On-trade recovering alcohol market share in Q1 ’22
Consumer spend is growing but concerns around the rising cost of living could stall this recovery.
In 2019, the on-trade to off-trade market share of the then 600 million litre alcohol market had stood at 49% to 51% before the pandemic according to NielsenIQ’s Scantrack. But the on-trade’s share had dropped to just 19% of a reduced 502 million litre alcohol market in 2020.
On-trade’s share had recovered somewhat in 2021 to 27% of a 525 million litre alcohol market with the on-trade’s share now seemingly returning to pre-covid levels.
By the first Quarter of 2022 the on-trade’s share of a 115 million litre alcohol market stood at 46% where NielsenIQ put this share at zero per cent of an 88 million litre alcohol market in Q1 of 2021 when hospitality was closed, 44% of a 113 million litre market in Q1 of 2020 and 53% of a 123 million litre market in Q1 of 2019.
Consumers are responding to MUP
NielsenIQ’s Consumer Survey from last April found 60% of respondents buying less alcohol since Minimum Unit Pricing was introduced in January, highest in the 55-64 age group along with the 25-34 age group at 67%.
For example, 43% are purchasing smaller pack sizes, 58% have or will purchase alcohol in NI/Duty Free/Overseas and 51% are saving their alcohol consumption for occasions. Some 23% are purchasing more NoLo alcohol.
On-trade
CGA estimates that the RoI on-trade lost around €1.9 billion in Long Alcoholic Drinks/Spirits & Soft Drinks value in 2021 as a result of the impact of Covid-19 when compared to 2020.
And while ‘wet’ outlets were hit harder by the closures, a strong cohort of outlets have returned to the market.
CGA’s On-Premise Market survey from last March indicates that some 93% of pubs are back trading vs 2020 while 91% of bars are back trading, 95% of hotels and 97% of restaurants are back trading.
“Consumer confidence has grown over recent months as market conditions have normalised,” states CGA.
In 2021 it found only 42% of consumers to be ‘very’ or ‘quite’ confident. This figure is now running at 82% this year.
“Sales are also bouncing back with 2022 sales tracking at 80% of equivalent 2019 levels,” states CGA which put the total ‘wet’ volume compared to the 2019 period at 47% for 2021 and 33% for 2020.
Rising prices
However the rising price of drink has not escaped the consumer’s notice and it is currently top-of-mind with a typical round of drinks at €27.48 costing nearly 6% more in February this year than it did at €26.18 in June 2021 (compared to €25.94 in pre-Covid 2019).
In order to mitigate the effects of the increase in the cost of living 42% stated last April that they’d be going out less frequently, 37% would budget less money for eating/drinking out and 36% would look for more value options when out.
Legacy of pandemic on on-trade behaviours
Consumer confidence seems to be higher in food-led venues, with cautiousness remaining around ‘higher tempo’ venues, thus casual low tempo occasions seem the most common reason for consumers to visit the on-trade.
A CGA Reach sample of 727 consumers found 88% of them confident visiting restaurants, 84% confident visiting pubs, 83% confident visiting bars and 73% confident visiting nightclubs.
Thus the legacy of the pandemic has grown the influence of food-led and local venues, which present opportunities to suppliers.
Some 57% of those who’d typically go out for a meal in a three-month period chose a casual meal over a special occasion (54%), a relaxed/quiet drink (48%) or a formal meal (27%). Only 18% chose after-work drinks and 14% a high tempo/big night out occasion.
But 41% of consumers choose their drink as a ‘treat’ when out for a formal meal.
Consumer confidence seems to be higher in food-led venues, with cautiousness remaining around ‘higher tempo’ venues, thus casual low tempo occasions seem the most common reason for consumers to visit the on-trade.
During the pandemic Dublin bore the brunt of Working From Home and the avoidance of city centres but CGA believes that city centre trade is now returning to pre-pandemic levels. Nevertheless, during this return engagement with suburuban venues remains strong, with sales tracking in line across both market strata, states CGA.
This is due in part to one in three consumers planning to visit local venues ‘more often’ than they did pre-pandemic and that 18% who typically go out for ‘after work’ drinks.
Drinks choices
Consumer choice when in the on-trade remains polarised but despite the financial challenges, high quality has increased in importance, states CGA.
When its Reach survey asked which, if any, of the following are more important than prior to Covid-19 when choosing what to drink out, 30% chose high quality drinks where 25% went for well-known brands. Just 22% chose cheap drinks.
“While consumers’ purchasing habits polarise, suppliers can obtain competitive advantage by engaging with cocktails and premium drinks,” states CGA.
And LADs have entrenched their position in an outlet’s offer, gaining the most share when compared to 2019.
On-trade data from CGA found that LADs held 71.4% of total on-trade value in Q1 to March 2022 compared to the same Quarter in 2019, up three percentage points, while Spirits held just 20.3% of total on-trade value, down 1.6 percentage points. With an 8.3% share Soft Drinks were down 1.4 percentage points when compared to Q1 of 2019.
As just under one in two consumers are likely to trade-up their drinks choice, the opportunity to trade up is most prevalent amongst wine and cocktails with 18% drinking white or red wine likely to do so for a better quality drink and 16% of those drinking cocktails likely to do so. Overall, 45% of consumers are still likely to pay extra for a better-quality drink.
This is also reflected in the Spirits category where Premium spirits’ share of the total spirits market is 27%, up one percentage point on two years ago.
In lagers, World Lagers now hold an 11.3% share of total Lager sales, up 1.9% percentage points on two years ago.
Cocktails
Sex On The Beach is the most popular cocktail consumers typically drink when out at 39% followed by a Daiquiri at 37% and a Mojito at 35%.
Cocktails have grown notably versus a year ago with one in four consumers now drinking cocktails out of home.
Some 28% of Irish consumers drank cocktails out of home in the first Quarter of 2021, five percentage points more than their UK counterparts.
“Cocktail ranges in Ireland need to encompass Classics and Indulgent Premium Signature serves to maximise the benefit of a cocktail range in an outlet offer,” states CGA since consumers intend going out less frequently but will spend more when they do so.
Sex On The Beach is the most popular cocktail consumers typically drink when out at 39% followed by a Daiquiri at 37%, a Mojito at 35%, a Pina Colada at 29% and a Cosmopolitan at 25%.
Sixth most popular is the Pornstar Martini at 24% followed by a Margarita at 23%, a Long Island Iced Tea at 20%, a Woo Woo at 17% and finally, an Expresso Martini on 16%.
In summary, CGA believes that there’s a lot of positivity at present, stating that consumer spend is growing but concerns around the rising cost of living could stall this recovery.
