Alcohol Purchases in Bars, Restaurants Hurt by Economic Downturn

Alcohol Purchases in Bars, Restaurants Hurt by Economic Downturn

Nearly 44% of bar managers, bar owners and bartenders report a decrease in consumer traffic at their establishments, according to a May 2008 study from The Nielsen Company and Bevinco.

Among the 500 bar operators surveyed, 25% note a decrease in the number of on-premise drinks ordered, and 22% say customers are ordering less-expensive drinks.

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The bars were located in US nightclubs, hotels, casual restaurants and fine-dining restaurants. Among these types of establishments, the casual dining sector appears hardest hit, with 46% of respondents reporting a decline.

Consumers Going out Less

Consumers also report that they are cutting back. According to a May 2008 Nielsen consumer survey of 3,500 consumers, two-thirds (66%) of fine-dining patrons say they are going out less often than a year ago.

Their sentiments are echoed by 65% of those who visit nightclubs, 55% of bar patrons, 59% of casino and resort patrons and 52% of casual diners.

Regional Impact

Establishments on the East Coast and West Coast report the largest declines in on-premise alcohol consumption, with bar owners and operators in California (55%) and Florida (52%) citing significant decreases in traffic.

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In addition, 43% of Florida operators say they’ve experienced a decrease in the number of drinks ordered. Only one-third of establishments in Florida and California claim there has been no overall impact.

In Texas, slightly more than half of operators report a decrease in consumer traffic, while nearly one-third say patrons are ordering less expensive drinks.

Beer Fares Best, Wine Sales Lag

Beer sales are affected the least by the economic downturn, with wine sales showing the most impact, according to Nielsen and Bevinco. Nearly half of total respondents rate beer as having the “best” sales trend of the three categories, followed by spirits at 40%. Only 11% cited wine as having the best sales trend of the three.

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Operators also report the following minor price-related changes in consumer behavior:

  • 14% report that customers are ordering more well or house drinks.
  • 13% report greater sales of beer on draft rather than in bottles.
  • 9% say wine drinkers are increasingly opting for house varieties.

“Wine is more likely to be consumed in dining establishments, which have been more heavily impacted by the economy than bars or nightclubs,” said Danny Brager, vice-president, Client Service, Beverage Alcohol, The Nielsen Company. “At the same time, beer and spirit companies vigorously market their product to bartenders, likely resulting in greater ‘share of mind’ compared to wine among servers and bartenders.”