The (nearly) year-end data is already starting to trickle in. Indeed, NielsenIQ hosted a year-in-review presentation this week, reporting strong total bev alc sales in 2022. Despite less-than-ideal economic conditions and other external factors, total bev alc sales are up double digits as we near the year's end.
Jon Berg, NielsenIQ vp of thought leadership, and Drew Hummel, CGA client solutions director, reported that combined on- and off-premise bev alc sales tracked by NielsenIQ have amassed $198 billion for the latest 52 weeks ending October 8 - an increase of 14%. Breaking that down, we see 55% of bev alc dollar sales coming from the on-premise, and 45% coming from the off-premise.
Important note: this data comes from NielsenIQ's tracked channels, which as we understand it, holds a complete picture of the on-premise and just a part of the off-premise. You may recall, NielsenIQ acquired CGA earlier this year.
WINE LOSING SHARE TO SPIRITS. Over the 52-week timeframe, wine sales amounted to $35 billion on- and off-premise, up 6%. Broken down further, 43% of wine dollars are sold on-premise (in this data set), while 44% are sold in food and liquor channels. "Over the last year, wine has lost just over 1% total bev alc value share to mostly spirits," Drew said.
As for on-premise, dominant red varietals including cabernet sauvignon (up 0.8 share points), pinot noir (up 0.3 share points) and merlot (up 0.2 share points) gained dollar share while top white wine varietals including chardonnay (down 1.4 share points) and pinot grigio (down 0.3 share points) lost share. Meanwhile, Champagne (up 1 share point) and sparkling wine "have both benefited from celebratory and treat occasions," Drew said.
Off-premise, however, sparkling wines have been facing declines while wine-based alternatives, wine-based cocktails and non alc wine have been on an upswing. "Wine really needs to step up with some innovation," Jon said, pointing out that wine needs to appeal to that increasingly important consumer segment: Gen Z.
LOWER PRICED WINE LOSING SHARE TO RTDs. While RTDs (malt, spirit and wine based) are "the category we probably get asked about more than anything else," Drew noted the category is "still in its infancy" in the on-premise. In fact, "the percentage of consumers consuming RTDs in bars and restaurants actually declined versus last year, which seems counterintuitive because there's more options than ever." How?
Drew explained that in 2021, RTDs "had a perfect opportunity to be adopted," due to "staff shortages operators were dealing with" plus "hygiene concerns that consumers had." To recover RTD sales on-premise, Drew said suppliers and operators "need to work together" on the cost structure and consumer education.
As for how RTDs are interacting with other categories, Jon said of the off-premise that wine priced $15 or less is experiencing some headwinds from competition with RTDs. "Shoppers in the lower price wine areas have found products that they've gravitated toward, whether it's wine-, spirits-, or malt-based RTDs."
SPIRITS ON FIRE ON-PREMISE. As for how things are faring for spirits this year, the answer is pretty well, especially on-premise. Over the 52-week timeframe ending October 8, spirits have sold $74 billion, up 18%. The vast majority of those dollars, about 71%, are sold on-premise in this data set.
"Spirits have performed exceptionally well over the last couple years," Drew said. "In the last 52 weeks, they've actually gained over two percentage points of total beverage alcohol value share from beer and wine, respectively."
While whiskey has retained the top value share (25.6%) on-premise, "the real standout is tequila," which has gained 1.1 share points to land at 22.6% share. "It has nearly caught up to vodka's share of the on-premise dollars," Drew said.
ECONOMIC IMPACTS ON CONSUMER SPENDING IN 2023. In terms of how consumer spending might be impacted in the new year, even with higher prices, total bev alc has trailed overall inflation by quite a bit and now sits at 5%, with in-home bev alc purchases at 3.8% inflation and out-of-home bev alc "a little closer" to the average inflation rate at 7%.
A consumer survey where NielsenIQ polled 15,000 consumers the past few weeks also shows the majority of consumers said they expect to spend more or the same as they've been spending over the next three months. Celebrations and special occasions at bars and restaurants will also be prioritized over other "comparable experiential expenses like entertainment, festivals and sporting events," Drew said.