A new international survey from CGA reveals that the global on-premise is well placed to bounce back strongly from Covid-19.
As the global on-premise recovers from the turmoil of Covid-19, CGA’s Reach (Research & Analyse Consumers in Hospitality) survey has been positioned to help uncover clues as to how disrupted consumer behaviour in the channel will change and how trends will evolve, helping drinks suppliers to position themselves for growth. Pulling together consumer data from 24 leading markets for on-premise alcohol sales and responses from more than 22,000 on-premise users, the Reach survey spotlights crucial Covid-related trends and developments. It provides powerful insights into how consumers’ attitudes and habits have changed and the commonalities and differences in countries’ on-premises as they recover from the pandemic.
Here, CGA delves into a dozen of the key developments as a new normal emerges and what they mean for suppliers.
Highly engaged consumers
The positive news is that people are highly engaged with pubs, bars and restaurants, and eager to get back to them. Globally, four in five (81%) consumers typically visit the on-premise, and nearly half (46%) do so at least weekly. Two in five (41%) now plan to visit more often than they did in 2019 — far more than the number who will visit less (26%). This shows the pent-up demand for hospitality worldwide and the unique opportunities for drinks brands to drive loyalty as markets return. While these figures vary by country, the one constant remains a core set of consumers who visit frequently, regardless of market, and who are vital to target to recover on-premise volumes.
Importance of the on-premise
The re-emergence of the on-premise is a timely reminder of its huge importance to all drinks suppliers. Consumers estimate that they drink 40% of their total alcohol there, while more than a third (36%) typically try new drinks there. “The on-premise drives trial and trade-up, and now is the perfect time for suppliers to lean into it,” comments CGA group chief executive Phil Tate. “While there may be a temptation to cut back on-premise spend, the fact that it is a channel where consumers celebrate, explore and experiment means that investing now to win the recovery is a very savvy move.”
Hospitality at home
Lockdowns have led more and more consumers to demand hospitality experiences at home, and more than a quarter (27%) now say they order food and alcoholic drinks to be delivered at least weekly. There is a big opportunity for drinks suppliers here — especially in the beer, wine, soft drink and packaged cocktail categories, as well as the emerging ready-to-drink (RTD) and hard seltzer categories.
Four post-lockdown missions
CGA’s Reach research identifies four key stages as consumers return to the on-premise. Occasions start with the desire to reconnect with people at low-tempo, local catch-ups. Next comes the recapture of lost celebrations, often in city centres and in bigger groups. Third, is the reward stage, where experiences and exploration become bigger parts of the mix. Finally comes the re-establish phase, when consumers combine behaviours from the first three occasions with new Covid-related behaviours. “Understanding how these missions impact drinks choices and supporting outlets with activation that resonates with the needs of consumers will attract drinkers, who will be sure to take new habits with them when norms are re-established,” adds Tate.
Focus on open-air venues
In the early stages of recovery, many consumers have looked to open-air venues for safe and pleasurable experiences. This has worked to the advantage of spaces like Manchester’s Escape to Freight Island, Campo Argentino de Polo in Buenos Aires and the traditionally indoor Time Out Market in Chicago that has increased outdoor space. Initially deemed to be a short-term trend, consumer appetite for outdoor spaces has led to a more permanent change in the eating and drinking-out universe. Tate explains: “We are seeing returning investment flooding into the global on-premise, with much of it heading into Instagrammable, consumer-friendly outdoor areas. For drinks brands, it is crucial to map these new markets and work out ways to seed and nurture brands among a wide range of demographics.”
Social media more influential
Social media has been a growing influence on consumers’ choices for several years, but it will be even more of a focal point after Covid. Reach shows that half (51%) of 18 to 34-year-old on-premise users get ideas of where to go based on friends’ social media posts, and nearly as many (45%) upload images most or every time they go out. To capitalise, operators and suppliers need to work together to create social-media-worthy, Fomo (fear of missing out) inducing moments through environments, serves and more.
New booking mentality
Concerns about venues’ capacity and safety, alongside regulations, have led more people to pre-plan their drinking out visits. A total of 41% and 29% say they are now more likely to book tables for food and drink respectively than they were pre-Covid-19. This has been combined with an increased desire to plan on-premise visits, with 44% of global on-premise users more likely than previously to plan every detail of visits ahead of the occasion. “Consumers are increasingly looking to ensure that nothing is left to chance within on-premise occasions,” says Tate. “This has created important new opportunities to engage with consumers in advance of visits, with brands able to intervene and sell drinks or trade-up in advance.”
Polarisation
As they emerge from lockdowns, markets worldwide have displayed a new polarisation. A third (33%) of consumers now think it is more important than before Covid-19 that drinks are of high quality — and the same number (33%) that they offer good value. With a great deal of separation in how consumers have been impacted financially over the course of the pandemic, disposable incomes have diverged and this impacts drinks choices. For drinks suppliers, clearly positioning the portfolio across ‘good, better, best’ options will help consumers navigate choices, emphasising either value or quality credentials to avoid being caught in the middle.
Familiarity
Returning consumers are opting for brands they know and love. Nearly half (45%) say they have chosen only drinks or brands they are familiar with and trust, and while experimentation and new product development (NPD) will start to return, initially the focus from consumers has been on recognisable names. “Within our Reach survey, the countries where recovery was most advanced were those in which consumers had started to experiment in the on-premise once more,” adds Tate. “For drinks suppliers, big brands may be initial winners from the pandemic as consumers look to trusted choices, but as trial returns, there is a need to be on the front foot and revisit NPD to create excitement and drive new choices.”
Multiple ways to order
The pandemic has split the way people choose and order drinks into multiple directions: at tables, at bars and through digital menus. Within on-premise markets that were open during the time of the research, 52% of consumers preferred to use technology to book, order and pay, while the remaining 48% preferred more traditional staff interaction, highlighting a contrast in ordering styles that venues and drinks suppliers will need to navigate to impact decision making.
“The on-premise is now approaching an omnichannel sector and even omnichannel venues with multiple ordering techniques under one roof are impacting the path-to-purchase,” observes Tate. “While this disruption may prove challenging, it also offers opportunities for trade-ups, which we have seen in other sectors, notably the fast-food sector, where digital touchpoints and self-serve kiosks rarely miss a change to prompt a higher spend.”
A new locality
In the first few months of recovery, global consumers have focused on local venues and also local brands. A renewed sense of community has led many consumers to look to local options, which in turn impacted drinks choices. Brands and categories, such as British gin in the UK and French rhum in France, have seen uplifts in sales post-lockdown.
With two in three global consumers who were working from home during the research predicting that they would continue to do so post-pandemic, there may be a medium-term shift in occasions and venue choices. Tate says: “Many occasions will revolve around suburban and neighbourhood pubs, bars and restaurants, making it important for brand owners to understand where visits are shifting throughout the week, and for salesforce teams to be agile in the response to demand.”
An on-premise renaissance?
As consumer confidence grows, there is a real possibility of a repeat of the roaring 1920s, when post-war consumers bounced back with a determination to live in the moment and spend. This is reflected with two in three global consumers stating that when things are back to normal, they will go out at “every opportunity”. People have realised what they missed during lockdowns and a renaissance period for pubs, bars and restaurants might not be far away.
CGA’s Reach survey was conducted in Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, India, Ireland, Italy, Japan, Mexico, the Netherlands, New Zealand, Nigeria, Poland, Russia, South Africa, South Korea, Switzerland, Thailand, the UK and the US. To learn more about CGA’s Reach survey and CGA’s global capabilities, including the Outlet Index and On-Premise User Research in more than 20 countries, and how they can help to optimise suppliers’ strategies, email: [email protected]
