Applying Insights and Analytics to Strategic Beverage Plans
According to The NPD Group, the change in consumer tastes and spending habits have led to a decline in restaurant beverage from 2010 to 2015 of 4 percent. Patrick Kirk, director of beverage innovation for Buffalo Wild Wings, Mary Melton, director of beverage for P.F. Chang’s, and Tylor Field III, divisional VP of wine and spirits for Landry’s, Morton’s, and Oceanaire, examined the truth of industry beverage trends during the 2016 VIBE Conference in San Diego.
Looking at GuestMetrics data from 2015, total alcohol volume was down 2.8%, with beer experiencing the greatest decline at 4.3 percent. Wine was down 1.4% and spirits slipped 1.8 percent. The fact is that guests are consuming fewer alcohol beverages: dine-in guests are purchasing fewer alcohol beverages per person and fewer dine-in checks contain such beverages.
When it comes to beer, Millennials are seeking creativity, customization and variety in their when choosing a restaurant. Within the beer category, domestic has slipped over the past 3 years by 10 percentage points. In general, the alcohol sales mix is skewing away from beer and shifting towards liquor.
Wine, on the other hand, is increasing. Consumption per ounce is growing among Millennial consumers, and Pinot Noir is showing double-digit gains. Also showing double-digit growth are wine cocktails such as Sangria. Both Prosecco and Moscato are growing, and Malbec is now the number one selling imported varietal. When seeking to leverage the growth of wine it’s important to realize a few truths. Wine consumption grows by volume in conjunction with declines in price per order; wine orders are profoundly determined by price point. Wine bottle sales per guest have declined over the past 5 years by over 15% while wine by the glass are up over 26 percent. Lower ticket tasting events are the key to attracting wine drinkers, as expensive wine dinners are no longer popular among consumers.
Spirits led beverage alcohol growth in 2015 by 3.2 percent. Growth is coming from whiskey but vodka holds the greatest share. Distilled spirits consumption by women has grown by 17%, a result of more educated guests and the craft movement. While sweet is still popular, consumers are showing increased interest in botanical and bitter flavors. The interest in tiki and tiki-inspired beverages is expected to be a strong trend through 2016. Millennials are consuming distilled spirits at a rate of 50% more than the rest of the US population, with the bourbon category up by 2 percent. Vodka has slipped 10% but is still the largest distilled spirits category. Consumers appear to be over waiting for complicated cocktails and are looking for recipes that are quick and easy to execute.
Now that the truth of the situation has been revealed, operators can implement a plan based on the information at hand. For instance, Kirk explained that Buffalo Wild Wings’ plan for beer is to strengthen their position as the top destination for draft beer. BWW also seeks to create the best possible beer drinking experience. To accomplish these goals BWW has created value proposition, showcased their variety of taps, aligned brands by strength of assets and seasonality, and offered new and different beers on a trial basis through the use of a beer of the month promotion. They also use featured drafts to educate guests on a specific brand’s story and increase checks.
Field shared the Morton’s, Landry’s, and Ocenaire promotional strategy to create wine programs that surprise, delight, and offer value for their guests while giving them a reason to return. Their plan consists of limited-time offers, first-to-market strategies featuring such items as the Coravin, control and private label programming, and low-cost “edutainment” functions. They also offer monthly wine flights, food and wine pairings, social media, national supplier partnership events.
P.F. Chang’s plan, explained Melton, is to offer fresh and innovative cocktails that use premium spirits and mixes that reflect their restaurants’ style while complementing the overall dining experience. As of March 2, 2016, PFC has updated their cocktails. The chain also leverages limited-time offers on a quarterly basis, featuring a minimum of three different cocktails. In order to create their own cocktail culture, PFC also uses CRM and social media. Melton says they have focused on strengthening their supplier relationships to make them more meaningful. Suppliers must provide specific, tailored information to their buyers, and buyers must communicate their plans clearly and make specific requests to their suppliers. Finally, PFC is investing in their bartenders, resetting their standards (including speed of service), utilizing online training, offering incentives, and encouraging creative involvement.
The panel suggested a 6-stage development process anchored to beverage plan objectives:
- Information & Insights: Regarding the marketplace, this consists of industry trends, market analysis, and identifying the consumer.
- Ideation: Based on the above, this part of the process leverages vendor partners, mixology, emerging trends, and white space.
- Development: This is how you plan to make your idea work through positioning, sourcing, cuttings, and pricing.
- Validation: Based on feedback and testing, this step involves beverage studies and field tests.
- Refinement: Use planning, timing, approval and buy-in, scalability, and budget and support to make recommendations.
- Communication: Carry the idea to the target through product naming, placement and copy, marketing, and training.
The outcome of this process should be a solid beverage plan, and that plan should result in increased sales velocity in beverage sector P&L. The outcome should also consist of the alignment of suppliers and the local wholesale community, an educated staff, system-wide consistency of service, supply and price, and increased trust and comfort with guests.