to target demographics, venues and occasions to create experiences which directly grow brand equity in a way which no other channel allows. It is, and will remain, a key vehicle for drinks brands to target Millennials, to recruit drinkers to their brands or categories, and to align their products with some of the coolest places and experiences available to drinkers of alcohol."
Among the key insights: spirits growth rates in bars and restaurants have strengthened in the last quarter. Flavored vodkas and whiskeys, as well as Canadian whisky, are growing more slowly on-premise compared to off. Cognac is doing very well on-premise, while tequila is one of the spirit segment leaders of growth in both channels.
For beer, craft and domestic premium beers are now almost equal in dollar sales value on-premise, while the share of imports overall is larger on-premise. Mexican imports are less developed, suggesting an area of opportunity since the Mexican beer segment is the growth leader in both channels. Domestic premiums have suffered significant losses on-premise, much more than off, and cider’s main growth is in bars and restaurants.
With wine, overall category trends are weaker on-premise, but sparkling wine is growing well in both channels. Varietals doing better in bars and restaurants include Pinot Noir, Malbec, Sauvignon Blanc and Riesling, and wines from Italy, Argentina and France as well as New Zealand are doing well.
The report predicts that on-premise competition will continue to increase in 2017, with innovation pushing the boundaries and consumers continuing to see bars and restaurants as an experiential channel.