Divergent Trends, Positive Outlook for On-Premise Adult Beverages

The on-premise aspect of the drinks business is a tough one to get your arms around. It’s multifaceted; outlets range from corner pubs to casual-dining restaurants to 60,000-square-foot nightclubs, which can open and close quickly. Pours at each of those locations can occur in slightly different quantities and with varying degrees of accuracy, and marks-ups are often on a sliding scale. The on-premise channel is also at the mercy of two fickle, sometimes volatile, but always intertwined elements: consumers and the economy. (And sometimes the weather.)

As our team worked to meet the challenge of assessing the variables within this complex, fast-paced channel and analyze the on-premise drinks business for our BarTAB (Trends in Adult Beverage) report, diverse trends emerged. For instance, bumps in the road to economic recovery mean consumer confidence is volatile, but pent-up demand is pushing patrons back into bars and restaurants post-recession.

Before going out, more consumers are imbibing at home as a cost-saving measure, yet many are gravitating toward higher-priced selections once at the bar. They want bartenders and servers who are knowledgeable about spirits, wine and beer, but they are more influenced by menus, merchandisers and the people they are with when it comes to selecting a drink. Complex whiskeys and Cognacs are trending well, but so are sweeter wines and candy-shop vodkas. The excitement in beer is around craft, even though the major domestic brands remain the lifeblood of on-premise beer volume and sales.

I could go on, but the point is that the trends in on-premise adult beverage are diverse, and the uncertain economic climate makes it even harder to plan for success, whether you are an operator or a supplier. As we head into the all-important holiday season, many of these trends will intensify and set the stage for 2013.

We foresee ongoing growth for adult beverage in bars and restaurants next year, with the caveat that the economic developments over the next few months will certainly influence the overall trend. Some may question that positive prognosis, but as we track the industry, we’ve seen the way many operators have sharpened all aspects of their adult beverage programs and leveraged supplier partnerships to maximize opportunities to grow sales and profits. Even with all these divergent trends and the hazy economic forecast, it’s ultimately the commitment of operators and suppliers to growing the business that will determine the state of the on-premise market a year from now.

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Donna Hood Crecca

A veteran of the foodservice industry, Donna Hood Crecca leads the firm’s Convenience Store Practice and is active in its Adult Beverage Practice. She develops research-based insights and recommendations for leading and emerging supplier and operator companies to enhance their go-to-market and product development programs and strategies.

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