Off-trade Trends: Creating Value In The At-home Alcoholic Drinks Market

Published by: Datamonitor

Published: Jan. 9, 2008 - 74 Pages

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 caché

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

Datamonitor 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

Abstract

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

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.

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.

Reasons to Purchase

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.

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