Off-premise retailerssuch as grocery stores, convenience stores and mass merchandisersare using such on-premise vulnerability, as well as 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 increased 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," said Richard Hurst, senior vice president, beverage alcohol, for Nielsen. "And as we've seen in the past, some states may experiment with extended hours for alcoholic beverage purchases, such as Sunday sales, for an additional boost."
Nielsen also expects a rise in the purchase of alcoholic beverage as gifts this year to be 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 and represent a more economical alternative to bigger ticket items," said Hurst.
"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." Given that fewer consumers are likely to be able to afford luxury wines and spirits in their holiday budgetsand there is evidence of trading downstores would do well to ensure that they offer products across a variety of price segments."
Imports are also being affected by the economy. With exchange rates unfavorable to the dollar, imported alcoholic beverages have been forced to raise prices, making it more difficult for them to compete with domestics. 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," said Hurst. "At the same time, the weak dollar has helped tourism and despite the dollar's recent recovery and the threat of a global economic meltdown, major cities should continue to expect to see the benefits during the holiday season."
Hurst added, "Historical as well as more recent consumer trends indicate that alcoholic beverages are much more recession-resistant than many other product categories." And while consumers are reducing on-premise consumption and trading down to less expensive beverages, they are reluctant to cut back significantly on beer, wine and spirits, according to Hurst. "With the prospect of limited economic recovery in 2009, consumers are likely to consider alcoholic beverages as an affordable indulgence during the holiday season."
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.