In a free webinar for the drinks industry, IRI provided insights into key growth points in the liquor industry, including ‘the new normal’, premiumisation and the cohorts driving liquor consumption in Australia.

IRI’s webinar, entitled ‘Market Moves: Liquor in Australia’ was presented alongside Growth Scope, a marketing solutions firm that focuses on continuous insights from the liquor consumption occasion. IRI Australia’s Liquor and Tobacco Director, Mark McCaffrey, hosted the webinar alongside Mel Anderson, Director of Research and Product for Growth Scope.

Insights were sourced from IRI’s Marketplace and LiquorLens tools, alongside Growth Scope’s consumer usage and attitude panel, providing what McCaffrey describes as a “triangulation of insights between the sales, the shopper, and the consumer and occasions, that provides a rich depth of insight we’ve never been able to provide before.”

State of play – a new normal

The webinar began with an industry overview, using IRI’s Shopper Panel Liquor Survey, which depicted a decline in liquor purchases over the August 2020 to December 2021 period, which was obviously heavily affected by the COVID-19 pandemic. In total, IRI found a nine per cent decline during the survey period.

Twenty-three per cent of those surveyed in August 2020 said they had either started buying alcohol, or were buying more, compared to 14 per cent in December 2021. In particular, the decline over-indexed among younger and pre-family cohorts, with young families falling from 40 per cent saying they were purchasing more alcoholic products in August 2020, to 26 per cent in December 2021. Similarly, the pre-family demographic fell from 35 per cent to 24 per cent.  

Nevertheless, McCaffrey says there is now a “new pandemic normal for the Australian liquor market” with a higher baseline than the pre-pandemic era, and the liquor retail market now worth $22.3bn, growing at 2.9 per cent.

“We are still seeing growth, and that growth is higher on average than before the pandemic, but it has softened in the most recent year,” McCaffrey said.

A medium-term picture illustrated the extraordinary growth of the Australian liquor retail market over the last five years, with IRI finding that all retail liquor had grown at +28 per cent, and an actual dollar value growth of $4.85bn. However, IRI also stated that 62 per cent of this growth occurred in 2020, when the industry recorded growth of 16.2 per cent, and a dollar value growth of over three billion.

And despite the enormous growth in 2020, the off-premise remained resilient, posting a growth of 2.9 per cent in the year to January 2022.

Shopper metrics and occasions

This slowing of growth is also shown in the core shopper metrics IRI examined, with the number of households purchasing via liquor retail channels falling by three per cent, while the number of trips per buyer was down to 10.7, a decline of seven per cent. However, stable spend (which increased slightly by two per cent), indicates that the premiumisation trend remains strong among shoppers.

IRI’s collaboration with Growth Scope allowed the analysts to take a closer look at the consumption occasion. Anderson explained how Growth Scope had identified some of the reasons underpinning the liquor consumption occasion, in both the on- and off-premise, through a survey of over 12,000 Australians.

The survey presents a picture of a strong off-premise consumption occasion, with ‘relaxing at home’ the number one reason for consuming liquor, cited by a third of respondents. In second place was ‘eating a main meal’, with 25 per cent, while spending time with family picked up 16 per cent of those surveyed.

The activities associated with the occasions themselves were also assessed by Growth Scope, with the number one activity being ‘watching TV’, reported by 33 per cent of respondents. In second place was ‘eating a meal at home’, with 27 per cent of those surveyed, and in third was ‘having a chat’, with 26 per cent.

Anderson stated that these figures suggest a lower tempo occasion seems to be most popular with drinkers, which stands in stark difference to the way that liquor and alcohol occasions are often marketed.

“It presents a huge opportunity for organisations to reposition their offerings in light of where the bulk majority of occasions actually lie,” Anderson commented.

Assessing these findings, Growth Scope developed a framework by which it attempts to understand the underlying mood or social context of the liquor consumption occasion, with the occasions set against four criteria. These were ‘stimulate’, ‘unwind’, ‘me’ and ‘we’.

Ultimately, Growth Scope found that the majority (79 per cent) of value in the liquor retail market was created by three social contexts: ‘me time’, ‘just us’ (reconnecting with family or partners) and ‘quality time’. Growth Scope also discovered that 73 per cent of off-premise occasions involve more than one drinker, while 91 per cent of on-premise occasions involve more than one drinker, but the majority of all consumption occasions are alone or with just one other person.

IRI also assessed who was catered for when consumers last purchased alcoholic beverages, with the overwhelming response being ‘myself’, at 84 per cent in August 2020, and 82 per cent in December 2021. Over half of purchases (55 per cent in 2020, and 52 per cent in 2021) were also catering for other adults in the household.

Growth Scope also assessed the top ten on-premise locations for the consumption occasion, finding that clubs (including local sports clubs, but also stadia) took out the top spot at 23 per cent. Traditional pubs were second with 18 percent, followed by regular dining and contemporary pubs at 16 and 12 per cent respectively.

Anderson justified the decision to split up pubs into two separate sections by referring to their different ranging, drinks offering and styles of location – combined pubs would number 30 per cent, placing them firmly at number one.

Key cohorts and the strength of NOLO

The survey also assessed the age cohorts that drive liquor consumption, with perhaps surprising outcomes. It found that the over 50s create an equal amount of value as the entire under-40s cohort, with Anderson identifying this cohort as crucial for the liquor industry, as Australia’s population ages. IRI predicts that by 2030, an additional 1.31m Australians will be aged 65 or over.

The value of this cohort is even more stark in the off-premise, accounting for 43 per cent more value than the under 40s – with a greater number of consumers, and a ‘substantially higher frequency of purchase’.

Finally, IRI and Growth Scope explored the strength of the NOLO category, one of the fastest growing sections of the Australian market today. Between August 2020 and December 2021, the non-alcoholic category increased its purchase penetration by six per cent, illustrating that this category is growing rapidly but still ‘in no way close to full penetration.’ IRI stated that the category is now worth $141m.

IRI found that year on year dollar growth rate of the zero alcohol category was 24 times higher than total liquor retail, adding 66 per cent in the year to January 2022.

“That’s massive growth, although it is off of a small base, it highlights that there is a consumer need-state out there and as more NPD and more products come out of this, shoppers are buying them more often,” McCaffrey said.

The study also found that younger Australians, between the ages of 18 and 44, were twice as likely to purchase zero and low-alcohol products, compared to those over 45.

In summary, McCaffrey said: “We have a new baseline in the Australian liquor retail market, after an incredible year of growth in 2020, we are normalising at 2.9 per cent growth, but it has generated a new baseline for the Australian off-premise.”

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