On-premise traffic may not be picking up the way operators want, but when it comes to spirits, all the news is good. According to Nielsen CGA's On Premise service, which measures restaurant and bar sales, spirits volume and value is growing. In fact, spirits are growing better than beer and wine, although on-premise lags off.
In the on-premise, volume is up 1.6% and value 2.6% in the 52-week period ending in mid-July.
“Off outperforms, which presents a challenge for suppliers, distributors and retailers to drive traffic into bars and restaurants and ensure the right products are presented at the right price to deliver a great experience and true sense of value,” according to the report.
With value growing ahead of volume, it appears retailers are trading customers up to more premium brands and categories, but in the off-premise more than on.
“Consumers are keenly aware of the price difference for identical or similar products in on-premise versus off, and so restaurant and bar operators need to ensure their pricing can be justified by the overall experience,” according to Scott Elliot, SVP of Nielsen CGA. "What we are just starting to uncover is the complex picture which just begins to scratch the surface of the interdependence between on- and off-premise. Opportunities exist for suppliers, distributors and retailers to work together to drive optimal assortment, ranging and pricing.”
Within the entire spirits category, Nielsen looked at the various subcategories with some intriguing results. For example, vodka and whiskey are competing for category supremacy in the on-premise in both volume- and value-based. In the off-premise, vodka leads volume but whiskey dominates in value. Value shares of Irish whiskey, rum, tequila, and gin are all higher on-premise. Intriguingly, flavors do better on-premise: flavored vodkas account for close to 27% of on-premise vodka, versus 21% off. Flavored whiskeys make up 17% of the whiskey business on-premise, a little less off. According to the report, there are some segments growing faster in the on-premise environment; rum is on with flavored variants performing very well there over the last year. Brandy and Cognac are also standouts, with Cognac up in double digits. So, too, Irish whiskey, rye and tequila are growing at double digits on-premise. Meanwhile, mezcal is on a steep incline, albeit from a very small base, according to Nielsen. Down are flavored vodkas, Canadian whiskey, and cordials show up here, each down between 2% and 5% over the last 52 weeks in volume and dollars.