Data analytics and market research company IRI has revealed the biggest off-premise trends shaping Australia’s $22.3billion retail liquor industry following the upheaval of COVID-19.
IRI joined with Growth Scope to explore liquor market performance, occasion, consumer and shopper insights. Growth Scope has been tracking liquor shoppers since 2020, asking more than 25,000 consumers about their motivations and behaviours in the category.
According to IRI, the overall market is growing at around 2.9%, with the majority of sales growth in the online space. Online sales now make up about 8% of retail liquor sales, with an annual spend of about $1.9 billion annually.
The pandemic has fuelled a 45% uplift in the number of people shopping online, with the trend extending to all shopper categories, including retirees.
When they do go in store, 84% of shoppers are planning their liquor shopping trip before they go and deciding what they will purchase before they walk through the doors.
Among the other off-premise trends are people also “pandemic premiumising”. And while the number of liquor shoppers were down 3% in 2021 and trips to the off-premise were down 7%, spend per occasion is up 2% to $46.90.
Champagne sales remain strong, especially when brands are discounted.
The top consumer being overlooked
Growth Scope’s Director of Research & Product Mel Andrews said the over 50s segment should be front of mind for the liquor industry when it comes to both bricks and mortar and online sales.
“We have an ageing population in Australia. In 2030 there will be 1.3million more Australians in the retiree group versus 2020,” she said.
“Over 50s account for 50% of all liquor occasions and create equal value to the under 40 cohort in terms of the number of occasions and how much they spend.
“In the off-premise drinkers aged over 50 account for 43% more value than under 40s. This is driven by the sheer volume of over 50s and the higher frequency of occasion.”
While under 40s might only drink once or twice a week, over 50s tended to drink more frequently.
“The over 50s are huge missed marketing opportunity,” she said. “It may not very sexy to market to over 50s, but this cohort is largely untapped.”
The top three categories to watch
IRI’s Director of Liquor & Tobacco Mark McCaffrey said the top three retail liquor segments ranked by actual dollar contribution to total growth were RTD seltzers, followed by light spirit RTDs and bottled tequila.
“These are the segments to be looking out for in the future,” he noted.
Category growth was being driven by spirits, both glass and RTD, with spirits sales up 5% in 2021 and RTDs up 14%.
“Spirits and RTDs are really over-indexing in terms of its dollar share,” he said.
RTDs recorded the largest share gain amid the pandemic-driven off-premise trends. In 2021, they had a 17% share of sales and a 70% share of growth, while spirits had 24% share of sales and 38% share of growth.
“During the two-year period all categories were in growth, but RTD dollar growth was up 47% ($1.23billion), glass spirits 29% ($1.16billion), while beer grew 11% ($733 million) and wine grew 12% ($535million),” he said.
“RTD growth is largely being driven by new segments such as seltzers and light spirit RTDs. RTD seltzer added 27 times its share of growth to its share of dollar sales.”
However, not all RTDs are faring as well. While vodka and gin RTDs were big market share movers, declines were seen in Kentucky bourbon RTDs,
The three declining categories
Beer still has the biggest share of sales in Australia at 34%, but its share of growth has declined 7%, while wine is down 3% and cider is down 4%.
Most of the decline in beer came from the classic segment, with contemporary beer and craft beer making huge inroads in the past five years. McCaffrey said the contemporary beer gains were largely driven by Great Northern.
Sauvignon blanc led the decline in wine, while some spirits also suffered, with growth dips for bourbon and blended scotch.
Changes to occasion-based dynamics
The pandemic has also altered the occasion-based dynamics of consumption. Andrews said most consumers had abandoned large gatherings in favour of smaller, home-based occasions.
The majority of all consumption occasions are now spent alone or with just with one other person. Just 8% of consumption is occurring in large groups of more than 8 people.
“The majority of liquor occasions are anchored around three social contexts: me time, just us moments with a partner and quality time with family. It’s not those big social occasions that are driving purchase.
“The top activity for consumption was watching TV (33%), followed by eating a meal at home (27%), having a chat (26%), spending time with their partner (22%).”
The “nolo” segment is now worth $144million and it has added $56million to grocery and liquor. Its year-on-year growth rate is 24 times higher than total retail liquor.
McCaffrey describes the category as a “massive growth opportunity” when it comes to off-premise trends. Purchase tends to skew towards social occasions rather than relaxing at home, with 32% of purchases being for gatherings of more than four people.
Around 14% of households purchased a zero alcohol product in 2021, with the biggest cohort being “pre-family” and the smallest being “young family”, closely followed by older singles and retired couples.
Australians aged 18-44 are twice as likely to consume zero and low-alcohol products than those aged over 45.
Picture main: Cellarbrations Arundel Tavern