CHAPTER 1 EXECUTIVE SUMMARY 3. Hot topic 3. Action points 5 CHAPTER 2 THE FUTURE DECODED 14. Introduction 14

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1 TABLE OF CONTENTS CHAPTER 1 EXECUTIVE SUMMARY 3 Hot topic 3 The future decoded 3 Action points 5 CHAPTER 2 THE FUTURE DECODED 14 Introduction 14 Trends in alcoholic drinking occasions 15 Emerging consumer groups 15 Changing consumer occasions 17 The value of changing consumer occasions 26 Consumers repertoires create a new competitive landscape 30 Need states and occasions limit consumers drink choices 30 Wine has become the most common alcoholic drink choice 32 Bonding consumers need shared experiences 34 Women s socializing has changed the on-trade 34 Men are motivated to conform 36 Bonding can broaden or deepen social networks 38 Variations by group 42 Consumers need for indulgence leads to trading up 43 Datamonitor (Published 03/2004) Page 6

2 Consumers are turning ordinary events into celebrations 43 Extending occasions creates new opportunities 43 How consumers celebrate depends on what they value 45 Relaxing and having fun 46 Low and high energy occasions 46 Consumers use alcohol to mark the transition from work to leisure 46 Consumers need to let their hair down 48 Eating can define drinking occasions 49 Rise of the eating occasion in the on-trade 49 Interest in fine dining is boosting drinking at-home 50 Eating defines drink choice 51 Conclusions 51 CHAPTER 3 ACTION POINTS 53 Introduction 53 Make need states drive innovation 53 New packaging meets different needs 53 New products open up new markets 54 Target premium living 56 Develop a premium positioning 56 Bring existing premium products to new markets 56 Develop a food-related positioning 57 Add value by enhancing food occasions 58 Datamonitor (Published 03/2004) Page 7

3 Develop new products to suit off-trade occasions 60 Use better packaging to improve the product experience 60 Different product sizing meets more consumer needs 61 Develop a brand ladder for different occasions 63 Encourage restocking 64 Target socializing 65 Develop products with shareability to target socializing 65 Develop products for on-trade occasions 66 Use category management to maximize sales in the on-trade 67 Work with venues to hit hot spots 67 Work with venues to create the right atmosphere 67 Work with staff to ensure recommendations 68 Differentiate your product amongst category rivals 68 Target warming up pre-going out occasions 69 Target women through sophistication, glamour and fun 69 CHAPTER 4 APPENDIX 71 Supplementary data 71 Occasions 71 Consumers 75 Consumption by volume 79 Consumption by value 82 Definitions 85 Datamonitor (Published 03/2004) Page 8

4 Research methodology 86 References 86 News sources 86 Academic research 86 Industry sources 86 Government sources 87 New product research 87 How to contact experts in your industry 87 Datamonitor (Published 03/2004) Page 9

5 LIST OF TABLES Table 1: Total alcoholic drinks sales, US and Europe, Table 2: Definitions of terms 15 Table 3: Consumer groups sizes, Europe and US (m), Table 4: Definitions of alcoholic drinking occasions 17 Table 5: Total number of alcoholic drinking occasions (m), Table 6: Going out occasions by time of week, Europe and US, Table 7: High frequency Going out consumer groups by total number of occasions, occasions per person per week, and per captia spend, Table 8: Staying in occasions by time of week, Europe and US, Table 9: Table 10: Table 11: High frequency Staying in consumer groups by total number of occasions, occasions per person per week and per capita spend, Entertaining at-home occasions by time of week, Europe and US, High frequency Entertaining at-home consumer groups by number of occasions, occasions per person per week and per capita spend, Table 12: Alcoholic drinks sales by type of occasion, US & Europe, Table 13: Annual per capita spend on alcoholic drinks by type of occasion, US & Europe, Table 14: Spend per occasion by type of occasion, Table 15: Annual per capita spend by consumer group, Table 16: Total number of alcoholic drinking occasions (m), Datamonitor (Published 03/2004) Page 10

6 Table 17: Going out alcoholic drinking occasions (m), Table 18: Staying in alcoholic drinking occasions (m), Table 19: Entertaining at-home alcoholic drinking occasions (m), Table 20: Going out occasions per person per week, Table 21: Staying in occasions per person per week, Table 22: Entertaining at-home occasions per person per week, Table 23: Consumers aged over legal drinking age (m), Table 24: Young Adult Females (m), Table 25: Young Adult Males (m), Table 26: Urban Singles (m), Table 27: Non-Urban Singles (m), Table 28: Childless Couples (m), Table 29: Consumers with children (m), Table 30: Seniors (m) Table 31: Going out occasions by total consumption volumes (liters m), Table 32: Going out occasions by per capita consumption volumes (liters), Table 33: Staying in occasions by total consumption volumes (liters m), Table 34: Table 35: Staying in occasions by per capita consumption volumes (liters), Entertaining at-home occasions by total consumption volumes (liters m), Datamonitor (Published 03/2004) Page 11

7 Table 36: Entertaining at-home occasions by per capita consumption volumes (liters), Table 37: Going out occasions by total sales values (US$m), Table 38: Going out occasions by per capita sales values (US$), Table 39: Staying in occasions by total sales values (US$m), Table 40: Staying in occasions by per capita sales values (US$), Table 41: Entertaining at-home occasions by total sales values (US$m), Table 42: Entertaining at-home occasions by per capita sales values (US$), Table 43: Definitions of terms used in the report 85 Datamonitor (Published 03/2004) Page 12

8 LIST OF FIGURES Figure 1: Occasions, need states and product categories 32 Figure 2: Female- and male-oriented bars 35 Figure 3: Molson Twin Label advertising 39 Figure 4: New products targeted at existing occasions 55 Figure 5: Arbor Mist s 375ml PET wine bottle 62 Figure 6: Archers Eden 70 Datamonitor (Published 03/2004) Page 13

9 The Future Decoded CHAPTER 2 THE FUTURE DECODED Introduction This report will examine the developing patterns of people s alcohol consumption by exploring the changes that are occurring in the nature and frequency of drinking occasions. Monitoring drinking occasions creates an accurate map of the opportunities and threats in the market by functioning as a model of consumer drinking behavior. The off-trade is growing in importance The main change in consumer spending is the move to the off-trade. Entertaining athome is rising in popularity with the result that consumers are prepared to spend more on ensuring that they can produce high quality drink when requested. This will have major implications for the off-trade as consumers demand better value and greater convenience. The rise in entertaining at-home is partly driven by the emergence of new consumer groups. While Young Adults continue to dominate on-trade spending, they are shrinking in absolute number and groups such as Urban Singles and Seniors are becoming more significant factors in the drinks market. Table 1: Total alcoholic drinks sales, US and Europe, bn US$bn bn/us$bn CAGR On-trade Europe % US % US & Europe % Off-trade Europe % US % US & Europe % Overall Europe % US % US & Europe % Source: Datamonitor analysis D A T A M O N I T O R Datamonitor (Published 03/2004) Page 14

10 The Future Decoded Trends in alcoholic drinking occasions Emerging consumer groups In order to create a mutually exclusive set of consumer groups, Datamonitor used the following definitions to segment all adults aged over the legal drinking age (LDA). Table 2: Term Young Adults Urban Singles Definitions of terms Definition People aged between LDA and 24 years old. Unmarried consumers aged between 25 and 49 years old who live in urban and suburban environments. Non-Urban Singles Families Childless Couples Unmarried consumers aged between 25 and 49 years old who live in rural environments. Consumers aged between 25 and 49 years old with children. Consumers aged between 25 and 49 years old with partners and no children. Seniors Consumers aged over 50. Source: Datamonitor analysis D A T A M O N I T O R Datamonitor (Published 03/2004) Page 15

11 Action Points CHAPTER 3 ACTION POINTS Introduction This chapter will outline both general and category-specific strategies for improving performance in the drinks market through improved category management, new product development, targeted marketing messages and occasion-led branding. Action Points will deal firstly with market-wide strategies, before focusing on the offtrade market and then on the on-trade market. Make need states drive innovation In order to attract the maximum number of customers, drinks companies need to produce new products and marketing which is targeted not at consumer groups, but at occasions. Consumers diverse repertoires of drinks and occasions mean that there are no simple links between one type of consumer and one type of drink. Instead, consumers will vary what they drink according to the type of occasion they are enjoying the venue, the number of people, the amount and nature of activity. As a result, targeting occasions means developing products which tap into the need states which consumers are trying to meet during each occasion. This creates much more powerful marketing and develops products which have much greater affinities with consumers desires. New packaging meets different needs Simple innovations can strengthen brand equity Currently many beer companies are examining new packaging options to help open up the at-home market, which promises stronger growth than the highly developed on-trade. Some innovations are simple and serve merely to re-inforce the existing affinities between the brand and the occasion. Carlsberg s football cans, for example, which are specially shaped to represent a football, help to re-inforce the existing strong relationship between cans of beer and men watching sport together. The aim of this innovation is simply to create a strong recognition factor coupled with an obvious sporting connection which should help to swing impulse buying decisions. Datamonitor (Published 03/2004) Page 53

12 Action Points The novelty also functions as a talking point possibly an ice-breaker related to the activity. More serious innovations open up new occasions The entertaining at-home market is emerging as an increasingly valuable opportunity. As a result several beer companies have produced kegs or barrels for home use: Boddingtons and Stella Artois have both produced five liter kegs which allow consumers to serve an on-trade style beer to their friends. Heineken have taken this one step further and produced the BeerTender which has an inbuilt cooling system. This has raised the price to 300, which means that this particular product is aimed at wealthy early adopters rather than the mass market, for now. In each case the aim is to allow consumers to play the host, offering all the benefits of the bar or pub but with the greater comforts of the home environment. By innovating in this way these companies have transferred their products strong appeal to a new market. New products open up new markets Targeting existing drinking occasions Producing entirely new products for existing occasions allows companies to grow their market share and increase sales. The key is to identify the needs of the occasion and create a product which allows consumers to satisfy those needs. For example, Archers Eden, a sparkling blend of schnapps, wine and fruit juice, is designed for consumption at parties and as such meets the following needs: lightness and refreshment; low alcohol content (5.0%); sociability achieved through sharing a 70 cl. bottle rather than single-serve; fun. In another example, Famous Grouse produced a Famous Grouse liqueur in 2003 aimed at indulgent and prestigious occasions such as dinner parties. The appeal of this product is that it offers a means of continuing and extending the occasion and provides a final high quality touch to the event. Datamonitor (Published 03/2004) Page 54

13 Appendix CHAPTER 4 APPENDIX Supplementary data Occasions Table 16: Total number of alcoholic drinking occasions (m), Millions CAGR France 8,121 8,436 9, % Germany 12,324 12,479 13, % Italy 8,280 8,434 8, % Netherlands 2,170 2,350 2, % Spain 5,635 5,807 6, % Sweden 1,332 1,364 1, % UK 8,270 8,622 9, % Other Europe 9,342 9,619 10, % Overall Europe 56,012 57,672 61, % US 38,806 40,997 46, % US and Europe 94,497 98, , % Source: Datamonitor analysis D A T A M O N I T O R Datamonitor (Published 03/2004) Page 71

14 Appendix Table 17: Going out alcoholic drinking occasions (m), Millions CAGR France 4,508 4,709 5, % Germany 5,328 5,414 6, % Italy 4,712 4,876 5, % Netherlands 1,012 1,187 1, % Spain 3,376 3,515 3, % Sweden % UK 4,628 4,920 5, % Other Europe 4,803 5,019 5, % Overall Europe 28,819 30,116 34, % US 17,178 18,061 22, % US and Europe 45,997 48,177 57, % Source: Datamonitor analysis D A T A M O N I T O R Table 18: Staying in alcoholic drinking occasions (m), Millions CAGR France 11,932 12,058 11, % Germany 18,430 18,496 18, % Italy 12,343 12,160 11, % Netherlands 3,443 3,386 3, % Spain 8,282 8,421 8, % Sweden 2,017 1,993 1, % UK 11,841 11,744 11, % Other Europe 13,648 13,638 13, % Overall Europe 81,931 81,896 79, % US 55,264 56,963 57, % US and Europe 137, , , % Source: Datamonitor analysis D A T A M O N I T O R Datamonitor (Published 03/2004) Page 72