It’s hard to forget the early days of the pandemic, as well as all those hours spent scouring the internet for cocktail recipes to recreate at home while we were unable to hit up our local watering holes. But even though in-person drinking and dining has resumed, bars and restaurants have yet to return to their 2019 sales levels. According to new data from the International Wine and Spirits Record (IWSR), analysis shows that beverage alcohol consumers are still displaying a clear preference for at-home consumption, indicating that this pandemic-era behavior has become entrenched in modern drinking culture.
The data indicates that while many on-premise establishments around the world rebounded in 2022 following record lows in 2021, most markets have yet to witness their sales return to pre-pandemic levels. Of the 15 countries leading the beverage alcohol market — Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, South Africa, Spain, Taiwan, the U.K., and the U.S. — only Mexico has been able to meet (and even surpass) pre-pandemic volume on-premise.
On a global scale, the on-premise sector accounted for 29 percent of total beverage alcohol (TBA) sales in 2022, still 6 percent down from its 35 percent market share in 2019. Though the market healed slightly in 2021, climbing from a 23 percent share in 2020 to 28 percent, the stall in growth from 2021 to 2022 could indicate that consumers are going out less.
The trend of at-home drinking is strongest in Western regions, which the IWSR says is driven by a number of factors including the macroeconomic climate and cultural attitudes towards drinking. In the United States, it’s reported that 59 percent of consumers say they are going out less, which the data analysis company believes to be tied to negative perceptions of on-premise drinking due to growing awareness of the increased costs of going out for a drink.
Americans aren’t the only ones staying in more: according to consumer research conducted by the IWSR in April 2023, approximately 60 percent of consumers across North America, regions of Europe, South Africa, and Australia all report to be going out less. That said, Eastern nations still place more value on the social aspect of hitting the bar. When drinkers from each region were asked for a preference in drinking at home or out at a bar, consumers in Western regions displayed the strongest desire for at-home drinking, while those in Asia expressed the weakest.
“Asian markets and China in particular attribute a lot of importance to alcohol being a part of social life,” says Sarah Campbell, the Asia-Pacific (APAC) research director for the IWSR. “Drinkers in China, India, and Taiwan are the most inclined to come back and socialise in the on-premise.”
While about 60 percent of European and North American consumers report that alcohol does not have an important role in their social lives, only about one-third of Asian consumers reported the same. In Asia, where lengthy lockdowns fostered cabin fever and an extreme desire to return to the “normal,” attitudes towards on-premise consumption are comparatively much more positive, and the sector continues to recover. In this April 2023 consumer research report, 50 percent of consumers in China and India actually reported that they are going out more.
“The trend around going out is polari[s]ed across key markets, with consumers in most regions recalling net withdrawal from the on-trade. Asia is the only region showing net positive sentiment towards going out,” says Richard Halstead, chief operating officer of consumer insights for IWSR. “Home-premise consumption is being used as an economi[s]ing tool in many markets to allow consumers to maintain relationships with premium brands. But this is not the case in Asia, where the on-premise revival remains in full swing.”
Not all Asian countries, though, are following the same curve. While almost two-thirds of drinkers in India display a marked preference for on-premise consumption, 82 percent of Japanese respondents self-reported favoring at-home drinking. Additionally, despite China’s continued recovery with in-person sales through 2023, the deceleration of the country’s economy and increasing unemployment rates among young people have raised concerns about the longevity of the on-premise sector’s growth. While the market remains strong, the IWSR cautions that economic concerns could prompt Chinese drinkers to be more cautious, which means visiting bars and restaurants less often and spending less when they do.
These economic concerns are certainly not unique. In the U.S., increased costs of operation in on-premise markets has risen at nearly double the rate of retail, making it hard to appeal to consumers and harder for establishments to remain open. The same is true for Brazil, where on-trade pricing has increased at a rate practically double that of the off-premise, leading 53 percent of drinkers to report that they are going out less.
“High costs — of energy, staff, food and drink — are making life very hard for the on-premise in many countries right now,” Halstead reports. “There are expected to be further closures in 2023 as a result.”
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