Over the last few years, the liquor industry in Australia has experienced one of the most tumultuous periods in living memory. Consumer intelligence company, NielsenIQ (NIQ) has released its Full View of Liquor report, which reveals some interesting trends given the shifts in the current economic landscape.
From the pandemic and cost-of-living pressures to consumer trends around moderation and sustainability, various factors have impacted behaviours, consumption, and spending. Further complicated for liquor manufacturers and brand owners by the fragmented nature and gaps in consumer, shopper, and category data available in Australia.
With the cost-of-living pressures, it’s no surprise that consumers have taken some strategies to manage their expenses, such as becoming more home-centric and going out less, leading to a reduction in visits to bars and restaurants.
Spirits consumption decline outside the home
According to the CGA’s Pulse+ report, 39 per cent of consumers claim they are going out less than usual. As expected, this penetration and frequency reductions bring challenges for on-premise liquor performance, leading to a contraction of -7.7 per cent in total spirits volumes, in contrast to beer’s 1.4 per cent volume growth compared to the previous year. This suggests that spirits are more impacted by factors such as price increases and perceived value for money.
Consumers replacing out of home occasions with drinking at home, beer wins
The data indicates consumers are replacing out-of-home occasions with drinking at home, with off-premise unit sales stable, but value growing compared to the previous year.
Although ‘units per occasion’ has dropped by -3.3 per cent, there’s an uptick in both buyers (+2.1 per cent) and occasions per buyer (+1.7 per cent).
This suggests people might be shifting some occasions to at-home consumption, but also purchasing smaller pack sizes more frequently, indicating a move towards occasion-based buying rather than stocking up.
Beer is the primary beneficiary of value-driven consumer mindsets, facing double-digit dollar value growth through increased buyers and occasions per buyer, enjoying growth in consumption at home and on premise.
Younger demographic going out more, older demographics spending more
Despite the high cost-of-living context, not all consumers are reducing their ‘on-premise’ visits equally. Young consumers (18-34 years old) are visiting pubs, bars and restaurants more often than before, but on the other hand, middle-age consumers (35-54) – more likely to be paying mortgages and raising children – are the ones usually going out less often.
Meanwhile older consumers (55+) show the strongest increase in liquor retail sales growth (34.1 per cent value growth compared to the previous year), while under 35s show the biggest reduction in retail spending on total liquor (-8.0 per cent).
Declines for under 35s are driven by decreases in buyers and occasions per buyer, potentially as people counteract the effects of the cost-of-living crisis by stopping their at-home drinking or reducing occasions to prioritise experiences and consumption in the On-Premise. In addition to that, this could also reflect moderation trends manifesting as abstinence among these consumers (Gen Z alcohol trends).
NIQ customer success director, Marco Silva, said demographic differences play a key role in on-premise consumer occasions and categories, and help to understand why young consumers are still going out.
“Gen Z (40 per cent share of all occasions) and Millennials (41 per cent) prioritise these experiential occasions more than Gen X (36 per cent) and Boomers (32 per cent),” said Silva.
“In line with their quest for experiences, we also note the high proportion of these younger consumers who prefer different drinks at bars/restaurants compared to home.
“This suggests that On-Premise consumption/visitation plays a more unique and differentiated role in their lives than it does for older consumers, making it less replicable at home and could be one of the reasons why many young consumers are either going out as much as before or even more often despite the higher cost-of-living,” he said.
NIQ’s Full View of Liquor offers the most comprehensive view of the liquor market in Australia. It combines the NIQ Omnishopper panel with CGA’s OPM (On-Premise Measurement) & OPUS (On-Premise User Study), along with scan processing capabilities and industry-leading discover software.
As new norms are reestablished more frequently than ever and liquor trends fluctuate, the ability to accurately measure On & Off Premise and physical & digital behaviours all in one place, with one partner, is a game changer.
