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Why the on-premise matters for wine producers (and not just during the festive season)

Market Bulletin | Issue 278
13 Dec 2022
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According to data from the IWSR, the on-premise channel[1] in Australia declined significantly during COVID-19 after being static for a number of years. It showed only a partial recovery in 2021 (see Figure 1), when it was estimated to account for just 11 per cent of total sales, or around 54 million litres.

Figure 1 - On-premise wine sales in Australia

Source: The IWSR

However, the significance of the on-premise as a sales channel for wine producers is much greater than its share of sales. In this Market Bulletin we identify three key reasons for this, based on the CGA by NielsenIQ (CGA) On-Premise User Survey (OPUS), which provides a range of insights into the behaviour of on-premise visitors in Australia and other major alcohol markets.

#1 Younger generations over-index in the on-premise

Among frequent (at least weekly) visitors to the on-premise, according to CGA, 43 per cent are aged 18–34 and just 21 per cent are 55+ years old. By comparison, in the general population, the share of adults in the youngest cohort is 27 per cent and the share aged over 55 is 38 per cent (Figure 2).

Figure 2 - Comparison of general adult population with regular on-premise visitors by age group

Source: ABS 2021 Census and CGA OPUS September 2022

This means that the on-premise environment provides an important opportunity to engage with the younger generations, which are showing less interest in the wine category generally. Social media may be the key to doing this, with OPUS finding that 41 per cent of consumers report getting ideas of where to go to eat or drink from their friends’ social media, and 31 per cent often ordering ‘new and exciting drinks’ that they see on social media.

#2 Wine over-indexes in the on-premise

Strictly speaking, this is not quite correct. Wine is the most popular alcoholic beverage in Australia overall, with 45 per cent of adults in Australia drinking wine over the 12 months to June 2022 according to the Roy Morgan Alcohol Consumption report (2022), with beer in second place at 33 per cent. In the CGA OPUS study (September 2022), 43 per cent of on-premise visitors were found to ‘typically’ drink wine – the second-most popular choice after beer (45 per cent) and just ahead of spirits (39 per cent)[3]. This ranking difference can be at least partly explained by the relatively high share of younger people among regular on-premise visitors, whose consumption of wine is lower.

However, looking at the different types of on-premise venues separately, wine (still wine in particular) features strongly across the board (except in nightclubs), whereas beer dominates in pubs and sports bars, but doesn’t feature in the top five beverages in any other type of venue (Figure 3). This broad popularity and versatility of wine gives brand owners a wide and diverse range of opportunities to create wine-based experiences for consumers.

Figure 3 - Top-ranked drink categories by type of on-premise venue

Source: CGA by NielsenIQ

Still wine dominates the food-led occasions in particular, which provides a substantial advantage in terms of contact opportunities, as around 90 per cent of OPUS survey respondents have eaten out at least once in the past month, compared with 44 per cent who have been out for a drink in the past month.

#3 The on-premise is a channel for experimentation, premiumisation and building connections with brands

According to CGA[4], 60 per cent of on-premise consumers globally say that experiences in the on-premise have prompted them to purchase drinks in the off-premise, while 36 per cent claim to try new drinks in the on-premise (compared with 31 per cent who ‘stick to what they know’). The combination of these drivers creates an opportunity for brand owners to introduce their products to consumers in the on-premise environment and create a link to drive further consumption in the off-premise later.

The on-premise would seem to be a suitable environment for trying no- and low-alcohol alternatives, because of the connection between going out and driving. However, only 12 per cent of Australian on-premise consumers reported choosing these options in the latest OPUS survey (September 2022) compared with 13 per cent six months previously. On the positive side, those who did choose them were choosing them more often, with the share of no- and low-alcohol consumers choosing one of these products ‘every time’ or ‘almost every time’ increasing from 33 per cent to 49 per cent (Figure 4).

Figure 4 - Frequency of drinking no or low alcohol alternatives among those on-premise consumers who choose them at least occasionally

Source: CGA by NielsenIQ

In terms of premiumisation, the results are mixed. CGA found in the monthly ‘pulse’ survey in November 2022 that 26 per cent of respondents said they spent more per visit, compared with 22 per cent who spent less. While this was mainly attributed to increases in the price of food (64 per cent) and drinks (50 per cent), a significant share of respondents reported spending more because they were treating themselves more (33 per cent), celebrating more special occasions (27 per cent) or buying more premium drinks brands (16 per cent).

A stronger indication of intention to choose more premium products was the finding that, in the past six months (to September 2022), the proportion of Australian on-premise visitors who expressed a willingness to pay extra for a better quality drink increased from 47 per cent to 53 per cent (although globally that figure was 63 per cent[5]).

#4 (a bonus) The Australian on-premise may be particularly resilient over the next few years compared with other countries

Globally, the on-premise is likely to face headwinds over the next few years. The IWSR forecasts that the channel will recover slowly and in a ‘nuanced’ manner, with rising costs (for consumers and trade), staff shortages and slowing economies limiting growth in the short term, while changes in consumer behaviour such as working and entertaining at home are expected to be long-lasting.

However, the on-premise in Australia may be better positioned that some other markets for a recovery.

According to the CGA OPUS survey, Australian consumers see the on-premise as an important part of their lives, with 73 per cent reporting that they would be either ‘disappointed’ if they couldn’t eat/drink out, or ‘lost without it’. They were also less concerned than the global average about the increased cost of living (26 per cent reported being severely impacted compared with an average across all surveyed markets[6] of 35 per cent), and 60 per cent felt confident that they would be able to afford to visit the on-premise as frequently in the next 12 months. In fact, 26 per cent reported intending to spend more than they usually would on eating/drinking out over the next 12 months – the second highest category for increased expenditure after domestic holidays.

The latest Wine Intelligence Australia Landscape Report (November 2022) reports that the frequency of wine consumption in the on-premise has increased significantly among regular wine drinkers since 2019, with celebratory and formal occasions seeing the biggest increases in consumption frequency. There are reasons for optimism about the on-premise in Australia.


[1] Restaurants, pubs, clubs, wine bars etc

[2] Bi-annual survey of 4000 adults in Australia who visited the on-premise at least once in the previous 3 months

[3] Respondents could choose multiple options

[5] CGA Reach global survey 2022

[6] CGA Reach global survey 2022

This content is restricted to wine exporters and levy-payers. Some reports are available for purchase to non-levy payers/exporters.

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This content is restricted to wine exporters and levy-payers. Some reports are available for purchase to non-levy payers/exporters.