The US on-premise: will it recover and, if yes, how quickly?
USA | The on-premise represented 17 percent of total alcohol sales in 2019. The closure of bars and restaurants during the pandemic saw its share drop to 9 percent in 2020. The IWRS, a research outfit, forecasts that it will only be back at 12.4 percent of US volume in 2024.
Not only restaurateurs, craft brewers too will want to know the reasons why the on-premise (including taprooms) may not get back to its previous share over the next four years.
As Brandy Rand, an analyst with IWRS, told members of the Brewers Association during a January 2021 webinar, a lot of that has to do with the overall closings of bars and restaurants. She pointed out that more than 100 000 venues were shuttered last year. “We think there is a significant impact in terms of just the number of venues,” she added.
Beer has been losing out
Then there is also a long-term trend which needs to be acknowledged. Over the past two decades, there has been a decline in on-premise share and an increase in off-premise or at home consumption, Ms Rand explained. This shift not even the thousands of craft brewers with their taprooms could avert.
In fact, beer’s share in both on- and off-premise volumes has shrunk and it will diminish further, not least because of the rising popularity of RTDs and hard seltzers.
Ms Rand believes that US consumers are becoming more comfortable about drinking at home, as evidenced by more at home entertaining and cocktail making.
As an observer, I think the latter trend marks a reversal rather than a shift. Trusting the evidence from TV series like Mad Men (2007-2015), everybody in the US in the 1960s knew how to mix a signature cocktail. Why Americans ever lost the knack, together with the cocktail shaker, I have no idea.
A slow recovery
Ultimately, the trend towards cosy sofa beers and cocktails has slowly been eroding the on-premise’s share over time. Of course, covid-19 just accelerated this trend, Ms Rand said.
It is several factors, which, combined, will slow down the on-premise’s recovery: consumers’ hesitancy to return to bars and restaurants; the time it will take to get people vaccinated against the virus, and, not least, the suspension of corporate travel. “A lot of companies have now told employees to work from home for good, and many of the big on-premise places for entertainment, eating and drinking have a long way to go before they get back to where they were,” Ms Rand declared.
If all of this sounds grim, take heart from the following: This is just a forecast. It could change like the weather.
