With more booze being consumed at home rather than in licensed premises, research exclusive to Marketing Week suggests brands that come up with new ways of serving drinks will be the ones popping the champagne corks.
Gone are the days where breweries’ fortunes are made from workers stopping off for a pint in the pub on their way home. Drinking habits are changing dramatically, according to a report by Kantar Worldpanel seen exclusively by Marketing Week.
People are spending more time drinking at home, and less leisure time means they are choosier about where and when they do go out to drink, says Kevan Mulcahey, business unit director for alcohol at Kantar Worldpanel.
“People will go out and spend their money but they have got to feel it is a worthwhile spend. The biggest problem for the on-trade is that [going to bars] is no longer seen as a good investment,” he says.
There is polarisation between casual food-based occasions and more enthusiastic going “out on the town” celebrations, Mulcahey adds.
The report shows that alcohol consumption in 2009 saw the sharpest year-on-year decline since 1948. For the first time, pubs are now making more money from food rather than drink.
While there is still a demand for mass-market lager brands such as Carlsberg and Carling, many people are seeking out niche craft-brewed beers and are becoming keen on premium spirits with provenance, such as Chase Vodka (see The Frontline, below). “It’s now about premium,” says Mulcahey. “People are becoming choosier about their type of drink or its quality.”
For the first time, pubs are now making more money from food rather than drink
The demand for more niche products is an opportunity for the on-trade. Cask ales are becoming more popular, with on-trade volume for this category up 47% in the last decade. More significantly, these drinkers are much more likely to choose a pub based on the quality of its drinks, than other types of alcohol consumer, according to the report.
Ale drinkers are likely to be men over 50, which is a real opportunity for venues. With nearly two-thirds of people in the UK aged over 34, compared with most of the population being under 34 in 1975, more consumers will be entering this age group.
Premium ale is also growing in popularity in the home environment. The report shows that sales of premium bottled ales increased by 9.5% last year, with some of this due to new launches.
Consumers are also being tempted by alternative ways of serving drinks. Sales of cans of spirits premixed with a soft drink are now being bought by nearly 2 million people a year compared with 800,000 in 2008. Almost 80% of people buy them impulsively, to drink the same day, compared with 46% for alcohol generally.
However, fears that this trend could affect sales of traditional spirits seem to be unfounded. Only 4% of people who buy unmixed bottles of spirit have bought the cans.
“The cans seem to appeal to a different consumer. Some people don’t necessarily want to open a bottle of wine, but if they’ve got a can of premixed spirit it can compete against beer,” says Mulcahey.
He adds that new types of packaging will also help revitalise the industry. “The biggest innovations will probably be around how the product is served, such as different pack sizes, widget cans and premixed drinks,” he says.
Wine marketers are also looking at innovations in the off-trade. For example, plastic glasses of wine with peel-back lids are now available in Marks & Spencer. The product is the brainchild of James Nash, who pitched the concept on BBC series Dragons’ Den, but did not receive an offer of financial backing at the time.
However, Mulcahey says the industry is generally not doing enough to innovate, and this is where marketing can help. “It is still quite production led – so a producer will make wine because that is the grape they have and it’s up to the marketers to sell it. But I think that will change when it starts to be led like FMCG markets, which are based around what the consumer wants,” he says.
Wine is most popular with women over 50, who account for 28% of all off-trade sales of the drink (see chart, right). Men aged over 50 account for 26% of all off-trade wine sales.
At the other end of the scale, entry-level drinkers are increasingly consuming alcohol at home. Almost two-thirds of 18-year-olds have a drink every week at home, while beer sales to men account for 12% of all alcohol bought by 18- to 24-year-olds, compared with 2% for women.
This signifies a very dramatic shift in consumer behaviour, says Mulcahey. “Historically the culture of going out was more prevalent among young people but that is becoming less defined now. You are still more likely to go out if you are younger, but there are now many more things to do than just going to the pub,” he says.
People of all ages are drinking more at home because alcohol can be bought cheaply at supermarkets, says Mulcahey. “Even if you buy it from a supermarket when it’s not on promotion it’s still going to be cheaper than going out.”
He also has a stark warning to the operators of pubs and bars, saying: “If nothing changes in the on-trade, then potentially that will die completely over the next 10 years so the home will become the main environment for drinking.”
- Alcohol consumption saw the sharpest year-on-year decline in 2009 since 1948.
- More than 50% of pub revenue now comes from food.
- The average cost of a pint of lager is £2.80 compared with 23p in 1975. Had the price of lager kept pace with inflation, a pint would now cost an average of £1.76.
- On average, UK adults go out for a drink twice a week and 60% drink weekly at home.
Source: Kantar Worldpanel
We ask marketers on the frontline whether our ’trends’ research matches their experience on the ground
Head of brand, online and PR at Luminar, which runs
nightclubs across the UK.
I agree that alcohol trends have changed. In response, we’ve added more to our drinks proposition, for example by introducing cocktails at the end of last year. Vodka is our biggest selling drink now and we’ve added premium brands to our offer.
Alcohol will continue to be a key part of our offer but we’ve tried to add more content to our clubs. We’ve just done a deal with Jongleurs comedy clubs, giving consumers more reasons to come to our clubs and come early. We launch at the end of February and presales are encouraging. A big part of Jongleurs is food, and that’s a new area for us.
It’s all about giving customers more content. Our core audience is 18- to 24-yearolds but, as the research shows, the population is ageing and we’re looking at how we can attract older age groups into our clubs. A lot of our buildings run Zumba [dance] nights or MMA (martial arts) fight nights to appeal to this audience.
Marketing manager at Naked Wines
Naked Wines was launched in December 2008 [by previous Virgin Wines staff]. We are different to traditional wine retailers because we invest in wine makers directly, and in return they make us exclusive wines at preferential prices.
Customers who invest £20 a month help our wine producers by buying in advance, and in return they get preferential prices.
They can also order their wine before it has been produced and again they get that at a discounted rate for providing cash upfront. The decline in alcohol consumption hasn’t affected what we are doing. Despite launching in the depths of recession, we’ve had 100% growth year on year because we offer consumers a different way to buy their wine.
There has been pretentiousness around wine but we are trying to create a culture where people feel comfortable about it. We try to strip away any snobbery around wine and get customers to use their own language. There is a Facebook-style wall next to each product where people can respond to each other. It’s a hybrid of a social network and an online wine store.
Founder of Chase Vodka and William’s Gin
I agree that things have changed. People are now very concerned about food provenance and that market has gone through a massive shake-up in terms of where foods come from.
I thought the spirits industry [would go through a similar thing]. It’s been tough, but it seems to be taking off in the last month or two and now we can’t keep up with demand, whereas in the first couple of years I often wondered what on earth I’d done.
The hardest thing is to get people to ask for your brand and then tell others about it. And we have many competitors – there are something like 200 new vodkas launched every year. However, our story is all about making the pure base spirit to start with.
It’s hard [to sell into bars]. There are many other spirit brands that have tried to buy their way into bars by giving them cash incentives. But a brand can’t prostitute itself; it has to stand up for something.
We are now making limited edition drinks, such as vodka made out of marmalade. Making bespoke vodkas is where I see us going in the future.
Marketing director at brewer Wells & Young’s
As the research shows, the balance between the on- and off-trade is getting closer and in the next few years we expect to see more people drinking beer at home than in pubs or bars. For pubs, this means it’s even more important to create a point of difference.
The widely held view is that sales in the ontrade will translate into off-trade sales, so we make sure our communication resonates with people either looking for the brand for drinking at home or in the pub.
I’d agree that cask ales are becoming more popular. Our flagship beer, Wells Bombardier, is the fastest growing ale brand enjoying 50% growth year on year in the off-trade.
We have introduced an innovative cask beer font, which stands at just over a foot high on the bar and rivals the high-impact lager fonts that have long been a barrier to enticing new consumers to cask beer.
Pubs where the new font has been installed have experienced a 20% uplift in sales of our cask beer.