3 Issues Slowing Alcohol Beverage Sales
By Steve Holtz on May 02, 2018NEW YORK -- Alcohol sales growth has slid significantly in the past year, according to a recent report from data analytics company Nielsen.
While beer, wine and spirits continues to perform better than all consumer packaged goods overall, each segment has seen growth decline over the past year.
For spirits, that has meant a drop from 5.8% year-over-year dollar-sales growth in October 2016 to 1.8% growth in December 2017. Wine sales growth has declined from 5.4% to 1.9%, and beer sales growth has slowed from 3.2% to 0.5%, according to New York-based Nielsen.
"At a very high level, factors like shifting demographics, stagnant wages, health and wellness trends, fewer drink-led occasions and declining big brands are playing a part in decelerating alcoholic beverage growth," Nielsen reported.
Here's a look at three trends weighing on the alcohol-beverage category ...
1. Too many options
In the case of beer, an overabundance of products is a factor, the report says. The number of beers available continues to grow (1,398 at year-end 2017 vs. 1,336 in 2014). But the real factor affecting choice is how many places consumers can buy alcohol. In the U.S., that number (on- and off-premise) grew by more than 100,000 from 2007 to 2017 (528,594 vs. 644,647). Nielsen's data shows the retail expansion is outpacing population and sales growth. And while the number of fine-dining restaurants and liquor stores declined significantly in 2017, casual dining and convenience locations have grown.
2. Generational change
Some of the shifts in outlet preference can be connected to consumer demographics, Nielsen said. For example, 67% of U.S. millennials say they’ve visited a brewery tasting room more than they did in the past year, and 63% say they visited a Tiki bar more than a year ago. But new channel options such as breweries are appealing to more than just younger drinkers. According to Nielsen's latest on-premise consumer survey, 61% of all U.S. drinkers said they visited a brewery or brewery tasting room more than they did in the past year.
3. Health and wellness
Certainly part of the issue facing alcohol beverages is their inherent high-calorie and high-carbohydrate profiles. A growing desire for healthier products naturally leads to less alcohol consumption. To that end, Nielsen offered some ways for alcohol retailers to embrace the situation:
- Start a running club. This is "an easy, inexpensive way to engage customers, particularly on weekday evenings."
- Offer yoga classes. Wineries and breweries have started exercise events on-site to drive traffic.
- Suggest food pairings. Providing the right combination of low-calorie, low-carb, healthy food options with a complementary beer or wine will go a long way in appealing to health-conscious consumers.
- Reconsider the product mix and package sizes on the shelf. Include small pack sizes to give customers the opportunity to explore and try new products.
- Explore shipping and delivery options.
- Host wine- or beer-of-the-month clubs.