“It was resoundingly clear from the presentations that we have a new consumer on our hands, one that has emerged from the financial crisis with what could be a permanent shift in their values, spending habits and lifestyle choices and affecting the way they consumer and purchase alcohol.  They are more frugal and demanding value.  Investing in new product development should be an essential part of any suppliers’ strategy in counteracting consumers’ heavy reliance on price discounts as a key purchase driver,” said Michael Walton, Executive Director, Nielsen Liquor Group in the Pacific.

Nielsen’s regional experts also provided a snapshot of trends in their respective markets.  The four key topics that were common across regions were:

• Low carb and low sugar: new products and brand extensions in this category are performing relatively well.
• Marketing to the over 50s demographic: This group makes up between 40-50 percent of alcohol consumers in the UK, US, Australia and New Zealand, yet are often overlooked when it comes to marketing in favor of a millennial focus.
• Online consumers: New ways and approaches to marketing to the technologically savvy consumer.
• New product development: A critical pathway to improve returns and drive real category growth.

Gavin Humphreys noted that just 57 percent of British beer drinkers popped over to the pub in 2009, compared to 70.5 percent in 1998.  In fact, the off-trade sector looks set to overtake share of beer consumption over the next two years.  While beer remains the favorite, wine is rapidly gaining share, driven by its link with in-home entertaining and also the availability of cheaper South African, Italian and Chilean varietals.

In the U.S., Danny Brager noted that more than 50 percent of Americans choose to entertain and eat at home more often.  Consumers are often trading down in an effort to find the best value, favoring domestic offerings and sticking with brands they know and trust.

Paul Kirby said that almost half of Australian drinkers claimed to be going out less often compared to last year, but are actually trading up when they do go out, sparking growth in premium and super premium alcohol segments (imported beer, international wine and bottled wine priced over $20).  Almost half of all packaged liquor was sold on promotion and 77 percent of alcohol consumers selecting their choice of outlet because it offered great promotions.

Just to the southeast, 60 percent of New Zealanders claimed to be going out less often compared to last year, according to David Hanson.  Annual sales for the off-premise market grew by 10 percent in value terms and 7 percent in volume.  More than three-quarters (77%) of all beer sales were sold on promotion.

With a growth rate of 32 percent in the last 13 weeks of 2008, premium wine casks outpaced all other wine categories, and there remains room for significant growth going forward.

On a full year basis, premium wine casks grew 31 percent, compared to 4.4 growth for table wine, the dominant wine sector. Total table wine sales for the year were $9.6 billion, while premium wine cask sales racked up $110 million.

Among the factors leading to this explosive growth is the value offered by premium wine casks: one cask holds the equivalent of four bottles, and on an equivalized basis, are approximately 40 percent less expensive than the average table wine.

“In today’s economy, consumers are seeking value with necessarily compromising quality, and this has contributed to premium wine cask success,” said Danny Brager, vice president, Beverage Alcohol at Nielsen.

Read the full press release here.

In its alcoholic beverage trends outlook for the 2008 holiday season, Nielsen notes a number of factors impacting consumer choices.

Restaurants And Bars Hurting

Consumers are going out to eat less often, as evidenced by a recent Nielsen survey, where two-thirds (66%) of fine dining patrons admitted they are going out less often compared to a year ago. Their sentiments were echoed by 65% of nightclub patrons, 55% of bar patrons, 59% of casino and resort patrons and 52% of casual dining visitors.

If they do dine out, some consumers order fewer or lower-priced alcoholic beverages. Other consumers trade down by visiting “fast casual” restaurants and quick service restaurants that may offer few or no alcoholic beverages.

“Given the importance of the holiday season to restaurants and bars, these establishments will need to pull out all the stops to lure consumer traffic back, using a variety of creative incentives as a hook,” says Hurst.

Incentives for Consumers to Drink At Home

Grocery stores, convenience stores and mass merchandisers, are using the on-premise vulnerability, and the lure of one-stop shopping, to their advantage. For example, grocery stores are targeting restaurant-goers with well-priced easy meal solutions and increasing their promotional efforts to encourage multiple purchases for shoppers who make fewer, but larger trips. Nielsen also expects to see a continued increase in online alcoholic beverage shopping, especially for wine, where legal to do so.

“Many stores are adding alcoholic beverages to their assortment, providing more opportunities for consumers to purchase alcoholic beverages at competitive prices,” notes Hurst.

Domestic Vs. Imports

With exchange rates unfavorable to the dollar, imports have been forced to raise prices, making it more difficult for these products to compete with domestic alcoholic beverages. For example, while both domestic and imported wines were growing at the same double-digit rates last year, domestic growth is now ahead of imports. Imported beers have also suffered, showing steady declines in the last six months. Consistent with the “localization” trend, craft beers and U.S. wines from outside California have been gaining share, and there are now more than 200 “micro-distilleries” across the country.

“In tough economic times, consumers are often biased toward national or local products, further enhancing the prospects for domestic brand growth, whose prices have remained relatively stable through the year,” says Hurst.

‘Tis the Season for Gift-Giving

Given that wine and spirits are common gifts during the holidays, Nielsen expects a rise in the purchase of alcoholic beverage as gifts this year, helped by the usual selection of special “value-added” packs. “Alcoholic beverages as gifts, especially those with value-added packaging, can fit most holiday shopping budgets,” Hurst offers. “Retailers should consider multiple store display locations to capitalize on impulse purchasing, as well as providing gift accessories nearby, such as bottle openers, gift bags, mixed drink party pack ingredients and glassware.”

Download the full press release.

A recent Nielsen survey of 21,000 U.S. households found that 35% plan to spend less this year than they did in 2007.  Just 6% will spend more this year, while 50% say they’ll maintain the same level of spending from 2007.

Lower-income households reported large reductions in their holiday spending — but so did high income households.  In all, 37% of lower-income households are expected to cut back on holiday spending, as will 34% of higher income households.

What’s Hot?

Necessities — rather than novelties and luxuries — are expected to drive holiday sales this year, according to Nielsen’s research.

Toiletries, baby care products, food items, and gift cards for groceries, gasoline, telephone, and car maintenance are expected to see strong sales.

Practical, cold-weather apparel — socks, fleece jackets, and undergarments — and household goods, like cook books, bed/bath linens, and kitchen supplies are also expected to sell well in November and December. 

Among more affluent consumers, fireplace accessories, kitchen ware, family games, and other at-home entertainments will dominate sales. 

As in past years, DVDs, video games, mobile phones, books, and wines and spirits are also expected to generate a fair share of holiday sales. 

Although many consumers are curtailing their spending on out-of-home food, alcohol, and entertainment, sales of movie tickets, which remain an affordable luxury, are expected to stay strong in November and December.

What’s Not?Department stores and retailers of electronics, toys, home improvement supplies, and office supplies are likely to feel the brunt of the economic slowdown as consumers shift their purchases to more value-oriented retailers.   

Where’s the Action?Online retailers, dollar stores, grocery stores, supercenters, mass merchandisers, and club stores are expected to attract the lion’s share of holiday spending, as consumers seek to minimize the number of shopping trips they make — and find good values.

View in depth Nielsen data on consumer holiday spending projections.

Read Nielsen’s holiday sales forecast.

Go behind the numbers: read NielsenWire’s Q&A with James Russo, co-author of Nielsen’s holiday retail forecast.

Read coverage of Nielsen’s findings in Adweek, Media Post, Promo, and the Rocky Mountain News.

Submit questions about the report to Nielsen forecast co-authors, James Russo and Todd Hale, by commenting below.

While growth rates varied significantly by region and within different alcoholic beverage categories, the results show that alcoholic ciders (+14%) and vodkas (+11%) showed the highest growth rates. 

“We are seeing a trend in certain markets, such as Russia and Poland, toward higher consumption of premium brands as consumers in those countries increase their spending power,” Richard Hurst, senior vice president, Beverage Alcohol, Nielsen, noted.  “Many emerging regions are becoming increasingly attractive to marketers of products in these categories, due to their strong year-on-year performance.”

Nielsen’s report, “What’s Hot around the Globe – Insights on Alcoholic Beverage Categories,” includes retail and on-premise alcohol sales trends from 53 markets throughout the world. 

View the full press release.

Read the report.