On the surface, the outlook for on-trade alcoholic drinks is not a positive one. A cautious consumer spending mindset and changing priorities mean people are going out less frequently than in the past or drinking less when they do. Elevated input costs are adding to the industry’s difficulties. Yet, demand still calls for memorable experiences and spaces to connect – perhaps now more than ever. On-trade spending goes beyond simple purchase transactions, underscoring the nature of opportunities.
This report comes in PPT.
The last few years have illustrated the vulnerability of on-trade alcoholic drinks to consumer economising efforts. The post-pandemic resurgence was short-lived, and volumes are under immense pressure from elevated living costs, which are driving a reduction in purchases as well as a shift to at-home occasions. Global on-trade volumes stand 10% lower than five years ago.
The erosion of on-trade alcohol in favour of retail is expected to persist, driven by economic uncertainty and a growing preference for out-of-home social events in which alcohol plays a secondary role. Nevertheless, the on-trade’s importance to value generation, product launches, and brand outreach means that a narrow focus on retail alone risks missing the big picture.
With a cautious approach to spending now embedded in the consumer mindset, on-trade visits are seen as a luxury. Venues are grappling with their own input cost pressures so consumer prices will remain high. Ultimately, the on-trade cannot compete with retail on price anyway. Finding ways to add value and justify the cost will therefore be key.
Value will be added by curating memorable occasions that cannot be replicated at home. The possibilities range from activities, games, and tech-focused concepts, to simple but seamless drinking experiences in inviting settings. Dividing spaces can effectively broaden appeal, while, alternatively, an environment tailored specifically to suit core consumers can build loyalty.
In-person connections and communities are the foundation of on-trade demand, and that need is only accentuated by the online nature of modern life. Championing on-trade spaces as community hubs – that foster offline connections through shared identities or interests – can both attract customers and build positive associations for venues and brand owners.
Alcoholic drinks is the aggregation of beer, wine, spirits, cider/perry and RTDs.
See all of our definitionsIf you purchase a report that is updated in the next 60 days, we will send you the new edition and data extraction Free!