Without a doubt one of the most respected industry research firms is Technomic, Inc. An industry leader for more than 45 years, Technomic offers custom consulting, custom research, multiple research programs, reports, and newsletters. We sat down with the firm’s Senior Director of the Adult Beverage Resource Group, Donna Hood Crecca, to gain insight into the changes to on-premise operations.
VIBE: You folks at Technomic are seeing some interesting changes in what’s happening on-premise, yes?
Donna Hood Crecca: It’s an interesting year for the beverage alcohol industry on-premise. We’re seeing that the on-premise channel overall has pretty much recovered from the recession in terms of food and beverage sales and things are definitely moving in a positive direction. We’re seeing better numbers than we’ve seen for a few years, and seeing good momentum in on-premise overall, with some really strong momentum in some of the sectors. So the numbers are improving but there are some real challenges for both suppliers and operators.
VIBE: How so?
Crecca: Well, here we are a couple of years post-recession and there is definitely a different environment, with a different consumer attitude, a different competitive set, path to purchase, and key drivers. The entire marketplace had been essentially reshaped by the recession, the way people think about spending, as well as what’s happened among the various categories of beer, wine and spirits in the past few years, the new emphasis on variety, quality and flavor.
VIBE: Are there ways to tease out these key factors and how they are changing?
Crecca: We’re certainly going to try by diving into the category and brand segment data and the food service tracking we do, as well as the consumer and operator insights we gather to really get a 360-degree view of what’s going on, to see what are going to be the big drivers and big challenges for 2016 and beyond. The headline is, “Why is it Lagging?” Yes, there’s positive momentum in the channel overall but alcohol is lagging, so we’re going to look at why it’s lagging and what can be done to turn it around.
VIBE: Can you share some examples of what’s happening in categories?
Crecca: With spirits, we see most definitely the best performing of the three categories, but it’s important not to look at them as three separate buckets – beer, wine and spirits – but as a whole: BWS. For example, beer is challenged for sure, but the momentum in craft and imports is continuing and taking share from domestic. There is positive momentum in beer, but where is it and what does it mean in terms of tap handles and menu?
Well, there’s a lot more competition at the tap handles as the majors get into craft beer, which gets rid of distribution, quality control and supply issues. But with craft so strong in the on-premise and the push from majors like Heineken on improving draft quality, there’s serious competition for the tap handles, and when you add in cider growth and even the hard root beers, the tap handles are really where the competition is these days.
In spirits, everyone talks about premiumization, and years ago it was across the board. But now it’s very specific: single malts, high-end American bourbons and ryes, and we’re even seeing some premiumization and more interest among Canadians. Vodka, though, is completely changing, with imports struggling, flavors not doing well, and pricing becoming more important. Not all spirits are undergoing the same level of premiumization and we’ll look at that as well.