Tuesday, November 18, 2008

What is up for "Wine Consumption" at the Holiday's

As reported by Wine & Spirits Daily:


A new report from Nielsen says consumers are likely to view alcoholic beverages as an "affordable indulgence" this holiday season. In fact, Nielsen expects more Americans to give alcoholic beverages as gifts this year, "helped by the usual selection of special 'value-added' packs." Nielsen's report gives a much brighter outlook then other outlets that have suggested the business will suffer in November and December, which accounts for a big chunk of annual sales. For example, AdAge printed an article yesterday claiming Champagne sales are expected to take a serious hit.

Grocery stores, c-stores and other off-premise retailers will benefit most as Americans increasingly choose to drink at home. Meanwhile, restaurants, bars and nightclubs "are facing serious challenges in the current economy" during a period when more consumers go out than any other time of year.

When Americans are eating out, some people are cutting back on how much they spend by ordering fewer or lower-priced drinks, especially as it relates to higher-priced wines and spirits. Other consumers are trading down by visiting "fast casual" restaurants and quick service restaurants that may offer few or no alcoholic beverages.

"Given the importance of the holiday season to restaurants and bars, these establishments will need to pull out all the stops to lure consumer traffic back, using a variety of creative incentives as a hook," said Richard Hurst, senior vice president, Beverage Alcohol, The Nielsen Company. "Watch for on-premise outlets to push customer loyalty programs to drive repeat business."

On-premise retailers are targeting consumers who used to go out more in order to drive repeat business. For example, Nielsen said grocery stores are targeting restaurant-goers with well-priced easy meals, and other stores are adding alcoholic beverages to their line up. Nielsen also expects to see a continued increase in online shopping, especially for wine, where legal to do so.

Richard suggests that on-premise retailers "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."

DOMESTIC VS IMPORTS. Domestic wine, spirits and beer is now outperforming imports for a couple of reasons. For one, a weak USD is making imports more expensive. Also, "consumers are often biased toward national or local products" in tough economic times. According to Nielsen, domestic and imported wines were growing at the same double-digit rates last year, but domestic growth is now ahead of imports.

"While there is evidence of consumers reducing on-premise consumption, as well as trading down to less expensive beverages, they are reluctant to cut back significantly on beer, wine and spirits, especially for at home consumption and entertaining. With the prospect of limited economic recovery in 2009, consumers are likely to consider alcoholic beverages as an affordable indulgence during the holiday season."

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