NIQ reveals economic pressures are moving on-prem occasions into the home

May 9, 2024
By Cody Profaca

The extent to which current cost of living pressures are impacting liquor sales in Australia is now widely recognised in both on-premise and off-premise trade. The specifics of how this change looks, however, is less understood. 

Recent NIQ Australia data, shared publicly via yesterday’s Drinks Association webinar, demonstrated the ways in which customers are substituting on-premise occasions with equivalent high-energy and high-drink-volume events at home. 

James Phillips, Client Solutions Director – Liquor at NielsenIQ and host of the webinar said that penetration of drink-led occasions has declined over the past 12 months, peaking in April 2023 and steadily dropping off right through until March this year.  

This means that, even though the frequency of on-premise visitation has remained relatively high overall, the amount of ‘high ticket’ visits by higher frequency visitors has dropped significantly. 

“Overall we’re seeing this drop in penetration and occasions in the on-premise really impacting the performance of the channel,” said Phillips.

“The on-premise still plays a really important role in some high ticket celebratory occasions/special occasions for a lot of consumers, with penetration levels remaining relatively high across the last couple of periods we’ve run our survey. [However,] we’re starting to see a bigger increase of the proportion of people going to the on-premise less frequently. 

“This ties into that story of less occasions in the on-premise, but an increase at home, and it’s coming to life in the sales data.”

According to Australian data gathered via NIQ’s October On-Premise User Survey (OPUS), the occasions that most increased at home vs on-premise were boozy brunches, themed events/nights, high tempo drinks, and before/after attending live sports events, all four of which experienced a net increase between 12-14%.

“So we actually ask these consumers in the on-premise ‘what are they doing at home, what kind of occasions are they replacing the on-premise at home with,’ and it seems to be the sort of high-energy/high-drink-volume occasions where we’re seeing the biggest increase or the biggest net change in occasions: things like a boozy brunch, a themed event or night at home, or a high-tempo drinks,” said Phillips.

“They’re bringing these occasions maybe where there’s a high spend back in home, maybe to manage those cost issues that we’re seeing before those budget issues that’re really impacting a lot of consumers.”

Interestingly, NIQ data shows that it is the under 35 year old demographic that has seen the highest drop across all on-premise categories despite typically having the highest disposable income. This struggle to recruit younger consumers, however, is not limited to on-premise channels, and is currently being experienced industry wide.

So how can brands target this changing face of at-home occasions? One way is to cater to the new face of at-home occasions, which, when it comes to the sub-35 year old demographic, is partly being driven by social media trends.

“Younger people seem to be replacing some of these out and about occasions with social media trends and challenges at home recreating those kind of experiences that maybe they get in the on-premise normally with something at home.”

Another way is to recognise its underlying causes. This includes examples such as the recent promotional campaign by Lion’s Byron Bay Brewery offering free rent for a year. 

“Some suppliers are really looking at ‘how do we address that,’ and ‘how do we encourage people to consume at home,’ and really capitalise on that changing occasion from on-premise into off-premise.”

Phillips concluded by reinstating the importance of on-premise channels. 

“You can’t ignore the value of the on-premise – the ability to build brands in that space and create meaningful connections is a really strong environment to be able to do that and has added benefits towards salience and brand consideration and brand equity,” he said.

“It’s really important to get the tools right and the levers right with what you’ve got to play with, so making sure you create the right offers, providing the right innovation within this wider economic context of what people are doing.”

 Click here to view the full recording of the webinar. More details about upcoming Drinks Association events can be found here.

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