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US off-premise leads spirits growth

Spirits sales growth in the US off-premise channel are significantly outpacing the on-trade, new data from Nielsen shows.

Off-premise sales growth is outpacing on-trade development in the US spirits sector
Off-premise sales growth is outpacing on-trade development in the US spirits sector

While on-premise remains the “pre-eminent environment in which adult beverage trends first emerge”, growth in the channel reached 1.6% in volume and 2.6% in value terms for the 52 weeks to mid-July, compared to 3.3% and 6.3% in the off-premise.

“Off outperforms which presents a challenge for suppliers, distributors and retailers to drive traffic into bars and restaurants and ensure the right products are presented at the right price to deliver a great experience and true sense of value,” the analyst says.

While value growing ahead of volume indicates a consumer willingness to trade up, keen awareness of pricing in the off-trade means restaurant and bar operators need to work to make sure their pricing can be justified by the overall experience, they add.

In terms of category developments, vodka and whiskey compete to lead the on-premise in both volume and value terms, while in the off-premise vodka leads on volume, but whiskey dominates on dollars.

Flavoured variants had a higher share in the on-premise (flavoured vodka accounted for 27% of on-premise vodka, compared to 21% on the off-premise, with flavoured whiskey at 17% and around 14% respectively).

Top performers in the on-premise were rum and brandy, with Cognac, Irish whiskey, ryes, Tequila and mezcal all into the double-digit range.

However flavoured vodka, Canadian whisky and cordials all posted declines of 2-5% over the 52-week period in both volume and value terms.

Nielsen released the data after the introduction of its On Premise service, which allows the analyst to make direct comparisons between the channels for the first time.

“What we are just starting to uncover is the complex picture which just begins to scratch the surface of the interdependence between on- and off-premise,” said Scott Elliot, Nielsen CGA senior vice president.

“Opportunities exist for suppliers, distributors and retailers to work together to drive optimal assortment, ranging and pricing. This will leave the retailer well placed to capitalise on nascent trends, open up new occasions and tap into consumer willingness to innovate and engage. And ultimately, that will mean happier customers and higher sales.”

Earlier this year Nielsen released figures which showed gin sales in the UK on-trade grew 13.6% in the 12 months leading up to the end of January 2016 but declined 2.2% in the US.

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