Drinking Habits Changing

A new report from independent market analyst, Datamonitor (DTM.L), forecasts that the consumption of beer is set to decrease to 93 liters per person in Europe and 114 liters in the US by 2011, with spirits set to remain largely unchanged at about 5 liters per person in Europe and 7 liters in the US. Wine is the only category where consumption is forecast to increase, to 37 liters per person in 2011.

“Health concerns along with changing alcoholic drinks preferences are having an impact on consumption,” comments Matthew Adams, consumer markets analyst at Datamonitor and author of the report. “Favourable attitudes to moderation are on the rise as consumers seek to both keep their consumption in check and also spread it out over the course of the week in a ‘continental’ type approach.”

Across all categories an important factor in market dynamics is the changing demographic balance of society. Western countries continue to experience a demographic shift, favouring a maturing of the population. This means that the growing number of consumers in older age groups will boost the market share of traditionally more mature drinks such as spirits and wine. So while some categories appear to be experiencing slow growth or decline it is because their traditional consumer base is shrinking relative to the overall population.

Beer’s mixed fortunes

The appeal of a beer belly is apparently diminishing for many consumers. Beer still dominates the alcoholic drinks market in volume terms, but it has been losing out to wine in many countries of Europe and is now perceived to be old-fashioned and stodgy. Per capita, beer consumption by consumers of legal drinking age is on the wane in France, Germany the Netherlands and the UK. Spain, Sweden and Italy are showing modest growth on the same basis. In the UK though, per capita beer consumption is highest among Young Adults (LDA-24) and declines with age.

Men account for a larger portion of the beer market with men consuming more beer than women by a ratio of roughly three to one. This leaves marketers with the challenge and opportunity of targeting women with new beer products while not alienating male consumers. The sluggish growth of the beer category makes premiumization essential for marketers in order to maintain the value of the category and consumers need to be encouraged to trade-up. Fortunately for many beer brands a large number of consumers seem to need little encouragement in this direction. Sales of premium lager brands account for a growing proportion of the lager sub-category in all countries of Europe with the exceptions of Italy and the Netherlands. In 2006 in the UK this proportion reached 47% and is forecasted to reach 48% by 2011.

Wine still booming

Wine has been one of the runaway success stories of recent years especially in countries with less tradition for wine drinking. Much of this success has been due to the emergence of ‘Megabrand’ wines such as Jacob’s Creek and Nottage Hill. However, the emergence of these brands has also stunted the price growth potential of the wine category as consumers are continuing to but wine based on perceived value for money in supermarkets rather than in specialist wine stores or in the on-trade. The main barrier to higher on-trade sales is the lack of perceived value-for-money, with consumers feeling let down by high prices and high mark-ups. Despite these minor barriers volume of wine consumed continues to rise with UK consumers boosting their consumption at the fastest rates but with their overall consumption still lagging behind that seen in France and Italy.