I’ve spent a lot of time recently thinking about the challenges facing the spirits category. It’s been a tough year; spirits sales are down by 11% year-on-year and 13% from 2019*. The gap is stark compared to beer, which is only 2% down.
Add spiraling costs, consumers moving to earlier dayparts, category switching, and a growing trend for moderation into the mix. We’ve gone from a period of strong growth to facing a perfect storm.
But instead of dwelling on the negatives, I see these challenges as an opportunity for suppliers and manufacturers to adapt, innovate, and rebuild spirits’ role in the On Premise.
And to do this, tackling the biggest issue first – declining footfall and spend.
Less bums on seats and less £££s in tills
There’s no way of sugarcoating how declining footfall in the On Premise has been compounded by the cost-of-living crisis throughout 2024. The good news is almost half of consumers still visit weekly. But the not so good news is a third are cutting back, and 29% are spending less per visit.
Couple these negative factors with our data showing the average cost of a double spirit and mixer has risen by 78p in the past year. That’s far more than beer (39p) or wine (45p). When you look at it in these terms, it is little wonder spirits are bearing the brunt of consumer uncertainty.
But it’s not just the pounds and pence making waves. Perceptions are also significant influence.
Over 40% of those drinking fewer spirits say it’s because they feel too expensive. That’s an important view of the consumer for the industry, especially those offering premium brands. We need to tackle this head-on, not just with promotions, but by rethinking how to demonstrate value.
The burning question is – how?
Exploring Solutions 
How do we encourage more frequent visits and make spirits feel worth the price? For a start, understanding the audience is key to recognising things have been better, but it’s not all doom and gloom.
Take younger, city-based, higher earners as a case in point. They’re going out more often, not less. Specifically, Gen Z is a shining light. Almost half (46%) of them plan to go out more, and they over-index for visiting experience-led venues like competitive socialising hubs, cocktail bars, and festivals.
This screams opportunity. Spirits brands can engage with this audience by matching the right brands to the right consumers on the right occasions.
Redefining Occasions
Is 3pm the new 9pm? Earlier dayparts are becoming more and more integral for On Premise visits. Beer and wine dominate these occasions. But there’s room for spirits, especially lighter, more sessionable options. For example, there’s a clear inclination for spritz serves, which appeal to the 30% of consumers interested in gin spritzes and 23% in vodka spritzes**.
At the same time, Gen Z is bucking trends by increasing their late-night outings. So, we can’t ignore cocktails and spirit mixers during traditional late-night occasions either.
These combined factors signpost the rewards that can be reaped when suppliers and operators work closely together, choreographing tailored offerings for mutual success across various dayparts.
Shifting the value narrative
Like we’ve already established, price matters. But value matters more.
When consumers understand what they’re paying for, be it premium quality, provenance, or an amazing experience, they’re more willing to spend. It’s about raising spirits’ worth in the eyes of the consumer, rather than slashing prices.
You’re already aware promotions can encourage trial, but exciting serves, alongside in outlet activation and communication is vital for driving consumer engagement.
Cocktails have been a long-term driver of excitement within the category, and were a big contributor to the post-covid boom in spirits sales, But with the performance of cocktails plateauing, it suggests a growing need for new innovations in serve strategy and an opportunity to redesign the menu to focus on growth categories such as tequila and rum.
Clearer communication on the price of finished drinks is also an important consideration; whilst we want to encourage trade up, entry level price points that don’t alienate consumers feeling the pinch will help to stop consumers trading down into lower priced categories.
A way forward
There’s no denying we’re at a crossroads for spirits. And yes, the challenges are real. But so are the opportunities. And we can turn the tide by focusing on high-value consumers, innovating for different occasions, and reframing value perceptions.
Ultimately, the question isn’t whether spirits can bounce back. It’s how quickly we adapt to make it happen. And that starts now.
CGA by NIQ provides a best-in-class suite of research to help On Premise stakeholders understand the latest spirits sales trends and consumer engagement with the category. It delivers in-depth analysis of channels, occasions, segments, pricing and much more, with bespoke brand level views for supporting individual strategies.
Contact Rachel Weller, CGA by NIQ commercial leader – GB and Ireland at rachel.weller@nielseniq.com to discuss solutions, or reach out to the wider team here.
*CGA by NIQ On Premise Measurement (OPM)
**CGA by NIQ Mixed Drinks Report 2024
