Bev Alc Growth “Underperforming” On-Premise

Dear Client:

Turning to alcohol sales to boost growth has been a common strategy on-premise. In fact, the top on-premise chain sales growth tends to increase as level of alcohol sales increases, according to Technomic.

For on-premise chains with alcohol sales at 10-15% of total sales, their total growth was up 0.5%. Chains with alcohol sales at 15-20%, reported growth up 4.3% and those with alcohol sales at more than 20% of total sales were up 3.4%.

But, in the last 3-5 years, “consumer spending on beverage alcohol is underperforming the overall industry,” said Dave Henkes, Technomic advisory group senior principal, at the recent VIBE conference.

In 2018, consumers spent about $115.4 billion on-premise in bev alc sales, representing an annual growth rate of 2.5%, according to Technomic. Comparatively, total spending on-premise was up “well over 3%,” according to Dave.

Spirits is a bright spot at an annual growth of 2.8%. Wine is in-line with overall bev alc growth at about 2.5%, while beer was at about 2%.

In 2019, sales growth is expected to maintain the 2.5% growth rate and reach $118.3 billion in total on-premise alcohol sales. Price increases are driving the majority of that growth, which means case volume growth is either flat or in some cases declining, according to Dave.

What gives?

Technomic contends that bev alc sales on-premise are impacted by hyperchoice, both in terms of drinks options as well as on-premise locations, particularly with the increasing popularity of specialty segments like food trucks, food halls and grocerants.

Consumers are also spending more on non-alc drinks. Beverage alcohol is “uniquely challenged” because there are so many quality non-alc drinks, according to Dave. “Consumers are increasingly voting with their pocketbooks to spend on non-alcoholic beverages.”

However, a good beverage program is still part of the “winning restaurant formula,” he said. But the onus is on the on-premise operator to craft the right beverage menu.

SGWS LAUNCHES ITS OWN DIGITAL PLATFORM

Days after Republic National Distributing Co. announced the launch of its new digital platform, eRNDC [see WSD 04-23-2019], Southern Glazer’s Wine & Spirits is launching its own B2B digital platform called Proof.

The platform allows customers to reorder, restock and shop online for new brands, giving customers control of ordering and account management, per a release.

Moreover, this new platform frees up the wholesaler’s sales teams to focus on consultative selling and spending more time showing customers new brands. In fact, Proof also includes a customer relationship management platform for its sales team as well as one for their customer advocacy team to enhance the customer experience.

“Proof is one more way Southern Glazer’s is responding to the changing marketplace, meeting the evolving needs of our customers, and giving our suppliers new ways to grow their businesses,” says SGWS ceo Wayne Chaplin. “With this innovative new offering, we will be able to further strengthen customer relationships and become even better brand builders for our suppliers.”

SGWS also inked a multiyear partnership with Vermont Information Processing, a data processing, reporting and analytics solutions specialist, about a year ago. Though, SGWS tells WSD that Proof is a separate initiative.

Proof is currently available in Indiana, Kentucky and Washington and will launch in Florida, Oregon and South Carolina on May 20. The service will roll out to additional markets throughout 2019.

RAVENSWOOD TASTING ROOM TO CLOSE AFTER SALE TO GALLO

The Sonoma-based Ravenswood Winery tasting room is closing after almost 30 years. Ravenswood was one of the 30+ wine and spirits brands E&J Gallo purchased from Constellation Brands earlier this month [see WSD 04-03-2019].

But Gallo only purchased the Ravenswood brand, while Constellation kept the 12-acre property and tasting room, reports Sonoma Index-Tribune.

The Ravenswood staff will be let go next month. Ravenswood founder and winemaker Joel Peterson told the local publication that Constellation is looking to move some of the Ravenswood employees to one or more of its other wine brands.

The future of Ravenswood is unclear. No word on what Constellation will do with the property and tasting room nor what Gallo plans to do with the brand. A Gallo spokesperson said: “We plan to respect the legacy of these brands while devoting our efforts to revitalizing them and continuing to make the highest quality wines and spirits.”

WSD BRIEFS:

BARDSTOWN BOURBON CO. LAUNCHES KY STRAIGHT BOURBON WHISKEY. The Bardstown Bourbon Company has launched their first Kentucky Straight Bourbon Whiskey, Bardstown Bourbon Fusion Series #1. It’s made from a blend of their estate-made two-year old wheat and high-rye bourbons, with an 11-year-old sourced Kentucky bourbon. It is bottled at 98.9 proof and is available at a suggested retail price of $60.

B-F TO RELEASE JACK DANIEL’S APPLE. Jack Daniel’s Tennessee Whiskey has introduced their third flavor varietal, Jack Daniel’s Tennessee Apple, which will join Tennessee Honey and Tennessee Fire as a permanent flavor variation. The plan is to launch the new flavor within the next year, reports Lexington Herald Leader.

Until tomorrow,
Sarah

“You can’t wait for inspiration. You have to go after it with a club.” – Jack London

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