Data Intelligence

The Hidden Value of Premium Spirits

SPIRITS ARE DRIVING SALES, GROWTH AND NEW OPPORTUNITIES IN SEVERAL KEY ON-PREMISE CHANNELS.

With the right strategies in place, spirits and cocktails can open up new avenues for retailers, suppliers, distributors and restaurant operators looking to drive revenue and offer more variety to their customers.

Driven by consumer surveys and Point of Sale data across the United States, Nielsen CGA’s findings reveal the immense value of spirits for bars and restaurants, specifically in 9 key areas. Out of the 14 channels covered, spirits sales lead across Premium Nightclubs, Premium Bars, Game Based-Bars, Airport Bars, Casinos, Neighborhood Bars, Sports Bars, Groceraunts, and Fine Dining.

Channels Graphic Nielsen Beverage

Of course, beer is often a significant – if not the top – seller in several other categories (and is still extremely valuable to the On-Premise), but the data uncovers a sizable opportunity to drive revenue through spirits. Comparing the weekly total value of checks only including beer as an alcohol category VS those containing only spirits, beer and spirits come in at a comparable $2.9K and 3K, respectively.

However, the rate of sale shows that beer has to work a bit harder to achieve roughly the same revenue as spirits: to reach $2.9K, outlets across the US had to sell 504 serves of beer. On the other hand, to reach $3K, only 376 serves of spirits were sold – 30% less.

Nielsen_Premium Spirits_Value GraphicTHE DATA UNCOVERS A SIZABLE OPPORTUNITY TO DRIVE REVENUE THROUGH SPIRITS.

We also see this trend on checks containing both beer and spirits, with the average outlet earning $3.8K from beer sales per week VS $4.4K from spirits sales; +16% more.

Beer generally sits at a lower price point than spirits (about $5 VS spirits at $7) so a discrepancy here is expected. But the data presents a clear narrative – spirits are incredibly valuable to the OnPremise. Given the flexibility of spirits, proactive marketing and strategic selling spells potential for bigger spikes in revenue – something that is already occurring in key channels. Out of the 14 channels covered in NCGA’s report, only six are showing growth in outlet openings vs one year ago. Out of those six, three channels are spirit-led, the most notable being Premium Bars (likely serving premium spirits and cocktails) up +10.5% VS a year ago.

The growth shown here by Premium Bars is actually the highest across all 14 channels, exceeding the next largest growing channel – Polished Casual Restaurants – by +6.1PP

With this in mind, what can your local neighborhood bar or casual restaurant do to tap into the value of spirit sales?

Simple yet effective actions, such as developing a fresh, on-trend cocktail menu or offering more premium spirit options can make an almost immediate impact. As the rise in premium bar openings show, new trends in alcohol consumption have emerged: we are reaching for premium distilled spirits, botanical mixers and ‘instagrammable’ cocktails, and the trend isn’t slowing down.

The opportunity is here – it’s up to retailers, distributors and suppliers to take it.

nielsen clip logoCGANielsen Logo

For more information on CLIP or how Nielsen CGA can help your business grow, contact hello@nielsencga.com.
Be sure to also follow NCGA on LinkedIn for the latest updates.

Sources:

Nielsen CGA Channel Strategy Report 2019

Nielsen CGA CLIP (Check-Level Insights Pool) Data 2019

Nielsen CGA OPM (On-Premise Measurement) Data 2019

Nielsen’s TDlinx 2019

 

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