ABL Annual Meeting Presentation
Tavern Owners, beware of sharks, says ABL Speaker
By Paul Tash, Montana Tavern Times
(Reprinted with the permission of the Montana Tavern Times – first published in the April, 2017 issue of the Montana Tavern Times)
“Competition is heating up from the sharks,” and on-premise alcohol retailers need to swim fast to stay alive.
That’s the message from Danny Brager, an expert in beverage alcohol practice for The Nielsen Company. Brager gave a presentation called “Current and Emerging Trends in the Retail Environment” at the American Beverage Licensees” Annual Meeting March 27th, in Las Vegas.
The “sharks,” according to Brager, come in many forms, but include retail discounters like Walmart and Costco, online retailers like Amazon, direct-to-consumer companies, meal-and alcohol-movie theaters, and “grocernauts” or grocers that seek to enhance the shopping experience by locating restaurants and even bars inside their stores.
How can tavern owners compete with all that? Brager says to concentrate on their strengths, and “what makes you different.” Focus on building “knowledgeable staff” who knows what their customers want.
“Engage the consumers,” he added, by organizing special events, pool and dart leagues, and even tastings.
Though millennials, those born in the 1980’s and 90’s, are important, seniors are the largest-growing age demographic, so “target them,” he said. And, he said, “The sweet spot (of the three alcohol categories) might be spirits.”
CURRENT CONSUMER TRENDS
Brager noted a “consumer fragmentation” is taking place with a shrinking middle class and a “generational divide” between seniors and millennials. Other factors affecting the world’s alcohol-consumption trends, he said, include technology advances (mobile and online purchasing ability, for example), a changing legal environment (marijuana, for example), and consolidation among retailers, distributors and suppliers.
According to a recent February 2017 Harris Poll, beer remains the beverage of choice over all demographics, but wine is gaining in popularity, Brager said. The poll found that 38 percent of drinking-age adults preferred a brew, 31 percent preferred wine, and 28 percent preferred spirits.
Among females, however, wine was no. 1 at 46 percent. Wine was also the top choice for those over 65 (42 percent) and those making over $100,000 per year. In addition, of those who preferred wine, 50 percent said their top choice 10 years ago was beer or spirits.
In it examination of annual percentage of growth in the United States, Nielsen found that on-premise sales of beer dropped .7 percent in 2016 from 2015, while sales of wine increased .9 percent and spirit sales rose 3.1 percent.
Nielsen statistics show traditional on-premise sales are under pressure from a variety of societal factors, including:
Nielsen data shows that red blends and rose are showing a growth in sales, while “consumers are definitely trading up” and spending on higher quality, and higher-priced, wine. New trends include wine on tap, wine in a can, wine cocktails and premium wine boxes.
Regarding spirits, Brager said Irish whiskey is doing well, as is American whiskey. In addition, sales of flavored whiskey flavoring are growing, while flavored vodka sales have fallen off after immense popularity. Premium and ultra-premium spirits showed the largest growth in the last year, while sales of the cheapest brands declined.
In the beer category, craft beer remains big, but it’s experiencing “much less growth.” Brager said. IPAs make up the biggest beer segment, with blonde ales, pilsners, porters and shandys showing more popularity. In addition, on-premise locations continue to lead the way in the craft beer segment, providing about a 32 percent share of craft beer sales (see graphic).
Brager said the more “mature” craft brewers, such as Samuel Adams and Sierra Nevada, are suffering declining sales, while “newbies” continue to enter the market.
ALCOHOL CONTENT’S ROLE
The data also shows that beer drinkers are now more likely to consider session ability, or the ability to enjoy more beer at a session by drinking brews with less alcohol content, usually less than 5 percent. Data shows 53 percent of beer drinker’s age 21-34 says they always or often pay attention to alcohol content in the beer they drink. In related data, 13 of the 25 fastest-growing beer brands are “sessionable” beers that contain less than 5 percent ABV.