Report Summary
Introduction
Consumers' alcoholic drinks consumption behaviors are shifting from the flat on-trade to the off-trade. Home-based occasions are rising with consumers seeking to bring the favored aspects of on-trade alcoholic drinks consumption into the home. However, although volume sales are rising, heavy discounting is limiting value growth and undermining the potential in consumers' openness to trading up.
Scope of this Report
- Insightful analysis of the evolving consumer migration from on-trade to off-trade alcohol expenditure and the need states and occasions driving this.
- Quantitative data tracking at-home alcoholic drinking occasions by occasion type and country.
- Detailed action points offering practical strategies based on the trends and insights analyzed in the report.
- Covering eight core countries across Europe and North America; France, Germany, Italy, Netherlands, Spain, Sweden, UK and US.
Research & Analysis Highlights
US consumers' alcoholic drinks purchases account for 72% of total sales. Europe has a noticeably stronger on-trade, but off-trade sales still account for 58%. Both European and US consumers' at-home alcoholic beverage occasions outnumber out-of-home and are exhibiting stronger growth.
Consumers are increasingly less inclined to compromise their quality and sensory needs when making the choice to stay at home rather than go out and drink in the on-trade. They desire authentic on-trade drinking experiences within the comfort and security of their own or their friends' homes.
Consumers, concerned with signs of wider economic uncertainty in the housing and credit markets, are increasingly likely to adjust their spending, cutting back further on on-trade occasions. Manufacturers and marketers can respond by targeting the associated rise in at-home meal occasions and the complementary relationship between alcohol and food.
Key Reasons to Read this Report
- Learn how to drive value in the at-home drinks market by appealing to consumers' home-based needs and encouraging uptake of premium products.
- Access a blend of quantitative and qualitative data aggregating the most compelling and recent research in this increasingly important topic.
- Counter sales volume stagnation and decline by discovering the route to premiumization within the off-trade/at-home context.
Table of Contents
Overview
Catalyst
Summary
Executive Summary
Introduction
The Future Decoded
Consumers are increasingly opting to stay in
Off-trade drinking continues to grow as consumers on-trade consumption stagnates
At-home drinking occasions are increasingly diverse
The "discount trap" presents a problem for building value from off-trade sales
Consumers seek on-trade quality experiences in the home
Consumers are "front-loading" at home before going out
Smoking bans are influencing consumers' off-trade drinking behavior
Attempts to build value in the off-trade may be influenced by the threatened housing/credit crunch
Health considerations are changing consumers' at-home alcoholic drinking behavior
Action Points
TABLE OF CONTENTS
Table of figures
Table of tables
THE FUTURE DECODED
INTRODUCTION: The strategic importance of the off-trade to the industry is growing
TREND: Consumers are increasingly opting to stay in
Improving and investing in the home encourages consumers to spend more time there
Consumers are focusing on the home as a comfortable retreat
US consumers' favorite summer evenings center around home and outdoor social activities
Cocooning has evolved: consumers want to share their homes with others
Home entertainment options continue to grow in sophistication
Take-outs and implications: consumers want products that complement their home-based needs
TREND: Off-trade drinking is growing while consumers' on-trade consumption stagnates
Off-trade sales in the US lead those in Europe as a share of total sales
At-home alcoholic beverage occasions outnumber going out
Per capita at-home and going out occasions vary significantly from country to country
UK consumers drink the most alcohol per on-trade occasion
Consumers are critical of on-trade value for money
Price sensitivity plays a role in directing off-trade consumption, but is far from the only factor
It is also important to recognize that there are other factors beyond price driving the trend
Take-outs and implications: industry players should place increasing emphasis on the need states of consumers drinking at home
TREND: At-home drinking occasions are increasingly diverse
Entertaining at home is a significant sub-trend in at-home alcohol consumption
Sports events fuel male at-home drinking behaviors
Beer is inherently social, both on and off-trade
Alcohol consumption at home is increasingly allied to meal occasions
Aging populations will add to the growth in at-home alcoholic beverage occasions
Weekend alcoholic drinking occasions increasingly occur in the home
Take-outs and implications: diverse drinking occasions at home have untapped potential, particularly with regard to premiumization
INSIGHT: The "discount trap" presents a problem for building value from off-trade sales
Price-based promotions in the off-trade can negatively impact overall brand equity
Beer continues to be particularly at risk from cut-price image problems
Younger consumers are migrating between cheap sub-premium beer and specialty brews
Take-outs and implications: a major threat to off-trade value generation is the continued emphasis on cut price promotion at the expense of building long term brand equity
INSIGHT: Consumers want to replicate on-trade quality and experiences in the home
Consumers' experiential expectations are high
Premium-hungry shoppers are looking for the latest on-trade trends on retail shelves
Poor on-trade experiences and choices are putting consumers off frequenting the channel
The "insperiences" trend means that alcoholic beverage consumers are recreating aspects of the on-trade at home with greater regularity
Insperiences are offering consumers high quality on-trade experiences with home convenience
Insperiences and entertaining at-home are tied to the rise of the kitchen as a prominent social space
The propensity for consumers to pair alcohol and food is a developing trend with historical precedent
Take-outs and implications: it is important to appeal to off-trade consumers by emphasizing the premium experience that brands can offer in the comfort of the home
INSIGHT: Consumers are "front-loading" at home before going out
Europeans show a higher propensity for front-loading than US consumers
The growth in front loading among UK consumers is particularly notable
Sweden has the lowest per capita occasions of the countries covered
Germany is experiencing the fastest decline in both quiet drinking and front-loading occasions
Take-outs and implications: front-loading is a growth occasion but presents difficulties for encouraging up-trading
INSIGHT: Smoking bans are influencing consumers' off-trade drinking behavior
Smoking has been linked to higher alcohol consumption among consumers
Smokers constitute a sizeable share of the drinking demographic
Smoking bans have impacted on on-trade sales and changed some consumers' on-trade drinking behavior
Smoking bans may influence the off-trade behaviors of both smokers and non-smokers
Take-outs and implications: smoking bans may not have a fundamental impact on the balance between on and off-trade alcohol occasions
INSIGHT: Trading-up in the off-trade may be restricted by the looming housing and credit crunch
Consumers may look for economies by staying-in
Take-outs and implications: the industry must prepare for consumers tightening their belts and look to the off-trade for opportunities
INSIGHT: Health considerations are changing consumers' at-home alcoholic drinking behavior
Consumers are moderating their alcoholic beverage consumption
Alcohol choices at home are being influenced by health considerations
Health and premiumization foster "less but better" approaches to alcohol consumption
At-home drinking faces a threat from the so-called "assault on pleasure"
Take-outs and implications: health and premiumization are complementary trends in the alcoholic beverage space in an era of increasing alcohol disapproval
INSIGHT: There is evidence that student drinking habits are shifting, thereby affecting on and off-trade behavior
Take-outs and implications: industry players must recognize students' changing priorities
ACTION POINTS
ACTION: Ensure the off-trade and on-trade brand positioning is complementary
Avoid a disconnection between pricing and marketing messages that confuses brand identity
Ensure that your alcoholic beverage brand stands for something: take ownership of important product trends
Control the discounting impulse if it threatens brand cache
ACTION: Align products more directly with off-trade need states and occasions
Capitalize on the fact that relaxation at home connects with individualism and reward
Market products that "enable" traditional male events
Covet the opportunities offered through the home entertaining occasion
Facilitate social drinking with products that enable sharing or shared experiences
Trusted brands can be allied to front-loading occasions
ACTION: Adjust portfolios in recognition of the defining consumer trends shaping preferences
Recognize that light beers are well placed to capitalize on the wellness trend
Help fulfill consumers desire for experimentation and self-expression
Allow consumers to act on the "less but better" impulse with widened portfolios that support trading up
Respond to the "Natural" trend
Organic credentials will become increasingly important
ACTION: Take the on-trade to the home through branded events
Branded "insperiences" are a rapidly developing opportunity
Look for new opportunities to offer branded experiences in the consumers' home
Align brands with new, popular forms of at-home entertainment
Co-branding possibilities exist in the home entertainment arena
ACTION: Emphasize the specific links between alcohol and food
APPENDIX
Supplementary data
Definitions
Methodology
Further reading and references
Ask the analyst
Consulting
Disclaimer
List of Tables
Table 1: Off-trade alcoholic beverage sales (% volume), US & Europe, 2001-2006
Table 2: Alcoholic beverage occasions (millions), going out and at home, Europe & US, 2001-2011
Table 3: Annual per capita alcoholic beverage occasions, going out and at-home, Europe & US, 2001-2011
Table 4: US & Europe alcoholic beverages consumption (liters) per occasion, on and off-trade, 2001-2006
Table 5: Annual at-home alcoholic beverage occasions (millions), US & Europe, by type, 2001-2011
Table 6: Per capita at-home alcoholic beverage occasions, US & Europe, by type, 2001-2011
Table 7: Share of alcoholic beverage occasions (%) by type and time of week, US & Europe, 2001-2011
Table 8: Staying in: alcoholic beverage occasions (millions), by sub-type, 2001-2011
Table 9: Staying in: per capita alcoholic beverage occasions, by sub-type, 2001-2011
Table 10: Number of smokers (millions) and as share of adult population (%), US & Europe, 2001-2011
Table 11: Overall alcoholic drinking occasions (millions), Europe & US, 2001-2011
Table 12: Alcoholic beverage occasions (millions) by type and time of week, US & Europe, 2001-2011
List of Figures
Figure 1: Four key factors motivate consumers to increasingly stay at home
Figure 2: US consumers favorite summer evening activities are centered around the outdoors and home
Figure 3: Integrated home entertainment systems fuel consumers' cocooning and hiving behaviors
Figure 4: The off-trade market in the US is much stronger than in Europe, 2006
Figure 5: Consumers are more price-conscious when buying alcohol on-trade than off-trade
Figure 6: US alcohol preferences shift with age from beer and FABs towards "mature" beverages such as wine and whiskey
Figure 7: UK consumers switch to wine earlier than Americans, peaking in their late-30s
Figure 8: The "discount trap" threatens off-trade premium value generation
Figure 9: Consumers still experiment with new alcoholic beverages more in the on-trade than in the home
Figure 10: Alcoholic "insperiences" marry on-trade quality, storage and presentation with off-trade convenience and accessibility
Figure 11: Beer Insperiences bring on-trade serving and presentation home
Figure 12: Non-smoking establishments are preferred by the majority of European and US consumers
Figure 13: Consumers in the US and Europe are showing a higher propensity for alcohol moderation
Figure 14: Health considerations have become an important factor in alcoholic drink choices
Figure 15: Stella Artois's declining brand image in the UK is a result of a disparity between its upscale positioning and heavy off-trade discounting
Figure 16: Coors Light has successfully delivered a unified brand message on and off-trade
Figure 17: Magners has changed the face of the UK cider market by tapping into the individualism and indulgence trends
Figure 18: Alcoholic drink concepts that emphasize sharing behaviors
Figure 19: The early success of Heineken Premium Light Lager Beer highlights consumer preference for "better-for-me" beers that taste good and have strong branding
Figure 20: Case study: Bacardi Bespoke takes the on-trade experience home
Figure 21: Co-branding or complementary tie-ins between alcohol and food evoke the premium experience
