The changing face of alcohol sales

By Travis Traini

Alcohol beverage sales are changing to capture a new generation of consumers.

Years before the pandemic, the foodservice industry had been experiencing a decline in the sale of alcoholic beverages for young customers aged 18 to 24 years, making up seven per cent of all alcohol orders at drinking places in 2020 compared to 27 per cent in 2013.[1]

This decline, unsurprisingly accelerated by the pandemic, is part of a longer-term trend of fewer young people going out to drink at licensed establishments and going out less often. The legalization of recreational marijuana in Canada may play a factor as well, as those partaking in marijuana before a night out are considered in some cases less likely to mix and drink alcohol.

During the pandemic and the closure of dining rooms and drinking places, takeout and delivery of alcoholic beverages became permitted to assist restaurants with reduced revenues. Restaurants quickly seized this opportunity and after the first year of the pandemic, 49 per cent of surveyed restaurateurs started offering takeout/delivery of alcoholic beverages.[2]

Beer was the most popular alcoholic drink ordered for takeout/delivery, followed by wine and then ready-to-drink canned beverages such as hard seltzers, vodka soda, gin and tonics, and so forth. Looking ahead, nearly 30 per cent of 18- to 34-year-olds are interested in purchasing alcohol for delivery or takeout from a licensed restaurant or drinking place over the next 12 months, compared to just eight per cent of those 55 years of age or older.[3] Do-it-yourself drinks are in vogue, too. Curren Goodden Associates’ 2021 Canadian Spirits Report + Bar and Beverage Showcase indicated that 34 per cent of consumers who report ordering spirits on-premises have also ordered a cocktail kit for takeout/delivery.

Ready-to-drink beverages such as canned margaritas are one of the fastest-growing alcohol categories and DoorDash’s Future Market Insights projects that the global drink cans market will grow by 2.3 times through 2031.[4] Alcohol takeout and delivery has also given consumers access to unique bottles that they might not have been able to source elsewhere, which is predicted to have an ongoing appeal beyond the pandemic.[5] The overall popularity of hard kombucha, hard iced tea, and hard seltzers are increasing and expected to continue for a greater variety of non-traditional hard drinks in 2022. “We’ve seen hard seltzer move into hard everything else,” said Kara Nielsen, Director of Food and Drink Forecasting at trend forecasting company WGSN.

Beyond delivery, pairing, and experience packages being put together by restaurants to expand into this new off-premises revenue stream, foodservice operators should also be taking steps to modernize their beverage menus to appeal to the changing tastes of younger customers.

Younger customers are less interested in traditional alcoholic beverages and demand low and alcohol-free beverages (an expansion of the mocktail programs at many bars and restaurants has been seen in the market). A 2021 study by IWR Global found that 60 per cent of respondents reported an intention to try new no- or low-alcohol brands and predicted 3.6 per cent growth in the category in Canada by 2024.

Another growing beverage segment, especially for younger customers, is alcoholic beverages that include ingredients and supplements with health benefits, including hard kombucha and botanical spirits, allowing consumers to enjoy drinks that are flavourful without the use of sugars and syrups. Beverages with adaptogens (herbal pharmaceuticals stemming from roots and herbs from Chinese and Ayurvedic healing traditions) are also increasing in popularity.[6]

Restaurateurs should continue to develop this new off-premises revenue stream and expand dining room beverage menus to meet the needs of young customers. Offering a wider range of premixed canned alcoholic beverages on off-premises menus and expanding mocktail options and selections of low alcohol beverages with health benefits are expected to become more in demand and may help restaurateurs keep up with the needs of a new generation of customers.

Travis Traini is a Principal at fsSTRATEGY, a consulting firm specializing in strategic advisory services for the hospitality industry, with an emphasis on food and beverage.

[1] Restaurants Canada Foodservice Facts, 2021
[2] Restaurants Canada Q1 2021 Restaurant Outlook Survey
[3] Restaurants Canada Foodservice Facts, 2021
[4] DoorDash, 2022 Alcohol Trends: What Consumers are Drinking Now
[5] Ann McArthur, president at Nourish Food Marketing in Toronto
[6] DoorDash, 2022 Alcohol Trends: What Consumers are Drinking Now