Despite a fragile economy, consumers will continue to see alcoholic beverages as an affordable indulgence according to Richard Hurst, senior vice president, Beverage Alcohol, The Nielsen Company. "Historical, as well as more recent consumer trends, indicate that alcoholic beverages are much more recession-resistant than many other product categories," Hurst notes.
In its alcoholic beverage trends outlook for the 2008 holiday season, Nielsen notes a number of factors impacting consumer choices.
Consumers are going out to eat less often, as evidenced by a recent Nielsen survey, where two-thirds (66%) of fine dining patrons admitted they are going out less often compared to a year ago. Their sentiments were echoed by 65% of nightclub patrons, 55% of bar patrons, 59% of casino and resort patrons and 52% of casual dining visitors.
If they do dine out, some consumers order fewer or lower-priced alcoholic beverages. Other consumers trade down by visiting "fast casual" restaurants and quick service restaurants that may offer few or no alcoholic beverages.
"Given the importance of the holiday season to restaurants and bars, these establishments will need to pull out all the stops to lure consumer traffic back, using a variety of creative incentives as a hook," says Hurst.
Grocery stores, convenience stores and mass merchandisers, are using the on-premise vulnerability, and the lure of one-stop shopping, to their advantage. For example, grocery stores are targeting restaurant-goers with well-priced easy meal solutions and increasing their promotional efforts to encourage multiple purchases for shoppers who make fewer, but larger trips. Nielsen also expects to see a continued increase in online alcoholic beverage shopping, especially for wine, where legal to do so.
"Many stores are adding alcoholic beverages to their assortment, providing more opportunities for consumers to purchase alcoholic beverages at competitive prices," notes Hurst.
With exchange rates unfavorable to the dollar, imports have been forced to raise prices, making it more difficult for these products to compete with domestic alcoholic beverages. For example, while both domestic and imported wines were growing at the same double-digit rates last year, domestic growth is now ahead of imports. Imported beers have also suffered, showing steady declines in the last six months. Consistent with the "localization" trend, craft beers and U.S. wines from outside California have been gaining share, and there are now more than 200 "micro-distilleries" across the country.
"In tough economic times, consumers are often biased toward national or local products, further enhancing the prospects for domestic brand growth, whose prices have remained relatively stable through the year," says Hurst.
Given that wine and spirits are common gifts during the holidays, Nielsen expects a rise in the purchase of alcoholic beverage as gifts this year, helped by the usual selection of special "value-added" packs. "Alcoholic beverages as gifts, especially those with value-added packaging, can fit most holiday shopping budgets," Hurst offers. "Retailers should consider multiple store display locations to capitalize on impulse purchasing, as well as providing gift accessories nearby, such as bottle openers, gift bags, mixed drink party pack ingredients and glassware."
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