1 Bev Al is a $198bn business
NielsenIQ’s research values the total beverage alcohol market for the year to August 2022 at $198bn. That’s split 55% to 45% between the On Premise and Off Premise, and represents strong growth of 14% from the previous 12 months. BeverageTrak shows velocity has run ahead of the last three years in nearly every week this year, though ticket count is down 3% on 2021. Outlet numbers have risen slightly, to a total of around 240,000 Off Premise outlets and 290,000 On Premise venues.
2 Consumers want experience and exploration
NielsenIQ’s consumer research consistently highlights consumers’ appetite for authentic experiences and exploration when they drink out. They want to discover new flavours and they’re increasingly focused on issues like wellness and sustainability as well. With CGA’s REACH survey showing half (50%) of US On Premise consumers seek drinks in bars and restaurants that are different to what they consume at home, it’s important to understand the motivations of visitors—and CGA’s new On Premise segmentation can help to pinpoint nuances in needs.
3 Imported beer’s share is up, craft is down
Beer sales totalled $89bn in the year to August—15% more than in the previous 12 months. Price increases and promotions mean the beer market is on track for a strong end to the year. Segments that have gained share in the On Premise include imported and domestic premium beers, while craft beer has lost a little of its split.
4 Hard seltzers reach an equilibrium
After several years of rapid growth, hard seltzers’ share of On Premise sales has stayed steady this year, and it has dropped in the Off Premise. This is still a significant part of the market, but some drinkers may now be looking for something new.
5 RTDs are ready to grow
The Ready to Drink (RTD) segment is still relatively new in the On Premise—only 16% of consumers say they have purchased one recently—but their convenience and hygiene accelerated take-up during COVID-19. Spirits-based cocktails and flavoured malt RTDs have both trended well in 2022. But with lots of new products arriving on the market, suppliers will need to innovate to earn their place on crowded shelves. Work is also needed on pricing structures and consumer education.
6 New impetus is needed to revive wine
Growth in the wine segment has been much slower than beer at 6%, and it lost a percentage point of total bev al sales in the year to August. In bars and restaurants there have been notable shifts away from whites to reds, though Champagne remains strong for celebratory occasions. In the Off Premise we are approaching a make-or-break point, with innovation and education now sorely needed to encourage trial by younger adults. The majority of declines has been driven by wines costing below $15, as value consumers gravitate towards RTDs.
7 Tequila and premium are powering spirits
Some of wine’s sales have been lost to spirits, which generated 18% dollar growth in the last year. There has been exceptional growth in the On Premise lately, and well over two thirds (71%) of spirits sales now come here. Tequila has been the star performer with a share that is now only just short of whiskey, while more than two thirds (69%) of total spirits sales are from premium brands. In addition, Tequila accounts for nearly a third of On Premise total Spirits value in California. CGA’s enhanced OPM methodology allows brands to analyse and track performance across 15 new individual states, exploring the nuances that come with market and channel breaks.
8 Cocktails continue to flourish
Rum is another spirits standout, thanks in large part to its popularity in the still-thriving cocktail market. BeverageTrak shows the average On Premise outlet generated 17% more cocktail revenue this year than last, and the average price point has reached $12—a dollar up on last year. Cocktail sales tend to drive higher overall checks as well.
9 Inflationary pressures are rising
Inflationary pressures and growing household debts are mounting, though Bev Al categories and their consumers are more resilient than most. CGA by NielsenIQ’s OPUS research shows core consumers remain keen to prioritise the On Premise for their spending, and three quarters (76%) say they will spend more or the same money in bars and restaurants in the next three months as they did in the last three—often because they will be enjoying more treats and special occasions. This backs up consumers’ impressions of the On Premise as a place to find affordable luxuries.
10 There’s headroom in 2023 for sub-premium beer, non-alcohol and more
These treat and celebratory occasions are going to drive more premiumisation in 2023. But we are also likely to see sub-premium beer do well as some drinkers’ disposable incomes are reduced. Other likely growth areas for 2023 include non-alcoholic products, big soda and energy drinks and brands that can emphasise functional attributes as well as flavours
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NielsenIQ and CGA’s unrivalled suite of sales measurement and consumer research services help unlock actionable insights into these and many more trends in the US bev al industry. To learn more, contact Andrew Hummel, CGA by NielsenIQ client solutions director for North America, at andrew.hummel@cgastrategy.com.
