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A powerful combination of pandemic impacts and the cost of living crisis has changed Italian consumers’ habits in the On Premise—and despite promising shifts towards normality in recent months, pressures are set to continue through 2023.
CGA by NIQ’s latest On Premise User Study (OPUS) uncovers the effects of rising costs on behaviour and how suppliers can respond. It shows nearly two in three (62%) consumers have experienced significant increases in their household expenses, while 52% are now paying more for eating and drinking out. This inevitably threatens some people’s disposable incomes, and more than one third (34%) are now visiting the On Premise less frequently than they were three months ago.
Eating and drinking out remain priorities
However, half (50%) of consumers are visiting as frequently as they did. A core group of 16% are going out to eat and drink more often, while the majority of Italian consumers plan to maintain (36%) or exceed (35%) their current spend on eating and drinking out over the next three months, This raises hopes that spend and footfall may not be diminished quite as much as feared in the coming months.
It is encouraging to see that visits to the On Premise remain a priority. Half (52%) of consumers view them as affordable treats, while the same number say they are the treats they most look forward to. Asked about spending if their disposable income was reduced, 31% of consumers selected visits to cafes, bars and restaurants as their top priority—making them the activity that people most want to protect, ahead of things like buying clothing (28%) and domestic holidays (21%).
Understanding the risk of reduced spend
Nevertheless, it is crucial to understand the risk of reduced visitation levels in different consumer segments, and to maximise the engagement of the vital group of consumers who remain heavy spenders in the On Premise.
The OPUS research highlights some important differences in behaviour according to age. Consumers who plan to make more visits to bars and restaurants are typically younger adults in urban areas, while those going out less are likely to be within the 55+ age group. These people typically over index for no and low alcohol and soft drinks categories, and their reduction will be more apparent in the south of Italy.
Seeking value but trading up
Another big trend to watch is in the potential for some consumers to change their spending while maintaining frequency. Value plays a key role in deciding where to eat and drink, and it is likely to become even more pivotal.
In contrast, other consumers will reduce their visitation levels but increase their spend. Despite cost pressures, well over half (57%) of consumers say they are still likely to pay extra for a better quality drink in the On Premise. There is a big opportunity to tap into the market of people buying fewer drinks but opting for more premium ones when they do so. This emphasises the need for brands to correctly position themselves in the pricing ladder so they appeal to both those motivated by quality and those seeking value—plus those wanting a balance of the two.
Graeme Loudon, Managing Director, EMEA at CGA by NIQ, said: “Many Italian consumers are still willing to trade up their usual drinks choice—particularly in categories such as red wine, craft beer and Champagne—but only if they perceive their purchase to be worth the price according to criteria like the quality of ingredients and standards of service. Expert staff recommendations can help lead to these kind of premium purchases.”
“However, whatever the category, suppliers need to provide venues with the opportunity to stock brands that boast good upsell potential while ensuring profitability at the same time. CGA’s data and insights can help businesses adapt to shifting behaviours, identify the categories most likely to drive market share and minimise the risks associated with the areas that will be hit hardest by the ongoing cost of living crisis.”
Graeme Loudon, Managing Director, EMEA at CGA by NIQ, said: “Many Italian consumers are still willing to trade up their usual drinks choice—particularly in categories such as red wine, craft beer and Champagne—but only if they perceive their purchase to be worth the price according to criteria like the quality of ingredients and standards of service. Expert staff recommendations can help lead to these kind of premium purchases.”CGA by NIQ’s OPUS research provides a rich resource of data and insights that helps manufacturers, suppliers and operators interpret these key trends, answer category, channel, occasion and brand questions, and optimise sales and marketing strategies in Italy’s On Premise. The OPUS survey will continue to track consumer behaviour through 2023. To learn more about how CGA’s capabilities can help you win sales and share, contact Graeme Loudon at Graeme.Loudon@nielseniq.com
