Technomic Anticipates 2.8% Growth in Spirits Sales in Bars & Restaurants
Spending on spirits is expected to grow at a rate of 2.8%, the fastest expansion of all alcohol categories due to the popularity of whiskey and craft cocktails and the ongoing premiumization trend.
In evaluating its forecasted growth expectations for beverage alcohol sales at the nation’s bars and restaurants, Technomic continues to see only modest improvements in 2016. This comes from research conducted for Technomic’s Adult Beverage Planning Program research on key topics and trends related to the adult beverage on-premise industry.
While the overall restaurant industry has been experiencing stronger momentum, slower traffic at major casual dining chains and an evolving consumer dynamic are resulting in a “new normal” in which consumer drink purchase patterns have changed. For 2016, Technomic expects overall consumer spending on beverage alcohol in the away-from-home channel to grow at a modest 2.3%, with similar expectations for 2017. Total alcohol volume in bars and restaurants is expected to be flat in 2016.
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“It’s true that the operating environment is better for many restaurants and bars, but consumer occasions that include an alcohol beverage at these establishments are not growing,” states David Henkes, Senior Principal at Technomic and head of the firm’s beverage practice. “We see a number of underlying factors, including a different consumer mindset, with many consumers drinking less, but higher quality when in a bar or restaurant. There’s also growth in takeout and delivery − both areas that negatively impact the beverage occasion − as well as increased competition from new channels in both retail and foodservice for the alcohol occasion.”
2016 Growth Expectation by Alcohol Category
|Type of Product||Overall Alcohol Growth 2016|
2016 Growth Expectation by On-Premise Segment
|On-Premise Segment||Overall Alcohol Consumer Spending Growth 2016|
In looking at specific categories of adult beverage in on-premise locations, Henkes notes that beer remains the underachiever, with expected consumer spending growth of 2.0%. “Craft and imports are trending positively, but domestic beer – which still accounts for over half of on-premise beer volume, remains challenged.” Spending on spirits is expected to grow at a rate of 2.8%, the fastest expansion of all categories due to the popularity of whiskey and craft cocktails and the ongoing premiumization trend. Spending on wine is forecasted to grow at 2.0%.
Henkes cautions that restaurant and bar operators must ensure that the value proposition of their beverage program is aligned with their consumers’ expectations. “We continue to stress to our clients the importance of a strong adult beverage program – it drives customer satisfaction, and is obviously a source of incremental profitability” he notes. “But with consumers still cautious on spending, it’s important to stress the quality and creativity of a beverage program.”