CGA’s data has revealed financial strain among hospitality leaders who are impacted by wage, food, rent and energy cost rises in 2024. Cost challenges now result in the need for operators to review all parts of their cost base, including drinks, leading to range reviews seeking greater value from their distributors and brand partners. Two in five (41%) leaders of hospitality groups told CGA’s Business Leaders’ Survey earlier this year that they were reducing and rationalising their supply base, while another quarter (25%) were considering doing so.
This has put extra pressure on suppliers to retain their clients. Nearly a quarter (23%) of leaders had changed the routes-to-market of their drinks, and more operators are seeking to reduce (15%) their delivery partners than increase them (4%)—putting brands at risk of being de-listed.
Operators are closely reviewing the performance of categories, looking to optimise their range, and are therefore rationalising poor performing categories, and making space for growth categories. The Long Alcoholic Drinks (LAD) category is seeing the greatest churn, with 11% of leaders already changing their primary supplier. Significant numbers are planning to reduce their ranges of draught standard lager (16%) and packaged (10%) or draft (8%) cider. Gin range is being cut by even more leaders (22%), and a wave of celebrity-led new entrants has added to competition in this spirit.
The Business’ Leaders Survey also indicates what suppliers can do to support venues and keep brands in their ranges. Pricing is important, as 72% of operators say their partners could help them through more competitive pricing. But there are lower-cost ways to help out, including via staff training and support (32%)—which CGA’s Global Bartender Report has shown to be especially valuable among bar staff. Assistance with sustainable and environmentally friendly initiatives (32%) and offering more reliable and timely deliveries (23%) should be part of packages too.
CGA’s On Premise User Survey reinforces the importance of meeting consumer needs and protecting the quality of their visits. Consumers state when drinking out, value for money means a drink that is ‘good quality’ (42%), and a drink that is ‘worth its cost’ (38%), particularly in the beer category, while factors like innovation, excitement and visual appeal are more significant in cocktails.
Not all categories are contracting. With consumers increasingly focused on their health, more than a third of leaders plan to increase their range of no and low alcohol beer and cider (42%) or spirits (39%). Tequila (18%) is another growth opportunity.
Rachel Weller, Commercial Leader: GB & Ireland said: “Operators can’t afford to hold stock that isn’t delivering sales, and they know their range needs to meet the demands of their guests. Add in the intense competition for space, and it’s essential for suppliers to create strong sales stories that show why their brands deserve to be at the bar. It’s particularly important to strike the right balance of quality and value, to emphasise credentials on reliability and sustainability, and to target the categories where ranges are rising rather than falling. To beat rationalization, the top priority of all is to listen to what venues want and deliver the committed support they need.”
Rachel Weller, Commercial Leader: GB & Ireland said: “Operators can’t afford to hold stock that isn’t delivering sales, and they know their range needs to meet the demands of their guests. Add in the intense competition for space, and it’s essential for suppliers to create strong sales stories that show why their brands deserve to be at the bar. It’s particularly important to strike the right balance of quality and value, to emphasise credentials on reliability and sustainability, and to target the categories where ranges are rising rather than falling. To beat rationalization, the top priority of all is to listen to what venues want and deliver the committed support they need.”
CGA’s unique combination of research into the needs of consumers and leaders helps suppliers understand ranging needs, overcome threats and capitalise on opportunities. Bespoke analysis is available to support brand, category and channel level strategies. To discuss these and other CGA by NIQ solutions, contact the team.
