As CGA’s research has shown throughout 2019, it’s a tough market out there. With consumer demand broadly flat, competition fierce and people, property and food costs all rising, it’s important to maximise the opportunity from drinks sales. To do so, operators and suppliers need to optimise range and price—and those two things demand a deep understanding of consumers’ needs and behaviour, right down to postcode level.
Refine the range
CGA’s On Premise Measurement tool shows that no fewer than 3,675 new brands have launched into the on-trade in the last 12 months—an average of ten a day. In the last year alone, the average outlet has removed 23 brands and introduced 27 new ones, with premium gins, mixers and sparkling wine among the most popular additions.
The churn in brands has given operators huge choice, and selecting the right range is tough. CGA’s MATCH segmentation tools can help by breaking down the types of consumers on the doorstep of any venue, and tweaking the balance of drinks accordingly.
Getting it right is crucial because range heavily influences where consumers decide to go. For example, four in five (80%) craft beer drinkers say the range of craft beer brands stocked is important to their choice of venue. It’s increasingly difficult to build loyalty, but fine-tuning the range is a big first step towards it.
Make sure the price is right
Pricing needs a similarly scientific approach. Our data shows that on-trade alcoholic drinks prices have risen by just 2.9% in the last 12 months, which barely covers the rate of inflation, let alone increased input costs. There’s scope to increase prices—but only in the right places. Price is a brilliant lever for profits, but if it isn’t pulled properly then it’s hard to keep up with costs.
Again, a deep understanding of consumers and their expectations can help. Our MATCH tools reveal significant differences in people’s sensitivity to price: for instance, those in the ‘Trending Tastemakers’ category are willing to pay an average of £4.42 for a pint of lager, compared to just £3.21 for ‘Cost Conscious Champions’. Knowing the relative concentrations of these segments can establish the pricing sweet spots and maximize the cash in the till.