driving profits in the new economy: profiting from the hottest beverage trends presented by robert...

Driving Profits in the New Economy:

Profiting From the Hottest Beverage Trends

Presented by  

Robert Plotkin BarMedia

 Sean Ludford

BevX.com  

Nightclub & Bar ShowLas Vegas

Tuesday, March 3rd, 200910 a.m. – 11 a.m.

• Knowing what lies just around the corner would make our business less precarious

• Forecasting trends before they hit is like knowing next month’s stock quotes• What mega-trends are affecting the hospitality

industry as a whole?• What spirits are on the rise and which are

cooling off?• How is the recession affecting consumer

spending?• Which cocktails are gaining momentum and

losing steam?

• There were over 945,000 food and beverage establishments in U.S. in 2008

• Every year 55,000 new restaurants open in the U.S.

• On average 133,000,000 Americans frequent restaurants every day

• Restaurant sales have grown from…• $379B in 2000• …to a projected $558.3B in 2008 (+ 47.3%)

Source - National Restaurant Association

Industry Snapshot — By The Numbers

• In 2008, 88% of restaurants in the U.S. were franchises or multi-unit operations

• Compared to 85% of all restaurants independently owned in 1980

• 57% of franchise restaurants fail within 3 years

• 59% of independent restaurants fail within 3 years

Source - National Restaurant Association

Industry Snapshot — Independents vs Franchises

Spirits and Wine Outpace Beer Growth

Industry Snapshot — On-Premise Volume Growth

Spirits Volume + 16% since 2003 (On- & Off-Premise)

Industry Snapshot — Distilled Spirits Volume Trending Up

Vodka, Rum and Tequila Trending Up

Industry Snapshot — Spirits’ Category Volume

2003 vs 2008

Industry Snapshot — Top 10 Selling Spirits Brands

Industry Snapshot — Top 10 Selling Spirits Brands

2003 vs 2008

Industry Snapshot — Top Selling Spirits On-Premise

2003 vs 2008

Industry Snapshot — Top Selling Spirits Regionally

Most Popular On-Premise Spirit Brands by Region, 2008

Industry Snapshot — Bestselling Cocktails On-Premise

Most Popular On-Premise Mixed Drinks, 2008

Industry Snapshot — Bestselling Cocktails On-Premise — Regionally

Most Popular On-Premise Mixed Drinks by Region, 2008

Consumer Research — Next Level Marketing & Nova Marketing Services

• In December 2008, Next Level Marketing and Nova Marketing conducted a research study of 500 on-premise consumers —

• All participants were of legal drinking age

• Split 50% male / 50% female

• Located evenly throughout U.S.

• All had ordered beverage alcohol on-premise past 30 days

Consumer Research — Next Level Marketing & Nova Marketing Services

• Research study gathered on-premise consumer insights into:

• Impact of the economic downturn

• On-premise purchasing habits

• Attitudes regarding drink pricing

• Drink menu effectiveness

• Quantitative findings come with a “confidence level” of 95%

• Next Level Marketing & Nova Marketing allowed us to share the study’s findings

Consumer Research — On-Premise Consumer Insights

Reducing Full-Service Bar or Restaurant Spending —

• Nearly 80% of consumers say they’re going out less often — 25% spending less when they do

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Ways To Reduce Spending Per Visit —

• Consumers looking to cut back on their spending per visit order less expensive entrees, take advantage of special promotions, cut back on side orders and cocktails

Source: Next Level Marketing and Nova Marketing

Drinking Behavior Changes —

• When asked how their beverage alcohol purchases have changed over the past year, consumers split evenly between ordering the same and ordering less per occasion

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Most Important Beverage Alcohol Items —

• Consumers rate “Everyday Drink Prices At A Good Value” as the most important beverage program element

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Importance of Price When Ordering Drinks —

• Price of beer, wine and spirits/drinks is “very important” to 28% of consumers and “somewhat important” to 50%

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Knowing Prices in Advance —

• Most consumers don’t know the exact price of beer, wine and cocktails before they place their orders

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Drink Taste Expectations – Spirits

• Consumers strongly agree that cocktails made with premium brands taste better than those made with house brands

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Drink Taste Expectations — Summary

• Consumers strongly agree that premium beers, wines and spirits taste better than house brands

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

How Much More Will Premium Cost? —

• On average, consumers expect to pay $1.81 more for premium beer, $2.44 more for premium wine and $2.80 more for a premium cocktail

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Responsiveness to Suggestive Selling —

• Half of the consumers responded that they’d probably order a beer, wine or spirit suggested by a bartender/server

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Beverage Purchase Decision Timing —

• Nearly 80% of consumers don’t know in advance what beer, wine or spirit/drink they’ll order

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Beverage Purchase Influencers —

• Beverage menus and bartender/server suggestions are the most important order influencers

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Reading Drink Menus —

• Nearly 90% of consumers read the drink menus at full-service bars and restaurants

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Types of Drink Menus —

• Consumers clearly prefer stand-alone drink menus over drink listings in food menus, table tents or insert cards

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Number of Offerings on Menus —

• On average, consumers want to see 14 beers, 14 wines and 16 cocktails offered on drink menus

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Information on Drink Menus —

• Most consumers want to see drink descriptions on menus

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Menu Test #1 - Functional Descriptions Only —

• Based on functional descriptions, 47% of consumers would order House Margarita, 31% Top Shelf Margarita and 22% Ultra-Premium Margarita

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Menu Test #2 - Adding Romance Copy —

• Adding romance copy reduces orders of House Margaritas from 47% to 33% and increases orders of Ultra-Premium Margaritas from 53% to 67%

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Menu Test Summary —

• Adding romance drink copy to menus drives significant drink trade-up — addition of drink prices has little impact on trade-up

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Top 15 Cocktail Flavors

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Consumer Research — On-Premise Consumer Insights

Interest in Emerging Cocktail Flavors

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Top 15 Favorite Cocktails

Source: Next Level Marketing and Nova Marketing

Consumer Research — On-Premise Consumer Insights

Top 15 Favorite Call Brands

Source: Next Level Marketing and Nova Marketing

Beverage Information Group

The Beverage Information GroupHandbook Division17 High StreetNorwalk, CT 06851203.855.8499

Eric SchmidtManager of Information ServicesESchmidt@m2media360.com

Publishers of:

Presented by  

Robert Plotkin BarMedia

robert@barmedia.com 

Sean LudfordBevX.com

sean@bevX.com

Driving Profits in the New Economy:

Profiting From the Hottest Beverage Trends