What are the most up-to-date trends shaping the out-of-home drinks market? David Martin hones in on six key dynamics using our own CGA Peach BrandTrack consumer insight
1 Graduate growth
Graduates are changing the face of the out-of-home drinks market and will continue to do so as they age, analysis of the first BrandTrack data on educational attainment reveals.
The surge in young people entering degree-level education over the past two decades has major implications for the out-of- home drinks market. About half our 18-34 survey respondents have participated in graduate-level education, compared with about one in three of those aged 65 and older: it’s a profound contextual shift in the core young adult market for out-of-home drinking, but one that is poorly understood.
Focussing our view on the 18- 34 market, we can say graduates are different, in three key ways: their frequency of going out, their propensity to experiment and their orientation to brands and categories. Graduates, unsurprisingly, tend to have higher incomes than others in the same age group. This enables them to eat and drink out more frequently.
Some 61% of 18-34-year-old graduates eat out at least weekly, compared with 51% of others of the same age. The respective percentages for drinking out of home are 51% and 39%. We estimate that graduates in this age group will therefore account for about 60% of market traffic—they have now become the majority.
Under-35-year-old graduates are also more likely to have tried new products in the past six months—keeping that higher income in mind—and they are more likely than their peers to say they like to try new/different drinks when out. This is particularly evident for micro-distillery spirits and craft beers, confirming graduates’ financial ability and desire to explore beyond mainstream offerings.
Their category consumption patterns are very different, too. They over-index strongly on more upscale product groups, such as wine, ale, gin, whisky—and most markedly on craft beer, where category penetration among 18-34-year-old graduates approaches twice the level among their contemporaries.
Clear brand preference differences are apparent: in beer, for example, they over-index strongly on brands such as Amstel and Peroni, while under- indexing on Carling and Foster’s. And because retail brands’ exposure to the graduate market varies, so these attitudinal and behavioural traits offer variable potential for marketers and operators.
The graduate share of retail brands’ drinkers within the 18-34 year old audience ranges from less than 50% for Frankie & Benny’s and JD Wetherspoon, to almost 70% for All Bar One. It’s reasonable to assume that these graduates will take much of their formative attitudes and behaviour with them as they age, thereby heralding significant future changes for category and brand performance.
2 Putting the sparkle back into wine
Prosecco sales are nothing short of sparkling—a modern phenomenon that promises to help rekindle interest in the wider wine category.
About one in five of home wine drinkers enjoy sparkling varieties out of home, rising to 30% among rosé drinkers. Our data shows sparking wine has a younger user profile, with penetration highest among the 35-44 age group. Put another way, the under-35s account for 24% of all out-of- home wine drinkers, but 30% of out-of-home Prosecco drinkers—and it’s Prosecco driving the category.
Our on-trade Brand Index data shows the value of Prosecco sales in the year to mid-July have increased by more than 75%, and there can have been few successes of this magnitude in the drinks market in recent years.
Prosecco is now drunk by 82% of out-of-home sparkling wine drinkers, clearly more than drink Champagne or Cava, and almost four times as many as drink Asti. However, the overlap and competitive impact is highest for Champagne, which is drunk by three quarters of out-of-home Prosecco drinkers.
Prosecco’s success is its wide appeal. It is true that 70% of home Prosecco drinkers are female, but women already account for 60% of out-of-home wine drinkers. And it has been very successful among more upscale groups: 61% of out-of-home Champagne drinkers are social grades ABC1, but the same percentage applies for Prosecco, and penetration rates are also very comparable among the higher income groups. About half of all out-of-home drinkers enjoy wine—a product that underwent its “democratisation” 20-30 years ago.
The legacy of that audience growth is seen in the profile of category usage, with the highest rates of out-of-home adoption seen among those older consumers who grew up with wine.
Only 38% of 18-24 year olds, and 44% of 25-34 year olds claim to drink wine out of home, compared with more than 50% of the over-45s. Younger adults are more likely to have drink-led occasions, and wine may compete less strongly against other drinks there, but with nearly six million UK adults aged 18-24, that penetration difference equates to more than 750,000 potential drinkers.
We can’t determine if sparkling wine is a “gateway” product for light-wine drinking, but we can say that more than 90% of out-of-home sparkling drinkers also consume red, white or rosé wine. On that basis, it is fair to say that Prosecco promises further potential for growth of the wider wine category.
3 Who’s (not) going out for a drink?
Attract young people with food, and the drink sales should follow, our latest data suggests.
We highlighted in previous rounds of BrandTrack research the scale of the population that doesn’t go out to drink—about one in five adults, equating to around nine million 18-75 year olds. Superficially, that sounds like a huge potential market, but beneath the headline several factors should be considered:
* Half of all the people who didn’t drink out in the past six months ate out. About one in five of them eat out at least weekly.
* Those who don’t drink out are clearly skewed towards the older, retired population, and to those with more modest household incomes: almost 40% of those who don’t drink out of home are aged 55 and older, are also retired, and have annual household incomes below £20,000 – a subgroup that is 60% female. This is a challenging subgroup for the industry to attract on the face of it, but half claim to eat out at least once a month – hardly a lost cause—and only one in five of them – only 4% of our total BrandTrack sample—hadn’t eaten out in the six months prior to interview.
* Perhaps more concerning is the numbers of the core young adult market that claim not to have gone out for a drink. Under-35s account for about one in six of the non-drinking-out population. More than one in ten of people in this core age band didn’t drink out in the past six months.
While we know alcohol consumption appears to be receding among the young, for demographic and cultural reasons, this raises some potentially big questions about the appeal of social drinking for a significant minority of young people. And it highlights the bigger importance of dining out for the younger generations.
While 83% of the under-35s have drunk out of home more than once in the past six months, 96% of them have eaten out more than once. In much the same way as the older, less affluent market, it might well ring true that if you feed them, they will drink.
4 New drinks—and the new gin drinker
Brits are a conservative lot with most preferring what they know and like but some retail brands attract more risk-takers than others and this is where age-old marketing techniques can encourage experimentation.
Innovation is the lifeblood of our industry, and marketers will always seek to find those elusive early adopters. But who are they? And how numerous are they?
Our latest BrandTrack research identifies that only 14% of out-of-home drinkers say they often like to try different or new drinks. A greater proportion, one in five, says they “never” do. When we ask if people have actually tried any new drinks brands in the last year, only 20% say yes. This paints a pretty conservative picture, of limited risk-taking but, perhaps, unsurprising given that out-of- home drinking is no longer a cheap pastime.
Those who have tried a new brand are more likely to be male, under 45—especially under 25—with higher incomes, living in London, and degree- educated. They are people who are more likely to be exposed to innovation, and with the funds to take a punt on something unknown.
Given this demographic skew, some retail brands have an innovation advantage. Almost half of Brewdog’s drinking customers say they tried a new brand in the past year, whereas in Wetherspoon—despite its clear commitment to new products—the proportion is nearer one in four. The figure falls to nearer one in five for some of the major pub dining brands, which tend to have an older audience.
Experimenters say—despite the fact we live in a social media age—that in-venue influences are most likely to influence their trial of new drinks. About 30% of triallists mention product visibility, bar-staff recommendation and trial/ introductory pricing. And the products most likely to be tried in the near future come as no surprise—craft beer, cocktail and sparkling wine lead the list.
Gin, however, is a category with considerable recent success in reinventing itself. About one in three gin drinkers say they started drinking the spirit within the last two years. Seventy per cent of them are under 35, 70% are ABC1s and 60% are degree- level educated. Their favoured brands are more likely to be premium, and they are more likely to drink them in non-traditional ways. They are also more likely than other gin drinkers to consume them at casual-dining brands, they are prepared to spend more, and they are more likely to say that the gin range on offer is an important influence on their destination.
This is still, arguably, marketing basics—putting the right product in front of the right people—but the new message might be to respect the role of the casual-dining sector in new product launches.
5 Little loyalty in craft
Craft beers face an uphill task to win loyalty to individual brands, our BrandTrack data shows, because it is a desire for variety and to experiment with something they’ve not had before that inspires drinkers of this category. Our Business Leaders Survey at the start of 2015 was unequivocal that this was the category most likely to succeed this year—cited by two out of three leaders.
When we ask consumers about “craft beer”, as they judge it, about one in five say they have tried it in the past six months. This is comfortably ahead of any other emerging category, such as virgin cocktails, craft cider or micro-distillery spirits.
Consumers’ self-defined view of craft beer will be relatively broad, but the profile of craft drinkers is clearly and unsurprisingly skewed towards higher incomes—the ABC1 groups and the degree-educated.
However, and as a consequence of these socio-economic biases, consumption is not skewed to young adults—this is a category with potential impact from young to old, although retail brands’ exposure to the craft customer does vary, favouring those exposed to the London market.
Motivations to try craft beer confirm the importance of novelty and variety: half of craft drinkers say the availability of an interesting new brand affects their decision to drink the category, and 78% agree that “where available, I often try craft beer that I have not purchased before”.
So there is little evidence yet of brand loyalty or brand dominance in the craft category: BrewDog’s Punk IPA is the most-mentioned favourite in our prompt list of 23 brands, but almost half of craft drinkers name “none of the above” as their preferred choice, and only one in five craft drinkers pledges loyalty to a small number of craft brands.
How does craft drinking relate to the core beer category? About 60% of craft drinkers also drink ale—mainly cask—and a similar proportion also drinks lager. But the relative impact is greater on the ale audience because there are about twice as many lager drinkers as ale.
Interesting distinctions emerge at brand level. Among all lager drinkers, 27% name one of Foster’s, Carling or Carlsberg as their favourite lager brand. That proportion is more than halved among craft beer drinkers who also drink lager. By contrast, if we focus on three premium- positioned brands—Peroni, Stella Artois, and Staropramen—brand preference is higher among the craft drinkers.
Given we also know that about half of draught standard lager drinkers are aged 45 and older, the challenge for the category’s brand owners is to reinvigorate its image—especially in the face of a new competitor, offering novelty and variety. It’s a situation with parallels in the eating out sector, but that’s a story for another day.
6 Soft spot
Ditch the sugar and spice it up—soft-drink consumers are weary of the boring bog standard and want something healthier and different—a lesson venues would be well advised to heed bearing in mind that more people consume soft drinks out of home than any other category we measure with the exception of wine.
Some 48% of out-of-home drinkers say they typically consume soft drinks in bars, pubs or restaurants. That’s almost 10 percentage points more than lager, and more than twice as many as drink ale. Non-alcoholic drink is an innovative area in the grocery market, but out-of-home consumption is still dominated by carbonated drinks, which more than half of out-of-home soft-drink users consume.
As an example of contemporary emerging styles, premium bottled drinks, such as elderflower presse, are drunk by only 13% of out-of-home soft-drink consumers, and this only rises to 17% among high-income drinkers. Plenty of evidence exists, meanwhile, to support a more imaginative approach. Two thirds of soft-drink consumers agree they would like to see a better range of soft drinks targeted at adults, and a similar proportion would like to see more healthy soft drinks on offer.
More pointedly, 60% agree that the soft-drink range on offer is often predictable and boring—a sentiment that is strongest among 18-24s and women. Consumers say “could do better” when it comes to the soft stuff– and with changing levels of alcohol consumption among the young, and tougher drink-driving limits already impacting business in Scotland, surely it’s time to improve?
How CGA Peach BrandTrack rankings work
Every three months CGA Peach BrandTrack surveys about 5,000 GB adults who eat and drink out – with the sample weighted to reflect the make-up and balance of the general population. Data from these tables comes from the most recent July 2015 round asking consumers a wide range of questions about their eating and drinking-out habits and specifically their attitudes to the 60 most used brands in the sector.
Questioning took place from 23 April to 1 May. Many leading brand owners already use the data to benchmark their performance against competitors. To discuss consultancy services, bespoke brand analyses or to obtain a full pack of key league tables contact Jamie Campbell at CGA Peach, email firstname.lastname@example.org