Over the past year CGA’s BeverageTrak has revealed a significant and continued drop in wine sales for the average On Premise venue. Whilst the On Premise is struggling across the board, partially due to consumers reducing their spending in the face of cost-of-living challenges and the lapping of post-COVID revenge spending mindset, the declines seen in wine are considerably stronger than those seen in spirits and particularly beer.
So why is wine doing quite so poorly in the On Premise? It’s a tricky question, and a problem made all the more impactful by a period of significant glut, where one would hope the traditionally lucrative On Premise channel bouncing back/opening up would help off-set some of those export market challenges for Aussie wineries. To get to the bottom of why wine is struggling to engage consumers out-of-home, we must look at the wider On Premise trends and the potential over-weighted impact these have on wine.
More options, more competition, faster trends: It’s no secret that the number of drink options available in the On Premise has increased, from hard seltzers and ginger beer to cocktails and craft beer, meaning greater competition for share of throat. Whilst this is also true in the retail space, see the regularity of NPD in RTDs and the growing shelf space for these as an indicator, the challenge is intensified in the On Premise, where footfall and spend are weighted more towards younger generations, who are driving the uptake of newer categories.
The data speaks for itself, those under 35 are the least likely group to drink wine in the On Premise (with only 31% stating they do so in a typical 3-month period) compared to 37% for 35-54s and 45% for over 55s. Compare that to cocktails, where over half of under 35s (51%), drink them in the On Premise, you start to see the recruitment challenges faced. It’s a similar story in the retail channel, where from NIQ’s Omnishopper we see a much over weighted share of sales coming from those over 55, compared to their size of consumer base.
What is it about wine that isn’t capturing the hearts and minds of younger consumers in the On Premise? Well firstly, their missions are different, they are the group most likely to visit for ‘high tempo drinks’ and least likely to visit for a ‘casual meal’, so could it be wine doesn’t meet the need states younger consumers are seeking on their priority occasions? Well, OPUS tells us that the top 3 need states consumers seek when choosing drinks during high tempo drinks are; to have fun, to socialise and to celebrate. Whilst for casual meals, they are; to enjoy, to relax and for a treat. Maybe wine is no longer fun and isn’t as socially suited as it once was.
But are there any pockets of hope in wine that are bucking the trend and successfully engaging younger drinkers? Younger drinkers align more closely with the likes of sparkling wine and rose, whilst the growing popularity of the spritz cocktail (over 50% of the ingredients being wine) show that not all hope is lost and there are still opportunities to engage them, but clearly these are evolving and the traditional approach to wine path to purchase, long menu lists and nuanced information may be a barrier for younger drinkers looking for an exciting drink to post on social media.
And in that menu space, a great way to look at what does work with younger consumers is to take the most important components of a cocktail menu as a steer on what might work with younger consumers in wine. Cocktail ingredients, pricing, pictures and tasting notes/flavour descriptions all in the top 5. What we saw as the least important was also interesting, things like options for food pairings, serve size and ABV all down on the list of influencers. Clearly then it is more about the taste, look and feel of the cocktail as opposed to the finer details. Could the information on wine menus be too complicated and confusing, making it harder for newer drinkers to confidently enter the category?
Now is the time to act for wine suppliers/marketers. Are you re-thinking your occasion strategy for the new-normal, modern day, modern consumer? Are you optimising menus to target new drinkers or re-engage prior drinkers? What is your innovation pipeline like, and do you have a specific On Premise innovation strategy?
To gain a deeper understanding of the Wine industry in Australia and unlock opportunities, get in touch with Tom Graham, Client Success – ANZ at Tom.Graham@nielseniq.com.
