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By Renee M. Covino
Convenience stores can raise a glass to their beer caves, alcohol beverage coolers and wine displays despite the recession. While the category is not recession-proof, it has officially been declared "recession-resistant and resilient," and a "tough and hardy" beverage segment, according to Nielsen Co.'s Bev Al and the Economy report, a recently released Homescan Survey study.
"Consumers are only buying what they need in these times, and alcohol beverages must be meeting some of those needs because they're buying," said Nick Lake, Nielsen's vice president, group client director for beverage alcohol.
What's more, consumers say they intend to spend even more on alcohol in the near future as they see the economy recover. Demographically, the 21- to 34-year-old age group said they were much more likely to increase their spending in every alcohol beverage category, but especially in beer and spirits. The 55-plus age group is not as likely to increase their spending for alcohol beverages, except in wine. And across all age groups, wine is shown to have the best growth chance during near-future recovery, according to the study.
The worst news reported for the category is actually a plus for the convenience channel -- "on-premise" alcohol purchases (meaning at restaurants and bars) showed substantial declines, as nearly 50 percent of consumers who said they were doing something differently to save on household expenditures reported eating out less (and drinking out less) during these economic times.
"At the end of the day, it's about the home being the center," said James Russo, Nielsen's vice president of global consumer insights, speaking to a webinar audience in late May. "In 2001, we talked about nesting, mostly due to security concerns surrounding 9/11. Now it's even stronger because of the economic concerns. Consumers are rallying around each other and spending more time at the home experience."
While on-premise drinking is down, off-premise alcohol purchases (at the retail level, including convenience stores) is on the rise, and these findings consistently cut across all age groups and income levels, according to the study.
"When times are good, people drink, and when times are bad, people drink," said Danny Brager, vice president, group client director of beverage alcohol for the Nielsen Co. "But recently, there's been an on- to off-premise shift in purchasing behavior. As consumers spend more time at home entertainment and cooking, we should all be thinking of how to cater to that trend."
Additionally, the study showed there are clear growth advantages for larger pack sizes and for domestic labels.
"At the top level, there's a propensity towards domestics in the mind of the consumer now," Brager said. "Of course, it's hardly a black and white picture. In every instance, there are exceptions."
For example, Belgian beers are seeing high growth rates, as are wines from Argentina, Chile and New Zealand, according to the study, which also showed trading down as another alcohol beverage trend consumers seem to be gravitating towards in this economy. This is true for wine, where nearly 30 percent of shoppers said they purchase less expensive labels for home consumption, and nearly 20 percent of shoppers are trading down in beer.
"Dollar growth is ahead of volume growth in beer and wine, but it's not due to trading up," Brager explained.
Premium alcohol beverage products came out in front during the holidays, specifically Easter, which occurred in April this year.
"The week ending April 11, captured Easter holiday sales and what really drove sales were higher priced products across all categories, but especially in wine," Brager noted. "Since then though, consumers retreated to more value behavior."
The table wine subsegment is an interesting one for convenience stores -- the channel (along with mass/supercenters and drug) is leading in the category's growth.
"Convenience stores are up 10 percent-plus in table wines for the 26 weeks through May 2, 2009," Brager said. "They have a small share of the category but they are growing, with more and more offering some wine selection."
Beer is getting a boost from the fact that consumers are reporting to be "shifting from spirits into beer," according to Lake.
Other top beer trends, as uncovered by the Nielsen consumer study include:
The number of consumers leaving the beer category has steadily increased over the latest 52 weeks.
Consumers that remain in the category are progressively increasing their off-premise purchasing.
The craft and above-premium segments continue to grow, but overall, consumers are trading down.
Consumers are moving to bigger pack sizes across all segments of the beer category.
As far as a channel comparison in beer, the food channel remained constant with mid single-digit growth and drug experienced high single-digit increases, while convenience store growth tapered off slightly (showing flat to low single-digit declines) in the 12 weeks ended May 2, 2009.