January
The weekly Tracker showed a strong start to the year, with average sales in managed venues in double-digit year-on-year growth throughout January. However, comparisons were skewed by weaker trading in January 2022, when concerns about the Omicron variant of COVID-19 kept some consumers away from the On Premise. Peak weeks included 24% growth in the seven days to 7 January and a 13% upswing in the next week to 14 January.
February
Double-digit growth continued into the first half of February—thanks in part to the popularity of the Six Nations rugby tournament in venues showing live sport. However, with Omicron comparisons dropping out of the data, growth slowed and sales dropped below the levels of 2022 in real terms. There were signs that the cost of living crisis was tightening consumers’ spending, and rail strikes blighted footfall in city and town centre venues.
March
Trading struggled to match the levels of 2022 throughout March, with year-on-year sales behind in three of the four weeks. Poor weather and more strikes didn’t help pubs—though 4% growth in the final week helped to end the first quarter of the year on a brighter note. However, with inflation above 10%, year-on-year sales were significantly down throughout the month in real terms.
Categories
CGA’s data shows the mixed picture also applies to drinks categories in the On Premise. Year-on-year, the best performer has been wine, which has bounced back from a poor 2022, thanks in part to more older consumers returning to pubs, bars and restaurants after COVID. While some drinkers have been trading down their wine choices, category sales have been in growth in every week of 2023 so far.
Beer sales were in year-on-year growth in 13 of the first 16 weeks of 2023. The world lager and stout categories have taken share from standard lager and cask ale, helped by the Six Nations and football screenings. Cider sales, while dented by chilly weather, were in year-on-year decline for only four of the 16 weeks. Soft drinks had a solid start to 2023 as many consumers embraced ‘Dry January’, though growth has been more muted since then.
The Tracker shows trading has been toughest in the spirits category. There has been year-on-year growth in only three weeks this year, and double-digit declines in six. This is partly a result of tough comparatives with 2022, when many consumers were still celebrating the end of COVID restrictions with cocktails and shots. But it also reflects the squeeze on spending, which has led some consumers to trade down choices or switch to categories with lower price points like beer and wine. A move towards earlier dayparts, a dip in after-work occasions because of working from home and rail strikes are three more issues working against the spirits category.
Outlook
“The first quarter was something of a rollercoaster ride for drinks operators and suppliers,” says Jonathan Jones, CGA’s managing director, UK and Ireland. “It’s been encouraging to see that consumers remain very keen to drink out when they can, but soaring household bills are clearly leaving them with less discretionary spending. High inflation will make trading conditions tough throughout 2023, though a third Bank Holiday weekend in May will be a welcome bonus. In such a competitive market, it will be crucial for suppliers and operators to closely track sales and consumer trends and identify the opportunities for growth.”
“The first quarter was something of a rollercoaster ride for drinks operators and suppliers,” says Jonathan Jones, CGA’s managing director, UK and Ireland. “It’s been encouraging to see that consumers remain very keen to drink out when they can, but soaring household bills are clearly leaving them with less discretionary spending. High inflation will make trading conditions tough throughout 2023, though a third Bank Holiday weekend in May will be a welcome bonus. In such a competitive market, it will be crucial for suppliers and operators to closely track sales and consumer trends and identify the opportunities for growth.”
CGA’s Drinks Recovery Tracker monitors managed outlet sales of the drinking-out market, providing category, supplier and brand rate of sale performance. Suppliers and operators that want to track the recovery of drinks sales, benchmark performance or identify changes in trends and consumer preferences should contact jonathan.jones@cgastrategy.com.
