Tue. Oct 19th, 2021

Anyone who has recently walked past a London bar or a Manhattan bar knows that sociability is back. Office workers may be wary of giving back their desks, but once they struggle, their next stop after work seems sociable.

August and September sales at UK bar chain Mitchells & Butlers preceded the same period two years ago, as did seat numbers in Germany and Ireland, says booking website OpenTable. Heineken’s sales in the Americas, the Middle East and Africa are back to the 2019 level. “The human desire to meet for a beer or a drink in a bar or restaurant is universal at all times,” the brewery’s CEO, Dolf van den Brink, said last week.

Reopening offers an opportunity as well as a challenge for the liquor industry, which is trying to calm down after a pandemic-induced roller coaster ride. Global sales by volume declined 6 percent last year and is not expected to recover yet.

But premium producers thrive while home users start eating cocktail mix, baking with alcohol and trying top-quality tequilas and high-quality beer. The trend was especially evident among Americans, who already drank more at home than from it. Unlike the rest of the world, their total alcohol consumption increased last year.

The responsibility now rests with liquor groups such as Diageo and Pernod Ricard, who have recently achieved strong results, to keep sales going, even though customers have other things to spend.

‘Drink better, not anymore’, has become an increase in the industry. The slogan not only encourages consumers to trade, but also appeals to regulators who need to reduce the social problems associated with alcohol and beverages. It also proves that per capita consumption has been declining for years in some of the most difficult drinking countries.

Line graph of the annual alcohol consumption per capita (liters) indicating that drinking habits come together

Selling lower volumes of more expensive products increases margins, and the aging process used to create top-shelf products means that increases in commodity prices do not immediately flow to customers.

Japan’s Suntory takes the trend to the extreme with a whiskey for which it can be sold $ 60,000 per bottle. At Diageo, the super-premium category that includes Casamigos tequila (founded by actor George Clooney) and the luxury versions of Johnnie Walker whiskey has grown by 35 percent. They accounted for almost half of the net revenue growth in the year ended June.

By focusing on quality, the industry can also provide space to address one of the biggest threats to its long-term profitability: Genl. Z and millennial customers are much less attracted to alcohol than older generations.

More than 56 percent of 18- to 24-year-olds think one or two drinks a day are ‘harmful’, compared to 31 percent of those aged 65 and older, according to a new Jefferies survey of 4,000 consumers eight major markets. Young people were the only age group where ‘harmful’ reactions outweighed a more benign view.

Young alcohol skeptics are not morally opposed to drinking, or especially linked to online rather than socializing in person, Jefferies found. Rather, they do not like hangovers and are worried about the impact of alcohol on their mental health – and their wallets.

Bar graph of reasons why less alcohol is drunk, showing that young people are more concerned about money, hangovers and mental health

In preparation for this looming issue, the liquor companies have research and advertising power behind them. low and non-alcoholic adult drinks for several years.

Most of the efforts have been focused on revamped versions of their major brands, including Tanqueray 0.0, Ballantine’s Light and Brooklyn Special Effects pills. Heineken even switched its sponsorship for Europa League football from Amstel Light to Heineken 0.0.

The established groups also pile on boutique offerings that emphasize botanical flavors: Pernod bought a majority stake in Ceder’s non-alcoholic spirits in January, and Diageo did the same. Saadlip last month.

Global sales of no / low alcohol are expected to grow by 34 percent between now and 2025, compared to about 6 percent for the total alcohol market, says IWSR. While non-alcoholic beers currently make up the bulk of the market, counterfeit spirits are expected to rise the fastest.

This is good for the drinkers – as long as their products grow. Low and non-alcoholic beverages are often praised in similar varieties as their vicious counterparts to maintain their exclusive image. But they carry much lower taxes. This means that more of each sale goes back to the producer.

In their most optimistic moments, the alcohol groups imagine that ‘no alc’ products form a beach head for new drinking opportunities. Why drink a Coke at your desk with your sandwich when you can drink an alcoholic beer for half the calories? The three-martini lunch may rise again.

For this to work, however, these tips must be more than a pale substitute for the apostate. So I ran to the supermarket – all in the name of research. Heineken 0.0 is a clear improvement over the dirty non-alcoholic beer that was available when I was pregnant, but I admit that I was not fully won over by the Tanqueray 0.0 and tonic.

It turns out I’m at least partially into the drink. But maybe I’m just old.


Follow Brooke Masters with myFT and so on Twitter

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