“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.

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.”

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Although households are often assumed to be conventional families with children, most U.S. households do not have children under the age of 18.  In fact, households without children account for roughly 65% of all U.S. households. 

According to Nielsen, these households represent 77.5% of liquor and wine dollar sales, 74% of vitamin dollar sales, and 73.6% of floral/gardening product and tobacco dollar sales.

Other categories skewing to households without children include medications/remedies, pet food, books and magazines, and beer.

Nielsen’s Marketing Tip:
Retailers targeting households without children may want to promote these categories (above) with feature ads, displays, and product assortments. Manufacturers should consider cross-promoting and cross-couponing items in these categories.

Nielsen’s Dollar Volume Index identifies demographic groups that account for above or below average dollar volume purchases for a given product category.

Data for the index was collected via Nielsen’s Homescan consumer panel, a nationally representative sample of U.S. households that provides a stratified, proportionate, non-biased representation of the U.S. population. Homescan panelists scan all of their UPC coded purchases after every shopping trip, allowing Nielsen to capture their complete shopping and buying behavior.

Although they represent only 18.7% of U.S. households, high-income households represented 39.6% of wine dollar sales during the time period. 

Other categories skewing to households with high incomes include diet aids, liquor, and floral/gardening supplies.

Nielsen’s Marketing Tip:
Retailers targeting high-income households may want to promote these categories with feature ads, displays, and product assortments.  Manufacturers should consider cross-promoting and cross-couponing items in these categories.

Nielsen’s Dollar Volume Index identifies demographic groups that account for above or below average dollar volume purchases for a given product category.

Data for the index was collected via Nielsen’s Homescan consumer panel, a nationally representative sample of U.S. households that provides a stratified, proportionate, non-biased representation of the U.S. population.  Homescan panelists scan all of their UPC coded purchases after every shopping trip, allowing Nielsen to capture their complete shopping and buying behavior.

A troubled economy doesn’t necessarily mean declining wine sales, Danny Brager, vice president, beverage alcohol, Nielsen, writes in a recent Progressive Grocer column. 

Brager cites Nielsen research showing that, while almost 50% of consumers have reduced their overall spending, wine sales remain healthy.

Growth of premium wines has declined slightly, but the category remains strong overall — perhaps because consumers tend to view wine as an affordable luxury, Brager notes. 

If the current trend continues, he concludes, wine may emerge as a ”recession-resistant” category.