Restaurants, bars, hotels, nightclubs, fast-casual – the on-premise is a diverse and vibrant channel in the alcohol industry. Where’s it headed? Good question. Its growth trajectory is fairly reliant on consumers’ comfort level with discretionary spending, but their desire to relax, socialize, indulge and explore also plays a key role, as our recently released BarTAB Report illuminates. We live in uncertain times, no doubt. Global events and changes in consumers’ personal finances both influence their outlook and willingness to spend as well as their need to connect and unwind with friends and family. The on-premise channel provides that much-needed outlet for socializing and discovery.
The current dichotomy of consumers wanting to control spending while also enjoying going out to restaurants and bars, especially among those 21–34, is evident in BarTAB. Younger consumers are the most frequent on-premise patrons and prioritize adult beverages in their decisions of where to visit. Once inside, consumers seek value through selection, specifically looking for a range of quality and unique products served by knowledgeable staff. At the same time, they prioritize deals, specials and promotions as cost remains the most influential factor in drink selection. In short, when consumers step up to the bar or look at the drink menu at the table, they want it all and want it at an accessible price point.
While the upcoming holidays will spark increased spending, 2016 is likely to look a lot like 2015 in the on-premise market. Although economic trends are expected to continue to improve, wage growth is less than robust and the global situation is uncertain. Plus, 2016 is a Presidential election year. So, this dynamic tension between high expectations around quality, selection and experience along with the need to control spending is unlikely to change in the new year.
Our on-premise volume projections for the end of 2015 and into 2016 in the BarTAB report call for varied category performance within beer and nominal growth for wine and spirits. Premiumization will continue in select categories as consumers explore and indulge. The importance of drink programs in attracting guests to a particular location will continue to increase and promotions will give them permission to spend. What’s more, the connection between what consumers discover on-premise and what they purchase off-premise will also likely strengthen. On-premise remains a crucial channel for growing the alcohol industry and, while growing in dollars, achieving volume growth at the bar remains challenging.