In these difficult times, clarity is critical to unlock on-premise success – Comment

It’s tough out there. After nearly a decade of steady growth in the on-premise channel, many beverage alcohol brand owners are struggling to find even the smallest crumb of comfort. Once-plump profits are thinning, while blossoming shoots of optimism are withering on the vine.

Bars, pubs and restaurants are closing in record numbers amid a cost of living crisis that’s landing a combination of blows to already struggling venue operators; increased costs are squeezing margins and a lack of disposable income is leaving consumers with tough decisions to make on how and where to prioritise spend.

What’s more, shifts in socialising and (the welcome) softening of once-entrenched stigmas around moderation are spawning new drinking habits which have given rise to the ‘sober-curious’ generation of youngsters visiting the channel, on the hunt for no- & low-alcohol options.

On top of all that, we are braced for a Trump US administration backed by a baying electorate with promises of minimum 10% tariffs on all imports into the world’s largest on-premise market.

In the past month alone, we’ve seen many of the multinational brewers miss their Q3 volume estimates, while some of the largest spirits brand owners have been moved to call out underperformance in their key markets.

For many in the alcohol industry, this is unchartered territory. Not since the financial crisis of 2008 have such existential questions been asked about the consumer appetite to eat and drink out and, by extension, the health of the on-premise channel. Indeed, many who have built successful careers in predominantly good times are now facing up to volatile market conditions and previously unencountered challenges, resulting in, at best, nervousness and, at worst, panic.

And yet, this is precisely the time when calmness and clarity are most vital. Just as in 2008, there will be winners and, by extension, losers – and it will be those who have kept cool heads and invested in strategy that will come out on top.

Despite the negative headlines, reasons for optimism remain. Speaking with those closest to the channel, the picture is far from gloomy; four in five venue operators tell us that they’re optimistic about their business prospects for the next 12 months, while nearly three in four hospitality professionals state that hospitality is a sector that provides good long-term career prospects.

Globally, as inflationary pressures ease, consumer confidence is on the rise and visits to on-premise venues are actually stable. While there remain more closures than openings, an influx of innovative operators are ensuring a level of excitement and interest in the channel, designed keep the punters coming back.

There remains a subset of enthusiastic consumers for whom eating and drinking out is a vital aspect of their lives and who think little of paying that little extra to ensure quality of drink and quality of experience.

However, that subset is decreasing in number and the opportunities are undoubtedly sparser than previously. It’s at this exact point that we, as marketers, strategists and brand owners, need to work both harder and smarter.

No longer will mass campaigns and regional approaches be effective. Nor will we see growth through generic activations. A tailored and targeted approach, built through clarity and an understanding of your target audience, is the only way to succeed.

If the US presidential election taught us anything, it’s that you are not your consumer and that you ignore your audience at your peril. By failing to properly listen to and address the needs of their traditional working-class, lower-income base, the Democrats alienated a key audience to devastating effect.

In a world where increasing polarisation, alongside distinct, differing and discordant viewpoints, are shaping people’s attitudes towards pretty much everything, it has never been more important to understand and engage with your core consumer – those high-frequency users and those superfans who, more often than not, determine the success of your brand.

Building a targeted strategy that resonates with this tribe of fans (including hospitality staff), based on where, when and how they drink out, alongside their views, interests and hobbies will stimulate wider interest, picking up momentum and driving growth in otherwise near-impossible trading conditions.

Similarly, not all venue types, occasions and even countries will be fertile ground. Picking specific battlegrounds in which the conditions are favourable and being relentless in a quest to understand, target and win is the only way forward.

Yes, it’s tough out there, but only a laser focus – with clarity and calmness – will see us succeed in the on-premise in 2025.