On-Premise Recession = Wine Depression

While off-premise wine sales have suffered from the recession, on-premise consumption has ben hammered by a full-blown depression.

This is likely to continue for another year, according to data from Nielsen, along with two, on-premise data specialists: Technomics and GuestMetrics

Nielsen believes that this means the upcoming holiday season will see a surge in at-home entertaining and a continued sag in bar and restaurant celebrations.

According to Nielsen, on-premise wine sales account for just 25 percent of the volume but 52 percent of the value.

BARS, RESTAURANTS AN EASY TARGET FOR SAVINGS

With the consumer need to save money, the relatively high cost of on-premise food and wine is an easy target for cost savings.

Nielsen’s Homescan Consumer Panel Survey shows that:

• 68% of consumers have cut back on fine dining
• 57% have cut back on casual dining
• 59% go to bars less often
• 33% drink an alcoholic beverage less often when they do go out.

Nielsen’s Homescan Consumer Panel consists of 100,000 households selected to be statistically representative — both geographically and demographically — of the American market as a whole.

WINE IS HARDEST HIT ALC BEV ON-PREMISE

While it’s well-known that off-premise wine sales have been battered by consumers “trading down” in price points, bars and restaurants have been all but abandoned by many consumers.

In a survey of six major metro areas by Guest Metrics, the data indicates that, on average, wine consumption was hit almost twice as hard as spirits and more than three times as hard as beer. The data, looking at January to June 2009 versus the same period in 2008 showed wine as the biggest loser by far:

2009, First Half Growth/Decline

• Wine, -26%
• Spirits, -14%
• Beer, -8%

According to data from Technomics’ partnership with GrestMetrics, overall on-premise alcohol sales are expected to decline 4.9 percent for all of 2009.

According to the Nielsen Economic Advisor – Beverage Alcohol, the dollar-share of on-premise sales began to decline in 2008 after six years of steady growth:

2008 Growth/Decline

• Wine, -3.3%
• Spirits, -3%
• Beer, -1.3%

TECHNOMICS: NO ON-PREMISE WINE GROWTH UNTIL 2011

Food service consultancy Technomics believes that total alcohol sales in all away-from-home venues will decline 2.5 percent in 2010. The biggest declines will be seen in casual full-service restaurants and high-end white tablecloth restaurants.

2010 Projected Growth/Decline

• Wine, -6.7%
• Spirits, -2,1%
• Beer, -1.8%

“Our outlook for alcohol sales is based upon continued weakness in restaurant traffic and further consumer frugality,” stated David Henkes, Vice President at Technomic and the director of the firm’s on-premise practice.

“The overall share of visits that include alcohol has been on a downward slide for several quarters. While next year won’t be quite as bad, we don’t think we’ll begin to see real growth in consumer spending on alcohol again until 2011,” Henkes said.

Technomics
2010 Forecast for Overall On-Premise Alcohol Growth
By On-Premise Segment			2010 Growth/Decline
Fine Dining			-10.4	%
Casual Dining			-6.8
Bars/Nightclubs			0.6
Lodging			-6.1
Casinos			-5.0
Concessions			-2.0
Other Recreation			-4.2
Overall On-Premise			-2.5	%

NIELSEN: EATING OUT LESS IS #1 CONSUMER SAVING TACTIC

Consumers cited “eating out less” as the number one action they have taken to save on recession-battered household expenses.

The Nielsen Homescan data found that 46 percent cited this as their top tactic. Further, the data indicated that this choice was consistent across both age and income groups.