The Irish like their pubs.
Last September a Reach survey by market analysts CGA showed that 51% of Irish consumers predicted they’d visit the on-premise more often in 2022, the highest such rate in any European country in CGA’s 26-country global on-trade market survey. Take heart!
Following ‘The Great Irish Lockdown’, by mid- to late-2021 the licensed trade was beginning to show signs of recovery albeit still some considerable way from the seemingly carefree pre-pandemic levels of trade. During all this, CGA tracked consumer attitudes and trends as Covid-19 wore on.
“In September, total drinks volumes were tracking at 81% vs 2019” Phillip Montgomery, CGA’s UK & Ireland Director of Client Services, tells me, “while 80% of Irish on-trade consumers had been out in the last three months.”
However, with the emergence of Omicron and the reimposition of restrictions later in the year, we saw a crumbling of confidence.
Nevertheless CGA’s Reach survey showed that one-third of Irish on-trade consumers planned to spend more on eating/drinking when they got out again.
“With this sentiment to return amongst consumers” states Phillip, “it’s key for suppliers, operators and wholesalers to understand the key elements in encouraging consumers to return to the on-trade.” he says.
Food & confidence
Confidence around returning to hospitality is clearly demonstrated with two in three Irish consumers now confident in visiting the on-trade, says Phillip, but it’s crucial to understand how, where and why consumers are interacting to maximise this opportunity.
“Unsurprisingly, the younger consumer has highest confidence to return (75% of 18-34 consumers feel confident),” he says. This cohort visits and spends most and will be a key target group for any supplier or operator, “However, to facilitate a full sales recovery, driving confidence in older age groups will be key with only half of consumers over 55 confident in returning,” he points out. The key to success here will be understanding what consumers want from their on-trade experience.
“CGA’s research shows that food is increasingly important in on-trade experiences,” he states, “70% of consumers say that the quality of food is an important factor in choosing where to eat/drink while consumers are visiting food-led venues, with 57% having gone out for a casual meal in the last three months. With consumers also engaging more with relaxed and quiet drinks, ensuring that venues have a provision to accommodate a lower tempo daytime/early evening offer will deliver competitive advantage vs other outlets.”
Outside at the local
Over the course of the pandemic CGA found that consumers discovered venues in geographical proximity to them, being hesitant to travel to city/town centres due to infection rates. They’d also less reason to travel due to the Work From Home mandate.
“This is highlighted most clearly by the fact that in September 2021 Dublin sales had only recovered to 66% of pre-pandemic levels,” he says. Consumers also felt more comfortable with venues that had outside seating, with 62% of on-trade consumers most comfortable in such venues globally.
“Of course as the pandemic progresses and vaccination rates continue to increase, there will be a shift slightly away from these preferences, but operators and suppliers must still consider these elements in their consumer engagement strategy as the legacy of these experiences will live on and shape the emerging on-trade.”
Licensees must remember too that the consumer appetite for higher tempo occasions remains strong. CGA found that after-work drinks and high tempo drinks (big nights out) are still the occasions that consumers most want to go out for on a weekly basis.
“As the WFH mandate ends and confidence returns to town/city centres, the relevance of late-night/higher tempo occasions will continue to grow,” he believes, “Therefore, after 18 months where there have been significant restrictions on late-night, outlets must ensure they’re providing a compelling offer to benefit from a consumer appetite for higher tempo occasions.”
For outlets to achieve that compelling offer status he stresses that it’s key to work with suppliers to ensure that their range is fully aligned to consumer preference.
This will allow outlets to maximise revenue streams from their offer and aid recovery.
There are some emerging trends here that licensees must acknowledge in their offer.
“The pandemic has put significant pressure on the finances of lots of people in Ireland and 77% of on-trade consumers were concerned about the long-term financial impacted of Covid-19,” he points out, “Despite the squeeze on disposable income, consumers are increasingly looking to ‘treat-spend’ in the on-trade as they make-up for missed occasions and celebrations.”
CGA found that 45% of consumers are likely to pay extra for a better-quality drink in the Irish on-trade and 33% feel it’s more important to have a high quality/Premium drink than a year ago.
“This desire for a Premium offer is most entrenched in the Wine and Cocktail categories” says Phillip, “and certainly range reviews in this area should be a priority. However, even in established categories like Lager, there’s an underlying desire for Premium choices in an outlet’s range and therefore suppliers and operators must work together to optimise range across an outlet’s entire alcohol offer to provide consumers with Premium choices and drive footfall.”
When considering that outlet offering, leveraging cocktails may be a highly effective way to draw consumers. Cocktails can be an effective vehicle in promoting an outlet’s spirits offering and the category has gained traction since re-opening.
Cocktails are hitting the mark as an indulgent treat-spend option that deliver a great on-trade experience for consumers, he says.
“28% of Irish consumers drink cocktails out-of-home and a quarter of these consumers are drinking the category more so than last year. While this might not be the right solution for every venue, there are some compelling reasons to engage with this provision.
“The growth in cocktails is being fuelled by the younger consumers” he continues, “with one-third of 18-34 year-old consumers drinking within the category more frequently.”
As this cohort visits and spends the most, using cocktails to engage could have a positive impact on revenue returns. However the provision of a range of cocktails that engage different flavour profiles and incorporate mainstream and Premium serves will be key.
CGA can demonstrate that cocktail taste, quality and serve are the key drivers to the category, so ensuring that outlets have the required skills provision to deliver cocktails in an outstanding way will maximise the opportunity to deliver a competitive advantage.
Catering for the Health agenda
The pandemic has also brought into sharp focus consumers’ health agenda. This continues to permeate an outlet’s offer. 10% of on-trade consumers state that health is more important than a year ago and whether healthy options fit into an outlet’s offering represents a key decision.
65% of NoLo consumers still choose No/Low Beers, the traditional ‘go to’ choice in the non-alcohol space. However, consumers are increasingly engaging with NoLo Spirits, Cider and Wine as well as Mocktails, meaning that licensees may need to continually re-appraise how their NoLo offering needs to evolve, he says.
Hard Seltzers comprise one of the newer considerations for outlets.
Having gained traction in the US in recent years major suppliers have looked to launch brands in this space in Ireland and it’s clear there’s some consideration from consumers for this category.
“38% of consumers are willing to try Hard Seltzers and if outlets can deliver with great execution, this could be another effective weapon in helping consumers make healthy decisions in their alcohol choices,” he believes.
The Irish market has undergone unprecedented adversity in the last 18 months, challenging hospitality to its very core. However, as restrictions lift, there appears to be light at the end of the on-trade’s tunnel.
“As outlets begin the road to recovery, it will be vital that they stand out, understanding their consumer and delivering that compelling drink offer to drive footfall through the door that will guarantee the long-term sustainability of their businesses.”
Rest assured, throughout 2022 CGA Strategy and Phillip Montgomery will be watching this space.