Alcohol Sales Expected To Grow In 2012

The restaurant industry will see a modest increase in alcohol sales in 2012, but will drive that growth with higher prices and premium offerings, new research from Technomic found.

Overall on-premise alcohol sales are expected to rise 2.4 percent next year, Chicago-based market research firm Technomic Inc. said. Gradually improving traffic numbers and operator expectations of better conditions in 2012 helped fuel expectations.

For 2011, Technomic predicted alcohol sales growth of 1.9 percent, said David Henkes, a Technomic vice president and director of the firm's on-premise practice. Inflation of 2.5 percent was assumed for both the 2011 and 2012 forecasts, Technomic indicated.

Technomic forecast 3-percent growth in overall food-and-non-alcoholic-beverage sales within the eight segments tracked for on-premise sales, Henkes said.

By industry segment, alcohol sales are expected to grow in 2012 by 3.5 percent in fine dining, 3.2 percent in casual dining, and 5.4 percent in the lodging sector, Technomic said.

Henkes noted that the relatively robust growth within some of those segments, particularly fine dining, are the result of somewhat easy comparisons, as pricier restaurants were hit hard by the recession and have been slower to recover than other segments.

Technomic said it sees nominal growth of alcohol sales of 1.8 percent for casinos, 1.1 percent for recreation facilities and -0.2 percent at concessions operations.

Technomic expects wine sales to increase by 3.5 percent, spirits by 2.3 percent, and beer by 2.2 percent.

Henkes said the actual volume of alcoholic products poured in restaurants and bars next year "will likely remain flat" compared with 2011. Growth will be "driven largely by pricing increases and by gains in certain categories like craft beers and premium spirits," he said, and through the "differentiation" of a restaurant or chain's overall beverage program.

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Bar managers have not been immune to rising product prices, nor from their bosses, who traditionally look to alcohol sales to boost profits. Henkes indicated that some of those bar professionals are beginning to push back.

"A lot more operators are willing to admit they are starting to look at different ways to enhance profitability, or at least maintain it, as price increases are not always an option," Henkes said.

A growing percentage of surveyed operators said they are trying to protect profit margins by reducing pour sizes for wine and beer, or using smaller amounts of spirits in mixed drinks, Henkes said.

Within a group of operators recently questioned about alcohol management practices, 20 percent said they had reduced the size of their draft beer pours, as opposed to 13 percent last year, Henkes said. Nineteen percent of participants this year said they had done likewise for their by-the-glass wine programs, versus 14 percent a year earlier.

Twice as many operators questioned this year, 18 percent versus 9 percent in 2010, said they are using less spirits in their mixed drinks, Henkes said.

"Those are the percentages willing to admit to that," he said, "so the number of operators actually doing something like this is likely higher."

— Alan J. Liddle, NRN.com