On-Trade Alcoholic Drinking Trends: Differentiating consumer on-trade drinking occasions to capitalize on value generating opportunities

As the off-trade has emerged as the primary channel of engagement between brand and consumers, the on-trade’s role in brand building and in sales generation has had to change. On-trade exclusives; targeting under-represented on-trade demographic groups; harnessing the power of social media; and making the on-trade experience both interactive and experiential will be vital going forward.

“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 differing drivers of on trade drinking globally” “Stimulate ideation and invigorate brands by learning from best practice examples from the beer, wine and spirits segments" “Enhance your market positioning and concept development efforts and reduce risk for new product launches and increase the chances of success”

The off-trade dominance across most markets presents a dilemma due to the value generation advantages that on-trade sales present and the fact that the traditional routes to market for new products are through that channel.

However, marketers must consider that the on-trade still presents the best way to make an impact in the market and achieve brand differentiation (particularly in a controlled bar environment where the product can stand out from the competition), which can be followed by a retail roll-out.

What are the key consumer drivers of the on-trade and how does it fit with a premiumization marketing strategy? How can the on-trade be harnessed to create a winning brand positioning? How can the tendency for experimentation, a key characteristic of on-trade behavior, be harnessed? How can the cross-over between packaging type and venue type be harnessed to drive brand differentiation?

Table of contents

EXECUTIVE SUMMARY
•There is a contrasting global picture for the fortunes of the on-trade
•The fortunes of LDA–24-year-old consumers is constricting the on-trade's appeal
•Consumer on-trade needs are becoming increasingly polarized
•The shift to alcohol consumption in moderation is working to the detriment of the on-trade
•Older consumers and female drinkers remain target consumer groups for the on-trade
•Consumer dynamics are changing in the restaurant sector
•Premiumization is the key way forward for the on-trade in core developed markets
•Exclusivity, interactivity, and connectivity must be harnessed in the future

THE FUTURE DECODED
•Introduction
?On-trade visits have been harmed by a confluence of trends within individual countries
?The on-trade hits the sweet spot in "experiential" marketing
?Embracing experiential marketing is the key to on-trade success
?Congruency is key to encouraging consumers to pay more for a brand
•TREND: on-trade alcohol occasions continue to be overshadowed by the off-trade
?China leads in the number of on-trade occasions
?Beer occasions are emblematic of the changing fortunes of the on-trade
?The UK has the greatest number of on-trade cider occasions
?Consumption of flavored alcoholic beverages is highest in Russia and is growing
?Spirits occasions are growing fastest in the emerging markets but declining quickest in Russia
?Key take-outs and implications: it is vitally important that manufacturers monitor the changing nature of the on-trade market and selectively tap into the category opportunities that are present
•TREND: price is a key factor influencing channel drinking behavior, but not the only one
?In core developed markets, the on-trade is caught in a pincer between rising business costs on 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
?Key take-outs and implications: the off-trade's dominance is here to stay, and the on-trade will no longer be the primary point of engagement with alcohol brands for consumers
•TREND: the development of emerging markets is shifting the landscape of the global alcohol sector
?The economic situation in the emerging economies is very different to that seen in Western economies
?Patterns of consumption in emerging markets vary significantly and are influencing developments in core Western markets
?Key take-outs 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: urbanization is emerging as a key driver of on-trade visiting
?Younger consumers are migrating to cities
?The process of urbanization is driving the on-trade's development
?Key take-outs and implications: in capitalizing on the urbanization trend in the on-trade, alcoholic drinks companies must consider a wide number of cultural issues to be truly in touch with the urban consumer
•INSIGHT: the nature of occasion types dictates consumption patterns and preferences in the on-trade
?Category consumption patterns are strongly influenced by national drinking preferences
?Key take-outs and implications: understanding the cross-over between the suitability of alcoholic beverages for different drinking occasions and national drinking preferences is an imperative to effectively unlock the opportunities of on-trade occasion-based targeting
•INSIGHT: restaurants have high visiting rates owing to their wide consumer appeal, but local pubs and bars are visited the most regularly, a consequence of the dominance of informal frequent occasions
?Restaurants are the most important venue type, highlighting the importance of food to the on-trade, although there are some notable exceptions to the rule
?Restaurant spend is typically higher value and highly sensitive to the prevailing economic conditions
?The decline in fine dining occasions will detrimentally impact the top end of the alcoholic beverage sector
?The casual dining element of the market is growing and will exert influence over more mid-priced brands
?Fast food outlets are subject to slightly different consumer behavior
?Alcohol can provide a useful way of differentiating the fast food experience
?Key take-outs and implications: it is imperative to have a nuanced understanding of the structure of the on-trade within individual markets to fully understand and unlock the often niche growth opportunities
•INSIGHT: On-trade visiting behavior shows a strong age-related consumption pattern, with LDA–34s the key on-trade consumer group
?Younger age groups are declining in importance to the overall population mix
?Younger consumers are more likely to be unemployed with the onset of the global financial crisis in developed markets
?Key take-outs and implications: one of the key consequences of the reliance of the on-trade on younger consumers is the necessity to grow the on-trade's appeal among older consumers
•INSIGHT: The historical legacy of men being the key on-trade visitors continues, despite efforts to increase its appeal among women
?Men are more likely to drink twice a month in the on-trade in most markets
?Female drinkers are more likely to visit restaurants than other venues
?Key take-outs and implications: it is imperative for the alcoholic beverage sector as a whole to have an understanding of the needs of women in the on-trade
•INSIGHT: heavy or sessional drinking is a feature of consumer drinking behavior that is more strongly associated with the on-trade
?Younger male consumers are the most likely to "binge" drink
?Consumers in South Korea are most likely to consume five drinks or more
?Key take-outs and implications: the switch away from heavy drinking behavior is detrimental to the on-trade but can also open up new target occasions
•INSIGHT: there is an element of polarization in consumer spend evident in on-trade purchase behavior
?Consumers in emerging markets are the most likely to trade up
?Trading down behaviors tend to be most prevalent in developed markets
?Where to target consumers is the key to unlocking polarizing behavior
?National distribution networks often dictate the point at which consumers make their brand choice
?Key take-outs and implications: understanding how the economic situation is influencing consumer behavior is vital in addressing and anticipating polarizing consumer behavior

ACTION POINTS
•ACTION: develop more exclusive on-trade propositions, so that the experience is irrefutably different from the off-trade
?Limit the availability of brands or certain variants to the on-trade to drive exclusivity
?Make on-trade concepts time-limited to achieve "a get it while you can" approach among consumers
?Tie in with other areas of consumer leisure spend
•ACTION: make interaction and experimentation a central part of the on-trade experience for consumers
?Use brand ambassadors to encourage younger consumers – core on-trade visitors – to experiment
?Make interactivity a key part of the on-trade experience
•ACTION: develop an on-trade offering that meets the needs of under-represented consumer groups (with food a central element to that)
?Closely monitor trends in the food market and develop a significant food offering that appeals to women and older consumers
?Develop new beverage and in-store concepts which have female appeal
?Closely monitor hip urban bars, as they are often the breeding ground for new ideas
•ACTION: harness social media in all its forms to drive footfall into on-trade establishments
?Select the optimal social media platform based on a campaign's marketing objectives
?Harness social media to target under-represented groups
?Embrace mobile marketing, as it is a perfect fit for on-trade consumption
?Align with the photo-sharing trend to encourage consumers to tag brands in their pictures
?Develop an online ordering tool to make takeaway services more accessible for consumers

APPENDIX
•Secondary Sources
•Further reading
•Ask the analyst
•Disclaimer

TABLES
•Table: Overall on-trade drinking occasions across Europe, Asia Pacific, the Americas, and the Middle East and Africa (millions), 2005–15
•Table: Overall on-trade beer drinking occasions across Europe, Asia Pacific, the Americas, and the Middle East and Africa (millions), 2005–15
•Table: Overall on-trade cider drinking occasions across Europe, Asia Pacific, the Americas, and the Middle East and Africa (millions), 2005–15
•Table: Overall on-trade FAB drinking occasions across Europe, Asia Pacific, the Americas, and the Middle East and Africa (millions), 2005–15
•Table: Overall on-trade wine drinking occasions across Europe, Asia Pacific, the Americas, and the Middle East and Africa (millions), 2005–15
•Table: Overall on-trade spirits drinking occasions across Europe, Asia Pacific, the Americas, and the Middle East and Africa (millions), 2005–15
•Table: Total population across Europe, North America, South America, Asia Pacific, and the Middle East and Africa (millions), 2004–14
•Table: Urban population as a percentage of total population, by country, 2005 –15
•Table: Mid-year population of 20–34-year-olds, as a percentage of total population, 2005–15
•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,
•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,
•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,
•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,
•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,
•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,
•Table: Consumer Survey: preferred alcoholic beverage of choice by occasion in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: preferred alcoholic beverage of choice on having a relaxing drink in a bar, restaurant, or pub when eating in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: preferred alcoholic beverage of choice on having a relaxing drink in a bar, restaurant, or pub but not when eating in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: preferred alcoholic beverage of choice on having a high-energy night out with friends in a pub, bar, or restaurant in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: frequency of venue visiting in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: twice monthly venue visiting in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, by venue type,
•Table: Consumer Survey: frequency of restaurant visiting accross 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa,
•Table: Consumer Survey: changing eating habits at fine dining restaurants in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: changing eating habits at casual dining restaurants in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: changing eating habits at fast food restaurants in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: appeal of fast food outlets selling alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: appeal of coffee chains selling alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: on-trade venue visiting in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by age,
•Table: Consumer Survey: frequency of visiting local pub/bars to drink alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: frequency of visiting city center pub/bars to drink alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: frequency of visiting restaurants to drink alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: frequency of visiting sports/leisure venues to drink alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: frequency of visiting nightclub venues to drink alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: frequency of visiting cafés to drink alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: frequency of visiting KTV/karaoke clubs to drink alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: frequency of drinking outdoors in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: number of alcoholic beverages drunk when alcohol is usually consumed, in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa,
•Table: Consumer Survey: number of alcoholic beverages drunk on a weekend night when alcohol is usually consumed, in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, among weekly on-trade drinkers,
•Table: Consumer Survey: number of alcoholic beverages usually drunk on a weekday night when alcohol is usually consumed, in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country, among weekly on-trade drinkers,
•Table: Consumer Survey: changing approach to choosing higher quality drinks when drinking in the on-trade over the past six months, in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: changing approach to buying cheaper alcoholic drinks when drinking in the on-trade in the past six months, in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: approach to how alcoholic drinks are chosen when drinking in the off-trade and on-trade in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa,
•Table: Consumer Survey: approach to how alcoholic drinks are chosen when drinking in the on-trade in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country,
•Table: Consumer Survey: appeal of ethically sourced alcohol in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: appeal of alcohol-free beverages for adults in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,
•Table: Consumer Survey: appeal of lower-alcohol versions of existing products in 18 countries across Europe, Asia Pacific, the Americas, and the Middle East and Africa, by country and gender,

FIGURES
•Figure: It is imperative to have an understanding of the key drivers of channel consumption
•Figure: In capitalizing on opportunities in the on-trade, the alcoholic drinks industry must tap into the growing desire for experiences to be truly in touch with consumers
•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: 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: The Absolut City series and the Carlsberg Copenhagen brand highlight how pertinent urban areas are now in global marketing activities in the alcohol sector
•Figure: It is vital to recognize that consumers' alcoholic beverage drinking patterns are occasion-driven
•Figure: The consumer preference for wine at on-trade meal occasions is greatest in Western Europe, highlighting the strong cultural associations between food and wine in Europe
•Figure: The preference for beer on non-food on-trade occasions is greatest in Western Europe, highlighting its easy drinking nature
•Figure: Spirits are most associated with up-tempo on-trade occasions, especially in India where whisky consumption is notably prevalent
•Figure: Restaurants are the most likely to be visited at least twice-monthly, whereas local pubs and bars are the most likely to be visited on at least a weekly basis
•Figure: The propensity to visit restaurants tends to at its hardest in the emerging markets although there are certain national exemptions to the rule
•Figure: As a consequence of the global financial crisis, fewer consumers are visiting fine dining restaurants more frequently than mid-scale or fast food restaurants
•Figure: Consumer tendency to visit fine dining restaurants more is greatest in the emerging markets
•Figure: Casual dining is a growth element of the foodservice sector
•Figure: India and South Africa stand out as two countries where greater accessibility has driven an increase in consumers visiting fast food restaurants
•Figure: Consumers in Brazil, India, and China have the greatest preference for coffee outlets selling alcohol
•Figure: Consumers in China and India have the greatest preference for fast food outlets selling alcohol, although interest is also high in Italy, Singapore, and Brazil
•Figure: Younger consumers aged LDA–34 are the most likely to consume alcoholic beverages in on-trade venues
•Figure: Youth unemployment (15–24) has soared since the onset of the global financial crisis
•Figure: Popular gender stereotypes about the propensity to consume alcohol are supported by global research findings
•Figure: Men are more likely to drink in the on-trade than women, although there are certain national exceptions to the rule
•Figure: The importance of restaurants in attracting women to the on-trade is particularly important to the alcoholic drinks industry
•Figure: The propensity to usually drink five drinks or more is greatest in the on-trade
•Figure: Popular gender stereotypes about the propensity to binge drink are supported by global research findings
•Figure: The propensity to binge drink in the on-trade at the weekend is most notable in South Korea
•Figure: Although an equal proportion of consumers are trading up and looking for cheaper brands, there are strong differences both between and within regions
•Figure: Consumer attitudes to trading up are at their hardest in emerging markets
•Figure: Consumers are most likely to choose cheaper brands in those countries that have been negatively impacted by the global financial crisis
•Figure: Drinkers are more likely to choose what they want to drink when in situ in pubs, bars, and restaurants than in grocery outlets for when drinking at home
•Figure: There are strong regional variations as to when in the decision-making hierarchy consumers actually decide which brands they should choose
•Figure: Japanese spirit manufacturer Suntory limits brand distribution to the on-trade to maintain exclusivity and a high price tag
•Figure: Developing bar-specific alcoholic beverages can pull consumers into that establishment
•Figure: On-trade-only variants help create an effective brand architecture that is extremely influential in strategic brand planning
•Figure: The use of unique packaging stands out as a definitive trend in the differentiation of on-trade specific variants
•Figure: Pop-up bars and restaurants, due to their time-limited nature, create an element of exclusivity
•Figure: A number of alcohol brands have developed a strong association with film to connect with consumers' wider interests and target lower-tempo, more sophisticated on-trade drinking occasions
•Figure: QR codes provide notable opportunities to entice consumers into on-trade establishments and make the experience truly interactive, to encourage experimentation
•Figure: In capitalizing on the female opportunity in the on-trade, alcoholic beverage manufacturers must consider a wide array of lifestyle issues to be truly in touch with female drinkers
•Figure: The appeal of ethical alcohol consumption emphasizes the contrast between male and female preferences in alcoholic beverages
•Figure: Encouraging different drink sizes entices consumers to take a "less of the best" approach to consumption, reaching out to new consumer groups
•Figure: Social media, when effectively harnessed, can generate a high return on investment for quite a limited initial outlay
•Figure: Patron Tequila has a web-based club, Patron Social Club, using its own social media platform as part of an added-value-led marketing strategy
•Figure: Chivas Regal engages consumers by encouraging them to visit bars and check-in to gain points redeemable for cocktails made with the brand
•Figure: Corona Light tapped into the trend for photo-sharing, encouraging those who "like" them on Facebook to share an image with them projected onto a billboard in Times Square

Related research categories

By sector: General alcohol, Trends, Consumer (in Trends), General drinks