Imbibe live logo in white
1–2 July 2024
Olympia London

How customers are changing where and what they are drinking

Insights from the CGA

At Imbibe Live 2023 Paul Bolton, Client Director for GB Drinks at CGA by NielsenIQ, gave a presentation on how changing consumer habits are shaping the future of drinks and hospitality venues. Here's what we learned…

The session covered:

Watch the video below for the full session recording, or read on for an overview of the presentation.

Macro trends within the drinks industry

According to Bolton, despite the challenging circumstances of the past few years, the on-trade sector has remained relatively stable in terms of the frequency of people eating and drinking out. While there has been an overall drop in ‘occasions’, data has shown that the number of people visiting on a weekly and monthly basis has remained consistent over the last six to eight months. Bolton explains that this is an important insight, because there's still a core group of consumers who are going out regularly. These consumers are the ones to target for behavioural data, as they tend to spend more and are highly engaged customers.

For drinks owners and operators, the on-trade continues to play a significant role in people's lives. When consumers were asked what they prioritise in terms of spending their disposable income, visits to on-premise establishments ranked highest, even ahead of clothing, vehicles, and holidays. 

This means that people still have a strong desire to spend money on the on-trade because it's a fundamental part of their social lives, a source of enjoyment, and a treat they eagerly anticipate.

Furthermore, Bolton goes on to explain that they have observed a trend towards affordability. While some consumers are willing to spend their money on big occasions, others seek value in more casual outings. This polarisation means that the on-trade sector is accommodating various consumer preferences.

In terms of total drinks performance compared to last year, average value rate of sale is up by 6% - a promising figure considering the challenges such as outlet closures, train strikes, inflation, and rising living costs that have affected the industry. Bolton suggests that despite these hurdles, we can be optimistic about the next six months and beyond.

‘Premiumisation’ within the drinks sector

There is no evidence to suggest that consumers are cutting back on the quality of the drinks they enjoy or the calibre of the establishments they frequent. In contrast, there has actually been a subtle shift in consumer behaviour; while the number of drinks consumed on a single occasion has reduced and number of outings has decreased slightly, the trend of premiumisation remains very much alive and well.

Consumers are prioritising certain qualities in a brand. Good value is still important but it's not about being cheap, it's about getting an experience that's worth the money they invest. They’re not necessarily looking for the cheapest option on the bar; they're looking for something they perceive as valuable.

Bolton then goes on to explain that casual occasions are also becoming increasingly popular - a behaviour change that has accelerated in the last couple of years following the COVID-19 pandemic. High-energy, big nights out were missed during lockdowns, but now we're witnessing a return to more relaxed occasions. In alignment with this shift towards casual experiences, trends show that late evenings and nights have seen a decline in consumer visits, with a noticeable shift towards early evenings, mid-afternoons, and lunchtime outings.

So, in summary, consumers are still valuing quality and premium experiences, but they are adjusting the frequency and timing of their outings to match their preferences and changing lifestyles.

Flexible working driving a shift in consumer behaviours

There has also been a significant shift in consumer behaviour driven largely by the fact that many people are now working from home. This has created a unique opportunity in particular for localised outlets like pubs and local brands. These establishments have made a remarkable comeback in recent years, resonating with consumers who spend most of their workweek at home.

Sales patterns have been noticeably impacted by the rise in remote and hybrid working. Traditionally, Saturdays have accounted for 28% of the total weekly value in the market. However, Fridays, Saturdays, Wednesdays, and Thursdays are losing their share to Sundays. 

More people are staying home on Fridays and Mondays, and with the rise of hybrid working, they're often back in the office during the middle of the week.

This trend has been particularly pronounced in London, where there has been a significant decline in Friday sales compared to other days. People seem to be more inclined to enjoy themselves on Sundays - perhaps because they don't have to worry about work the next day. A bit of a hangover might not seem like such a bad thing when you have the luxury of a commute-free Monday.

Experiential drinks and venues

Bolton then goes on to discuss the growing preference for experience-led venues and competitive socialising; these types of outlets are predicted to succeed in the coming 12 months.

Experience-led venues often become focal points in city centres, drawing people in for the entire day or night. These venues offer various experiences, ranging from golf and shuffleboard to escape rooms and arcades. And it's not just limited to city centres; town centres and suburban areas are also witnessing a surge in such venues. They provide a compelling reason for consumers to venture out, socialise with friends, and spend money.

Experience, in its various forms, is becoming increasingly important for all types of outlets, including pubs and bars. Whether it's live music, beer or spirits tastings, quiz nights, or other interactive events, people are actively seeking reasons to step out. This presents a remarkable opportunity for hospitality establishment owners to engage in marketing campaigns that will attract patrons to their establishments for these unique experiences.

Value share across different drinks categories

Bolton goes on to discuss the top-line view of the value share across different drink categories, namely beer, spirits, wine, cider, and soft drinks.

Over the past year, beer has emerged as a standout winner, managing to reclaim its share from spirits. This could be attributed to the rise in desire for casual occasions; additionally, cider and soft drinks have also benefited from recent trends, possibly influenced by favourable weather conditions.

However, we cannot ignore the impact of the ongoing cost-of-living crisis on consumer choices. While consumers are not necessarily downgrading the quality of their drinks, they are making more selective decisions regarding categories. Consumers are making choices with their budgets in mind; cocktails, for example, might cost more than pints, prompting them to opt for the cost-saving choice.

This shift is happening across the board in all age groups. For example, the decline in spirits consumption isn't limited to just younger consumers; it's affecting all age groups. This emphasises the challenge faced by spirits in retaining consumers' interest and loyalty.

Something to consider is that sustainability is also a topic of ever-increasing importance. 44% of consumers consider sustainability a driving factor in their choice of where to visit, and 36% find environmental credentials important. These cues are crucial and could make the difference between someone choosing your brand or opting for another.

Going forward: predictions for the next six months

In terms of categories in which operators plan to increase or decrease in their offerings, no and low-alcohol options are once again on the rise, alongside beer and cider, spirits, world lager, tequila, and rum. However, some categories like gin and standard lager are experiencing rationalisation, indicating a reduction in offerings. Bolton explains that It's crucial for operators to make these decisions carefully, and for brand owners to provide compelling reasons for their products to remain on the bar. Data-backed justifications are essential to demonstrate the value your brand brings to consumers and the establishment.

Looking ahead, trends include the growing popularity of no and low-alcohol options, premiumisation, and a focus on providing consumers with elevated experiences. It's vital for operators and brand owners to align their offerings with these emerging trends to ensure they continue to appeal to the evolving preferences of their patrons.

Key cultural events over the next year will also likely impact overall performance. The Women's World Cup, followed by the Rugby World Cup, and the Men's Euros in July 2024 will offer opportunities for various categories, including spirits, soft drinks, and wine, as evidenced by recorded uplifts across the board during major sports tournaments. Additionally, the duty increase in August will affect categories differently. Finally, Christmas this year is anticipated to be the first ‘normal’ Christmas since 2019, so will present a unique opportunity for brands and operators to engage consumers.

In conclusion…

Bolton concludes his session by explaining that value for experience in the treat occasion remains crucial, despite some polarisation in consumer preferences. Adapting to changing occasions, including more casual outings, earlier hours, and local travel, is a strategic imperative. Activations, strong social media presence, and appealing to younger consumers are vital for brand success. Lastly, health and sustainability, while still relatively small in market share, offer immense growth potential.

Enjoy this article? Make sure to share it!

Looking for something else?