Australia’s on-premise is enjoying double-digit, year-on-year growth according to CGA by NielsenIQ’s James Phillips, who said as well as being in good shape there are still plenty of opportunities for more growth – but also key challenges to overcome.
Speaking at the recent Pub Leaders Summit, which took place at Eatons Hill Hotel & Accommodation in Queensland, Client Solutions Director, ANZ, Phillips gave an expert overview of Australia’s on-premise, with seven insights to help suppliers and operators thrive.
As well as pointing to the double-digit growth, Phillips detailed the results of CGA’s research which highlighted the return of consumer confidence and a number of key trends as a result.
The seven insights are:
1. Record sales and double-digit growth
Australia’s on-premise has rebounded very strongly since the COVID-19 pandemic. Data from the Australian Bureau of Statistics shows sales in the café, restaurant and takeaway food sectors hit their highest ever level in May, with year-on-year growth of 14.7 per cent. This compares very favourably to other consumer industries like electronics, where sales were down by 7.4 per cent.
2. Strong demand for pubs and clubs
Growth is echoed in CGA’s exclusive On-Premise User Survey (OPUS), which shows well over half (55 per cent) of consumers have visited a pub or club at least once in the last three months. CGA’s Outlet Index highlights the resilience of the channel, with a 0.6 per cent net increase in pub sites between March and July—a much stronger performance than bars (down 2.6 per cent), casual dining restaurants (down 4.5 per cent) and nightclubs (down 7.4 per cent).
3. High business confidence
This positivity is reflected in business leaders’ confidence in Australia. Four in five (80 per cent) say they are very or fairly optimistic about prospects for the hospitality sector over the next 12 months—exactly level with the average in CGA’s surveys globally.
4. Value a priority
More than two thirds (68 per cent) of consumers surveyed stated that value for money is a leading factor in their choice of venue—making it the top priority ahead of food quality (66 per cent), service (56 per cent) and range (53 per cent). Half (50 per cent) say price is a key factor when choosing drinks, though happy hour deals (31 per cent) and menus (31 per cent) can be powerful too.
5. Beer the number one drink
Domestic beer remains the most popular choice among Australia’s pub drinkers, with 35 per cent buying it in the last three months—putting it well clear of soft drinks (26 per cent) and still wine (20 per cent). But while demand for big domestic brands remains high, numbers favouring craft and imported categories have dropped over the last year. Among consumers aged 18-34 across the total On Premise, they favour vodka as the preferred category, followed second by cocktails.
6. Start-ups and street food on the rise
CGA by NIQ’s research in other countries provides clues to what might come next in Australia’s on-premise. The global REACH study shows 44 per cent of business leaders expect to see more entrants to the market than in 2022—and with 57 per cent of consumers planning to visit street food operators, pop-up markets or food and drink festivals this year, a lot of the new competition could come from mobile operators and precinct venues that cater to different occasions and preferences, like Sydney’s Coogee Pavilion Precinct.
7. Cost and staffing challenges continue
While there is widespread confidence in Australia’s on-premise, rising costs and staffing issues threaten growth. More than four in five (86 per cent) operators say rising costs are a significant challenge, while three quarters (75 per cent) face recruitment and retention problems. Staff shortages are also found in many other countries, and they are pushing up pay—by an average of 11 per cent in the last 12 months in Britain.