CGA’s exclusive service, which provides expert analysis of out-of-home drinks trends across Australia, indicates that the average price paid for a 425ml glass of beer has increased by 67 cents or 6.2% in the last 12 months.
Prices for a 30ml serve of spirits—where taxes are much higher—have risen even further, by 93 cents or 8.7%. Since the start of 2022, beer and spirits prices have gone up by 10.5% and 11.8% respectively.
Price increases and the cost of living crisis have reduced the frequency of people’s visits to pubs, bars and restaurants. The latest edition of CGA’s Consumer Pulse Report, which surveys the habits of On Premise users, found that 43% of consumers were going out less often than usual. This has led to a -7.7% drop in spirits sales by volume in the 12 months to May. Beer, malt beverages and cider volumes have been more resilient with a year-on-year increase of 1.4%, suggesting that some consumers may be switching from spirits to beer—a category that is often perceived to offer better value for money. However, beer too is showing signs of pressure, declining -3.1 % in the more recent 3 months to May compared to the same period in 2023.
While sales volumes are falling, the On Premise remains a vital part of Australia’s economy and social life, employing more than 900,000 people according to the Australian Government’s Labour Market Update Report (Feb 2023), and it enables consumers to socialise, unwind and consume alcohol in a safe and controlled environment. CGA’s data also shows it is a crucial channel for drinks brands to build equity with consumers, with nearly half (45%) of Australians saying the most recent time they tried a new drink was in the On Premise. It highlights the need for suppliers and operators to work together to maintain the long-term stability and value of the sector.
CGA’s extensive breakdowns of price and sales data from the OPM service shows how the impact of inflation has varied from category to category in the out-of-home sector, including:
- Year-on-year price rises have been fastest in whiskey and tequila, at 1% and 9.2% respectively
- Japanese whiskey, cognac and mezcal are currently the three highest priced spirits in Australia—but their sales volumes dropped by between 5% and 11.5% in the last year
- Year-on-year sales of lower-priced spirits including vodka and golden rum have outperformed the category as a whole, as some consumers seek more value.
Sales are likely to be challenged further by a 2% increase in excise tax on beer, spirit and ready-to-drink products from 5 August. Australia has the world’s third highest level of taxation on alcohol, and consumers will now pay 71 cents and $1.25 in excise tax on a schooner of full-strength beer and whiskey on the rocks respectively. While the tax raises revenues and acts as a disincentive for alcohol abuse, it is also adding to pressure on consumers and On Premise businesses.
James Phillips, CGA by NIQ’s client solutions director – total liquor ANZ, said: “High inflation, the ongoing increases in alcohol taxes and pressure on consumers’ spending are creating a very difficult trading environment for many pubs, bars and drinks suppliers. In line with global trends, the spirits category has been hardest hit, with steep tax rises and people’s desire for value leading some of them to other categories or keeping them away from the On Premise altogether. With more tax increases imminent sales are likely to remain under pressure for some time, and spending will be increasingly polarised between premium and value drinks. With this in mind it’s more important than ever to understand the nuances of sales trends and identify the opportunities for growth, and our sales and consumer research solutions are the starting points for strategies that overcome the market challenges and achieve real-term growth.”
James Phillips, CGA by NIQ’s client solutions director – total liquor ANZ, said: “High inflation, the ongoing increases in alcohol taxes and pressure on consumers’ spending are creating a very difficult trading environment for many pubs, bars and drinks suppliers. In line with global trends, the spirits category has been hardest hit, with steep tax rises and people’s desire for value leading some of them to other categories or keeping them away from the On Premise altogether. With more tax increases imminent sales are likely to remain under pressure for some time, and spending will be increasingly polarised between premium and value drinks. With this in mind it’s more important than ever to understand the nuances of sales trends and identify the opportunities for growth, and our sales and consumer research solutions are the starting points for strategies that overcome the market challenges and achieve real-term growth.”
To learn more about CGA by NIQ’s On Premise Measurement solutions in Australia, and discuss support to understand trends at category, segment and brand level, click here and contact James Phillips at James.Phillips@nielseniq.com.
