Off-Trade Drinking Habits: Exploiting New Consumer Behaviors in the Retail Market

As the off-trade has become an important issue for consumers generally, the influence it exerts on alcoholic beverage marketing has grown. Achieve sales growth by identifying how alcohol manufacturers are tapping into underlying consumers trends to drive sales growth. Enhance credibility during sales pitches by understanding the drivers of off trade drinking globally. Stimulate ideation and invigorate brands by learning from best practice examples with supporting consumer, product and market insight data.Enhance your market positioning and concept development efforts and reduce risk for new product launches and increase the chances of success. The off-trade is the winning channel benefiting from a confluence of societal, most notably convenience, legislative such as smoking bans in public places, and economic with the economic malaise affecting consumer spending. Exclusive Datamonitor research has revealed that price is a more important off-trade factor than it is in the on-trade and in core western markets, such as the Western Europe and North America, the economic recession has benefitted off-trade consumption. No longer can brand marketers rely solely on the on-trade to drive its brand equity strategies, increasingly the off-trade is emerging as the primary point of engagement with consumers, with packaging, food and alcohol pairing, and own label becoming more important.What are the key consumer drivers of the off-trade and how does it fit with a premiumization marketing strategy?How can the off-trade be harnessed to create a winning brand positioning? How can in-store shopper marketing activations be used to breakdown routine and familiarity which characterizes alcohol shopping behavior? How can the cross-over between packaging and new occasion targeting be most effectively leveraged? How can the cross-over between food and alcohol be most effectively harnessed?

Table of contents

OVERVIEW
Catalyst
Summary
EXECUTIVE SUMMARY
Consumer purchasing behavior is polarizing
Older consumers are the most frequent off-trade drinkers
The ways of brand building in alcohol are changing
Freshness is vitally important in CPG marketing as a whole, but not in alcohol
Packaging is a new frontier in the alcohol sector
INTRODUCTION
Off-trade behavior is influenced by macro-trends within individual countries
THE FUTURE DECODED
Trend: the development of the emerging markets is shifting the tectonic plates of the global alcohol sector
The economic situation in the emerging economies is very different to that seen in Western economies
Patterns within the global economy are tending to benefit off-trade consumption
Key takeouts and implications: consumer demand is polarized between the core developed markets and the emerging markets, and it is imperative for alcohol companies to align themselves accordingly
Trend: price is a key factor driving the off-trade's growth, but not the only one
In core developed markets, the on-trade is caught in a pincer between rising cost of business on the one hand and low consumer confidence on the other
The importance of price in alcoholic beverage choice varies significantly from country to country
In addition to price, legislation limits the on-trade's appeal
Contemporary lifestyles mean that consumers have less time to visit the on-trade, but also put pressure on off-trade retailers
Key takeouts and implications: the off-trade's dominance is here to stay, and it will become the primary point of engagement with alcohol brands for consumers
Trend: off-trade alcohol occasions continue to overshadow the on-trade
China leads in the number of off-trade occasions
There are strong country-specific nuances in the proportion of drinking occasions that take place in the off-trade
The number of off-trade beer consumption occasions is greater in China than in any other country
The UK has the greatest number of off-trade cider occasions
Consumption of flavored alcoholic beverages is highest in Russia and is growing
Younger consumers are driving wine occasions across countries
Spirits occasions are growing fastest in the emerging markets, but not Russia
Key takeouts and implications: with a few national exceptions, the off-trade is now the primary point of engagement with consumers, and brand manufacturers need to consider how to capture consumers in the off-trade channel
Insight: growing diversity in at-home drinking occasions is fueling consumers’ drift to the off-trade
Consumers are increasingly choosing to stay in and socialize at home
The at-home dining experience is changing
Switching occasion types from the on-trade to the off-trade has a notable impact on category consumption
Key takeouts and implications: success in a difficult market will be governed by connecting categories with consumers' new off-trade needs
Insight: consumer alcohol shopping habits vary significantly by country, often governed by the prevailing regulatory regime
In many countries the regulatory regimes governing alcohol sales are changing
Supermarkets have become established as key alcohol retailers
The growing importance of the supermarket channel is altering the dynamics of the alcohol market
The Internet is emerging as an important channel for the sale of alcohol
Key takeouts and implications: it is an industry imperative that manufacturers understand that routes to market are changing and align their marketing activities accordingly
Insight: gender and age play a distinct role in the opportunities within the off-trade sector
Men are more likely to drink alcohol, whereas women are more likely to abstain
Drinkers are likely to drink more frequently in the off-trade as they age
Aging populations have potential implications for the alcohol industry
The aging population is exerting an influence over the product mix in the off-trade
Key takeouts and implications: it is imperative to understand that older consumers are the key off-trade drinkers and to anticipate their needs
Insight: consumer price point behavior is changing, but this is very market-specific
Emerging markets are continuing to see consumers trade up
The consumer markets most affected by the global financial crisis are those where drinkers have looked to buy cheaper alcohol brands in the off-trade
New technology is making value-based purchasing easier
The price transparency offered by the Internet tips the balance in favor of consumers
Key takeouts and implications: in a globalized alcohol market it is imperative to have an understanding of consumer purchase behavior in different countries and align the price mix and marketing messages accordingly
Insight: gifting is an important element of the off-trade market on key occasions
Still wine and champagne are the alcohol categories most likely to be used as gifts
Gifting behavior tends to vary significantly by country
Key takeouts and implications: with differentiation becoming increasingly elusive, gifting provides a good route to a product premium, and one that alcohol manufacturers should increasingly capitalize on, taking into account national nuances
Insight: freshness is a key feature of the grocery market, but is one that off-trade alcohol is missing out on
Freshness is a consumer need in FMCG grocery retailing
More alcoholic beverages concept are offering freshness to the consumer
Key takeouts and implications: it is vital for alcohol manufacturers to understand what ”freshness” means to consumers by category to truly unlock its potential in alcohol
ACTION POINTS
Action point: incorporate freshness into the product positioning in the off-trade to unlock new shopper and consumption occasions
Action point: position alcohol as an ingredient in food preparation in consumer marketing campaigns
Follow the lead of CPG companies and explore alternative usages for alcohol brands in cooking
Action point: employ instore shopper marketing tactics to drive cross-sales and enhance consumers' drinking occasions
Embrace new instore merchandising strategies to add a point of differentiation instore
Cross-promote with other categories to add value in the retail market
Action point: new packaging formats should be embraced to unlock new opportunities in the off-trade
Harness the growing interest in sustainability to drive new packaging formats
Harness new packaging materials when shaping new product development
APPENDIX
Further reading
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
TABLES
Table: Total population (millions) across Europe, North America, South America, Asia Pacific, and the Middle East and Africa, 2004–14
Table: Overall off-trade alcoholic drinking occasions (millions) across Europe, Asia Pacific, the Americas, and the Middle East and Africa, 2005–15
Table: Proportion of all alcoholic drinking occasions that take place in the off-trade, across Europe, Asia Pacific, the Americas, and the Middle East and Africa, 2005–15
Table: Overall off-trade beer drinking occasions (millions) across Europe, Asia Pacific, the Americas, and the Middle East and Africa, 2005–15
Table: Overall off-trade cider drinking occasions (millions) across Europe, Asia Pacific, the Americas, and the Middle East and Africa, 2005–15
Table: Overall off-trade FAB drinking occasions (millions) across Europe, Asia Pacific, the Americas, and the Middle East and Africa, 2005–15
Table: Overall off-trade wine drinking occasions (millions) across Europe, Asia Pacific, the Americas, and the Middle East and Africa, 2005–15
Table: Overall off-trade spirits drinking occasions (millions) across Europe, Asia Pacific, the Americas, and the Middle East and Africa, 2005–15
Table: Consumer Survey: extent to which consumers use alcohol as a gift in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: level of satisfaction with the general direction of how things are going in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2009
Table: Consumer Survey: level of influence of price on choice of alcoholic beverage in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2009
Table: Consumer Survey: level of influence of health on choice of alcoholic beverage in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2009
Table: Consumer Survey: level of influence of brand name on choice of alcoholic beverage in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2009
Table: Consumer Survey: level of influence of habit/preferred brand on choice of alcoholic beverage in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2009
Table: Consumer Survey: level of agreement with finding it difficult to manage time and daily obligations in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: agreement with I am dining in (at home) with friends more than I used to in 19 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: preferred choice of alcoholic beverage by occasion, in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, 2010
Table: Consumer Survey: preferred alcoholic beverage of choice on having a relaxing drink at home with a meal occasion in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: preferred alcoholic beverage of choice on having a relaxing drink at home but not with a meal in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: preferred alcoholic beverage of choice on having or participating in an informal gathering with friends in your own home or someone else’s home occasion in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: preferred alcoholic beverage of choice on having a barbecue occasion in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers shop for alcohol online in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers shop for alcohol in drive-throughs in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers shop for alcohol in discount stores in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers shop for alcohol in bottle shops/liquor stores/off-licenses in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers shop for alcohol in supermarkets in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers shop for alcohol in warehouses in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers shop for alcohol in convenience stores in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers feel own-labels are good alternatives to named brands in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent of knowledge of wine in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: level of influence of "fresh" on food and beverage choices in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, 2010
Table: Consumer Survey: extent to which drinkers consume alcohol in the off-trade, Europe, Asia Pacific, the Americas, and the Middle East and Africa, by age within gender, 2010
Table: Consumer Survey: extent to which drinkers have chosen higher quality alcoholic beverages, Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country 2010
Table: Consumer Survey: extent to which drinkers have bought cheaper alcoholic beverages, Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country 2010
Table: Consumer Survey: extent to which drinkers have chosen alcoholic beverages on the basis of value, Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country 2010
Table: Consumer Survey: influence of packaging design on choice of alcoholic beverage, Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country 2010
FIGURES
Figure: It is imperative to have an understanding of the key drivers of off-trade consumption
Figure: The BRIC countries are driving sales in the global alcohol sector, whereas the European and North American markets are respectively declining and stagnant
Figure: The generally positive outlook in markets unaffected by recession is very different to that in other parts of the world
Figure: Price is a more important factor in choice of alcoholic beverage among weekly off-trade drinkers than weekly on-trade drinkers
Figure: "Price of a pint – Where does your money go?" in Ireland explains to consumers the elevated prices in the on-trade and how little of the price paid at the till the licensee receives
Figure: Price is the second most important factor influencing the purchasing decisions of consumers in the alcohol sector, but is low down the list in emerging markets
Figure: Popular stereotypes about smokers' propensity to consume alcohol are supported by global research findings
Figure: Consumers are generally more time-pressed in the emerging economies, although there are certain national exceptions
Figure: Just over one in 10 consumers are dining in with friends more than they used to, and there has been growth in consumers cooking from scratch
Figure: Consumers in emerging markets are showing the greatest propensity to dine in with friends
Figure: Wine is more likely to be consumed during off-trade occasions than on-trade occasions
Figure: Wine is the preferred beverage when having a meal at home, most notably in European countries
Figure: When consumers are participating in an informal gathering in the home, both beer and wine are popular, although the preference for spirits is at its highest on these occasions
Figure: Beer is the alcoholic beverage most likely to be preferred on barbecue occasions, with certain national exceptions to the rule
Figure: The profile of alcoholic beverage preferences is widest on occasions when consumers are having a relaxing drink not with a meal, with a more equal spilt between beer and wine
Figure: Alcohol is most regularly purchased from supermarkets, with most other channels used for occasional purchases
Figure: Deregulation of sales channels strongly favors supermarkets, reflecting the convenience and choice benefits consumers attribute to these outlets
Figure: The appeal of private labels is at its highest in Western Europe and in China
Figure: The pairing of a leading US craft ale with prime beef cuts adds a market differentiating benefit and generates a significant price premium
Figure: Consumers in the emerging markets would like to be better educated about wine, highlighting an opportunity for manufacturers to drive growth
Figure: Convenience is the primary reason why consumers shop online for their grocery products, indicating how important it is to sales in the grocery market
Figure: Online wine merchants in the UK are changing the nature of off-trade shopping habits
Figure: Older consumers and men are more likely to consume alcohol in the home environment
Figure: Levels of frequent alcohol drinking in the off-trade are at their greatest among older consumers
Figure: An equal proportion of consumers have traded up in the alcohol category as have traded down, but there are strong regional nuances to behavior change
Figure: Trading-up purchase behavior is most notable in the BRIC economies
Figure: The trading down in off-trade alcohol purchases is at its highest in Spain and Italy, reflecting the wider economic malaise affecting those countries
Figure: Purchasing of alcohol in the off-trade on the basis of value is greatest in Brazil, Italy, and Spain, although the drivers of value are increasingly multifaceted
Figure: To capitalize on the gifting opportunity, manufacturers must consider the categories of products most likely to used as gifts to be truly in touch with consumer needs on these important occasions
Figure: Gift packs add value to the overall product proposition and encourage consumers to trade up
Figure: The level of importance of packaging design associated with alcoholic beverages is greatest in the emerging markets
Figure: Freshness of product is particularly pertinent for the grocery market as a whole
Figure: Freshness exerts a high degree of influence over the CPG shopping behavior of the majority of consumers in all markets studied
Figure: Freshness is a multifaceted concept that has relevance in different alcohol categories
Figure: Whole Foods (left) and Duane Read stores (right) now offer draft beer in their stores, appealing to new consumption occasions
Figure: The marketing of brands as ingredients in recipes is gaining momentum in the CPG space, and is a opportunity that alcohol manufacturers should capitalize on
Figure: Developing new food products with alcohol can enhance consumption occasions
Figure: Sainsbury's has created a new merchandising strategy to drive sales of spirits by capitalizing on the growth in consumers looking to make cocktails at home
Figure: Pairing alcohol alongside other product categories instore can help to drive sales of complementary products (Sainsbury's left, Waitrose right)
Figure: Packaging is a vital communication tool, and alcohol manufacturers need to capitalize on this fact
Figure: The glass bottle of the 360 Vodka brand reinforces a premium positioning, whereas the PET on the Good Ol' Sailor brand does not
Figure: The French Rabbit wine brand uses a sustainability positioning to communicate to consumers the added value nature of its new sustainably packaged product
Figure: New packaging formats can open up new consumption occasions
Figure: Adopt aluminum bottles to enhance a modern contemporary brand image
Figure: Adding QR codes to packaging can add value to the overall product proposition

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By sector: Retail (in Off-trade), Consumer (in Trends), General drinks