Shrinking alcohol sales demand differentiated beverage programs

Nov. 3, 2009
Based on expectations of continued contraction in the restaurant and bar industry in 2010, foodservice consultancy Technomic has issued its forecast for beverage alcohol sales in those channels. Total alcohol sales in all away-from-home venues are expected to decline 2.5 percent in 2010.
The biggest declines are expected in casual full-service restaurants and high-end fine dining restaurants. Beer sales could be impacted the least, with a projected 1.8 percent decline that doesn't reflect the small gains craft and microbrews have made this year.
"We don't have specific numbers on how the individual (beer) categories are doing, but anecdotally know that microbrews are still holding their own, particularly relative to imports," said David Henkes, vice president at Technomic and the director of the firm's on-premise practice.
Wine sales could suffer the biggest declines, at a projected 6.7 percent.
Does this mean that operators should curtail beverage expansion plans for next year? Henkes said no — but there's a specific way to roll them out. Like with anything else, these plans need to be tailored to the current market.
"Drink programs are (or still should be) extremely important to operators, as (they) drive profitability," Henkes said. "Smarter operators realize this and continue to build on and around their drinks (either through expanded happy hour promotions, expanded food menus at the bar, etc.) So we don't recommend curtailing the drink program, but it does need to be done smartly. Value is key obviously, but (so is) some point of differentiation."
The question that needs to be answered now more than ever, according to Henkes, is what makes your beverage program better than your competitor's.
Indeed, many pizzerias have been expanding or revamping their beverage options during the economic downturn as a way to stay competitive. California Pizza Kitchen has just rolled out a new wine program, for example, that maxes out around $10 and features tastings of flagged wines so wary consumers can try before they buy.
For 2009, Technomic estimates that alcohol sales will end the year down 4.9 percent. This drop in sales is further supported by current data from the Technomic/GuestMetrics partnership, which shows check averages are down 6 percent through the third quarter of 2009. On top of declining traffic, overall alcohol sales levels have fallen at a much steeper rate than the decline in food.

Topics: Trends / Statistics

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