At Thursday's Network Breakfast, CGA by NielsenIQ’s Scott Elliott and James Phillips explored how On Premise trends have shifted in Australia since the pandemic and how these trends compare to the global recovery of the channel.
Elliott had just arrived from the UK, coming to Australia especially for the presentation and to launch the new BeverageTrak service to industry.
He said: “The on-premise: it's really the place where we build brands, we build emotional connection to brands and when you look at the experimentation and trial that happens in this channel, there is no other channel like it.
"Thirty-six per cent of consumers say they actively go to the channel to experience new brands. One in four people are happy to trade up if you can persuade them to do so. And three out of five people say the brand experience in on trade influences their purchase in off trade."
Elliott and Phillips co-presented at the breakfast to a full room at the Kirribilli Club and explored: the premiumisation vs polarisation trend, examining the ongoing growth of the Cocktail category, the increasing interest in hard seltzers amongst consumers, and how On Premise occasions have shifted post-pandemic.
The return of the On Premise around the world
Following the end of lockdowns and restrictions around the world, it’s clear that consumers are continuing to prioritise the On Premise – with 84 per cent of global consumer typically visiting the channel, a three percentage point increase versus last year. Drink-led occasions in particular have seen growth, with weekly visits increasing 12pp compared to pre-COVID-19 levels.
This trend is reflected in the Australian On Premise, with 88 per cent of Australian consumers planning on going out more or as often during the remainder of 2022, and with consumers visiting casual dining restaurants, pubs and restaurants more often compared to six months ago.
Premiumisation vs Polarisation
Globally, consumers’ desire for both value and quality has increased since COVID-19, with 35 per cent of consumers stating high quality is more important (+2pp versus 2019), and 37 per cent stating good value (+4pp vs 2019) is more important. Sixty-three per cent of consumers globally say that they are likely to trade up for a ‘better quality’ drink, highlighting how prevalent the premiumisation trend has become internationally, Australia included.
Fifty-three per cent of Australian consumers said it was likely they would pay extra for a better quality drink when out in CGA’s OPUS study – a six percentage point increase compared to Autumn 2022. However, Australians also tend to prefer good value, with this dichotomy presenting a significant challenge for drinks suppliers in positioning their brands.
Cocktails, No/Low and other emerging categories
In CGA’s exclusive Bartender research from earlier this year, cocktails were tipped to be one of the biggest trends with 59 per cent of bartenders stating they thought cocktails are in the best position to thrive in 2022. This is reinforced with the recent growth in cocktail penetration over the last 6 months in the Australian On Premise.
This trend mirrors a global shift towards more experience-led serves, with consumers around the world choosing cocktails. The US shows a 50 per cent increase in the rate of sale in this category compared to 2019.
Australian bartenders also predicted that this year would see the No/Low alcohol trend take off in the On Premise space – but this has not translated to a significant uptick in popularity with consumers. Penetration of low/no alcohol alternatives is slightly down versus six months ago, dropping 1pp. However loyal no/low customers are actually drinking more often (September 2022 vs March 2022).
Hard seltzers are one category that has seen consistent growth, booming worldwide – particularly in the US - across a variety of formats. The growth of this category in Australia could in part be due to the desire ‘to be healthy’ growing in popularity as a reason for choosing hard seltzers as a drink choice in the On Premise.
The Desire for Local
With the decline of high-tempo, late-night occasions, the suburbs have seen an uptick in visitation. This reflects a continuing trend towards the ‘importance of local’, with 27 per cent of Australian consumers stating it’s more important now that their drink is Australian than it was a year ago.
Elliott said: "Australia's up there in the top ten in terms of the, the growth of importance for a brand to be seen as local, to be produced locally for them and, and to be perceived as supporting local."
And Phillips agreed: "There's so much focus on sort of precinct areas or CBD areas when it comes to consuming in the on premise, but your local restaurant with a licence, you know, could be opportunity to kind of really grow at the same time."
The bottom line for suppliers:
Elliott said, "The clarity of the on-premise strategy on a brand and portfolio level is critical to get success in a channel...It's expensive to activate. So you've got to be clear and understand where specifically in that decision corridor or path to purchase you can play to win.
To learn more about CGA by NielsenIQ's on-premise insights, its consumer research and market measurement services across both Australia and New Zealand, please contact James Phillips.
For a copy of the presentation click here.
CGA by NielsenIQ is a Corporate Partner of the Drinks Association.