September 7, 2022
The last few years have been challenging for the On Premise channel, but CGA by NielsenIQ’s latest research reveals that the channel’s performance is stronger than ever – highlighting how key it is for driving brand awareness, trial and spend in both out-of-home and at-home consumption.
What are the latest visitation trends in the On Premise?
Despite inflation-related concerns that consumers in the US are planning to reduce their spending and visitation levels in the On Premise, CGA by NielsenIQ’s data highlights a more positive trend. Compared to the same two-week period in 2021, sales velocity is up +7% for the Total US, while California and New York were both up +10% in sales.
When it comes to visitation, the vast majority of US consumers (69%) have visited venues for food or drink occasions in the last two weeks, demonstrating that most consumers are still enthusiastic about going out and spending money on social occasions. This trend has only increased throughout 2022, as consumer confidence continues to grow post-COVID-19. In the last three months, regular visitation has increased, with 4 in 5 consumers visiting the On Premise three or more times in the last three months – a 5% increase since July 2022.
This trend isn’t likely to let up either, with 3 in 4 consumers planning to visit the On Premise for food, while nearly 50% are planning to go out for a drink in the next two weeks. 40% of those consumers who are planning to visit a bar or restaurant in that period say it will be for a drink-led occasion, proving that both food and drinks are a driver for bringing consumers to the On Premise.
Despite challenges faced by many venues in terms of hiring and retaining staff, consumer experiences are still very positive – with 9 in 10 consumers reporting they are very satisfied or satisfied with the wait time for food or drinks, the knowledge demonstrated by service staff, and the overall quality of service.
How much are consumers spending in the On Premise?
While cost of living increases are impacting spending habits for some consumers, nearly half (46%) of consumers have said they’ve not changed their spending habits, while 32% have been spending more in the On Premise.
When asked specifically why they’re spending more in the On Premise, this segment cited the increased cost of food and drinks as a top reason, yet celebratory occasions, treat occasions and purchasing premium drinks more often also ranked highly. This demonstrates that despite rising costs, consumers still intend to patronise the On Premise especially for occasions where they tend to spend more such as celebrations.
How the On Premise influences consumer behavior in the Off Premise
50% of alcohol consumption by the average consumer is in the On Premise – and it’s clear that these visits have an impact on behaviors and purchase in the Off Premise. Consumer research also highlights that visitors to the On Premise have an emotional connection with the channel, with 1 in 2 consumers stating that experiences in the channel have prompted them to purchase drinks in the Off Premise. 42% of consumers also state that they try new drinks in the On Premise – demonstrating a clear opportunity for brands and drinks suppliers to consider their marketing activities and NPD strategies to target On Premise visitors in order to boost Off Premise sales.
Matthew Crompton, CGA by NielsenIQ regional director – North America, said: “With US consumers excited for future visits to the channel, and the majority trying some of their favorite drinks for the first time in bars and restaurants, this truly emphasises how important the On Premise is in driving trial and consumption of drinks brands. Most consumers have not changed their behaviors on visits to the On Premise, with nearly a third expecting to spend more on future visits – suggesting a strong appetite to continue patronizing bars and restaurants for many.”
CGA’s On Premise Impact Report is a fortnightly sales report evaluating the different dynamics across the US and the impact of On Premise trends. For more information and support understanding these different dynamics, and developing channel-specific strategies, contact Matthew Crompton at Matthew.Crompton@cgastrategy.com