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Special Report: Tracking On-Premise Drink Trends

December 9, 2009 By: Donna Hood Crecca Night Club and Bar Magazine


Bars Outperform Other On-premise Segments at the Close of the Third Quarter

A quick glance at the numbers on these pages could certainly drive one to reach for a drink, and possibly a second immediately after. But take a closer look before doing so; some interesting trends and opportunities are lurking in our second round of data from GuestMetrics. The report, provided exclusively to Nightclub & Bar by the Leesburg, Va.-based firm that tracks on-premise spirits, wine and beer sales via operator point-of-sale data, reflects sales from January through September of this year at more than 2,800 establishments in six markets.

The first trend that emerges is that “bars are the best performing segment,” when compared to casual dining and fine dining outlets, says Tammy Posten, COO of GuestMetrics. The bar segment, which includes nightclubs, was trending down 7 percent nationally — meaning in all six of the markets tracked — for the nine months ending Sept. 30. That represents a slowing rate of decline; bars were down 11 percent for the first six months of the year.

Total beverage alcohol sales in all segments — bars, casual dining and fine dining — held at -17 percent, with casual dining declining 14 percent and fine dining declining 23 percent for the nine-month period, compared to -12 and -21 percent for the first six months of the year for casual and fine dining, respectively. Posten attributes the slower rate of decline among bars to two factors: seasonality and promotions.

“Bars traditionally fare better during summer months, and we’re seeing bars and nightclubs running a lot more promotions in the summer months and more beverage promotions overall than their casual dining and fine dining counterparts,” she observes.

As for specific market trends, Miami remains the least affected by the faltering economy; sales are down 13 percent at the end of quarter three, a slight change from the 12 percent decline reported at end of the second quarter. Sales of several spirits — cordials, American whiskey, gin, Irish whiskey, Scotch, tequila and vodka — were positive in Miami bars January through September.

Washington, D.C., a market thought by many to be recession-proof, especially in light of the arrival of the new presidential administration, declined 15 percent overall for the nine-month period, a deeper dip from the 11 percent decline reported at the end of June. New York is the hardest hit metro area: the Big Apple saw total drink sales drop 25 percent as of Sept. 30.

Spirits are experiencing a slower rate of decline in the bar segment; the category was down 5 percent for the nine months ending September as compared to a 12 percent decline for the first six months of the year. Spirits sales continued on a downward trend in casual dining and fine dining through quarter three.

Looking at specific categories, the nation’s favorite spirit, vodka, remains consistent with a 14 percent loss nationally. Vodka sales in the bar segment were flat, however, a marked improvement from the 13 percent drop experienced in the first six months of 2009. Interestingly, vodka sales spiked in Miami, up 45 percent for the nine months ending September; a significant gain given that the category had grown 3 percent in Miami in the first six months of the year. Again, Posten notes the strong promotions going on in bars and nightclubs in that market as a driving factor. “We’re actually tracking heavy promotional activity among the super-premium vodka brands there,” she says.

American whiskey is a winner in the nation’s capital, posting gains in bars and casual dining and trending flat in fine dining establishments. Again, Miami bars shine with a 26 percent gain in American whiskey sales for the nine-month period.

On the imported side, Irish whiskey remains a bright spot. While the category declined 3 percent nationally, an improvement over the 5 percent decline reported for the period of January to June, Irish whiskey experienced a positive gain of 8 percent in both Chicago bars and Miami bars and a 13 percent overall increase in the New York market, where every hospitality segment saw Irish whiskey sales grow. Again, Posten credits heavy promotions.

Rum, another hot category, also grew in bars and casual dining outlets in New York, although it declined in fine dining establishments.

Wine remains the category suffering most from the economic trends, with New York on-premise establishments feeling the most pain. Overall, the rate of decline actually increased between June and September, with wine sales down 29 percent nationally for nine months ending Sept. 30, compared to a 26 percent decline for the six months ending June 30. While fine dining restaurants experienced significant losses (down 30 percent nationally), casual dining venues saw wine sales drop 25 percent and bars 22 percent in the first nine months of this year.

For its part, beer is holding its own, posting a 10 percent overall decline as of Sept. 30. Domestics experienced a slightly greater rate of decline at the end of September (-5 percent) than at the end of June (-3 percent). Imports were down 16 percent as of Sept. 30; on June 30 imported beers had declined 14 percent.

“Where we see gains and growth or slowing rates of decline, we see a correlation to branded promotions in on-premise accounts,” observes Posten. “It goes back to the old adage in this business that whoever can put forth the best promotion wins. Well, that’s always been the case in this industry, but in these trying times, you really have to put out excellent promotions and keep them coming in order to make gains. Brand support, operator promotions and marketing are the keys to growth these days.” NCB

The Research

The sales trend information presented here is derived from GuestMetrics’ analysis of point-of-sale data from 2,800 bars, nightclubs and restaurants in six major metro markets. The data sample represents 104 million guest checks totaling $4.5 billion in food and beverage sales. The operators involved utilize the GuestMetrics GuestSnapshot Enterprise Reporting Solution, which is uploaded daily from point-of-sale systems.

This report is the second of an ongoing series of quarterly reports Nightclub & Bar will publish on current on-premise sales trends. Nightclub & Bar is the exclusive media partner of GuestMetrics. This and future reports will be hosted on our web site, www.nightclub.com. For more information about GuestMetrics, visit www.guestmetrics.com.


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