On-trade market context
Jones outlined that since Euro 2016, the backdrop against which pubs operate has changed significantly.
“It’s been a challenging 12 to 24 months with increases to business rates and national living wage. Two thirds of pubs have already seen negative impact of Brexit.”
He added that according to Coffer Peach’s Business Tracker, pubs were operating in a “flat” hospitality market – with growth slightly below inflation levels. “Total sales are keeping up with cost pressure, only just”.
However, Jones highlighted a positive in the fact that pubs were weathering adverse market conditions better than restaurants.
“Great news, pubs are outperforming [restaurants]. Drinks operators are far more confident about the next 12 months than food operators.”
Who are Britain’s on-trade consumers?
Jones highlighted that while the 18 to 24 age group has seen some growth – with a slightly higher proportion of the demographic drinking out weekly in February 2018 (48%) compared to February 2017 (42%) – consumption levels were "broadly flat".
The number of 25 to 34-year-olds drinking out on a weekly basis fell over the same time period from 48% to 47%, while the proportion of 35 to 44-year-olds climbed from 32% to 35%.
The most sizeable decline was seen in the over-65s, with the percentage of this demographic drinking out on a weekly basis falling from 25% to 18%.
How will frequency change?
When CGA asked 200 business leaders: "How do you think consumers eating and drinking-out frequency will change over the next year?" Some 53% predicted a decreased frequency of visit, while only 13% forecast an increase.
When asked what their marketing focus would be for 2018, 68% of responding business stated that their strategy would include encouraging repeat visits from existing customers, with 43% highlighting they would focus on gaining new customers.
Brand building via social media and brand advocates was also flagged as important areas, with around 40% of respondents saying these areas would be a point of focus in the year ahead.
Experience key in battle for footfall
CGA research found that 77% of the same 200 business leaders identified quality of experience as the key driver of consumers in 2018.
Asked what they thought the key drivers of pub footfall would be in the next 12 months, 71% of respondents mentioned quality of service, 69% flagged value for money, while 67% and 65% mentioned value for experience and food quality respectively.
Who watches sport in pubs?
CGA research found that 22% of British consumers visit the on-trade to watch sports.
As a proportion of 18 to 34-year-olds, this rises to 33%, 24% among the 35 to 54 demographic, and sits at 12% among the over-55s.
Moreover, Jones revealed that almost a third of consumers who watch live sport in the pub do so at least weekly, and that this group are more frequent visitors to the on-trade in general, with 62% of on-trade sports fans drinking out at least weekly – versus the British average of 30%.
Creatures of habit
According to figures revealed by Jones, sports watchers spend 10% more than the average visitor – coughing up an average £16.48 per visit.
Additionally, Jones highlighted that higher spending sports fans were creatures of habit, with a quarter of them having a go-to sports pub, and almost a third earmarking certain venues for specific sports.
Jones forecast that it was likely that more than half of on-trade sports viewers had already chosen where they plan to watch this summer’s World Cup.
Premier League snapshot
£34,109 – average increase in wet sales over the course of a season
5,684 – additional pints of lager sold
25% – value uplift of long alcoholic drinks
10% – average uplift in sales provided by midweek and Saturday fixtures
16% – average uplift in sales provided by Sunday fixtures
35% – of those who watch sport in the on-trade only watch football
Football, most popular by far
Jones outlined that football was by far the most popular sport in the on-trade, with 73% of respondents to CGA’s BrandTrack 2017 survey stating that they watched 'the beautiful game' in the pub.
Rugby was highlighted as the second most popular sport, with one in five stating they watch it when out, while 18% stated they watch boxing. When comparing the two, Jones explained that the numbers behind rugby were driven by older consumers while boxing was increasingly popular among the 18 to 34 age bracket.
Interestingly, 18 to 34-year-olds were least engaged with football in the on-trade.
However, despite overall popularity, the average sales uplift for a Premier League game (14%) was dwarfed by the 22% sales surge experienced during the Six Nations. While figures for boxing were lower at a 13% uplift, Jones noted that this was measured against the average Saturday night, when fights are often broadcast.
Overall, 28% of publicans stated that showing sport provided a very positive return.
World Cup 2018 not just about lager
Jones explained that while lager drives the majority of uplifts – 44% of on-trade visitors choose it while watching sport and while two thirds don’t have a go-to brand, 70% will stick to a single brand throughout their visit – providing cider, craft beer and spirits would be essential components of a pub’s offering this summer.
Each experienced strong sales uplifts during Euro 2016, with cider, craft beer and spirits seeing respective 3%, 8% and 5% extra per match day.
Fruit cider was highlighted as driving cider growth, with an increase in 10.3% in value to the on-trade versus a 0.4% decline of apple cider.
Crafting an opportunity
Moreover, CGA figures revealed that 7.7m consumers are now drinking craft beer out of home, equating to 16% of the adult population. With the average price consumers are typically willing to spend on a pint of craft beer standing at £5.41, it’s an essential addition to a pub’s World Cup offering.
Jones also highlighted that premium spirits were driving growth as opposed to value brands – with premium sales rising 13% during Euro 2016 compared to a 2% increase in value brands.
The Numbers behind Euro 2016
12% – average sales uplift on match day
£7,181 – total incremental sales per outlet
£2,855 – incremental sales from England v Wales alone
42% – sales uplift for Wales v Portugal in the semi-final
4% – sales uplift for the semi-final between France and Germany
11% – average sales uplift for Euro 2016 final
£275 – total incremental sales per outlet during the Euro 2016 final
24% of Euro 2016 on-trade visitors were female – 6% higher than Premier League proportion
43% of Euro 2016 on-trade visitors were aged over 35 – 5% higher than Premier League footfall
Who to expect?
Jones explained that of there were three key groups who over-index for watching sport in the on-trade.
‘Trending tastemakers’, 49% of whom watch sport in the on-trade versus the average 22% from other consumer groups, described as “social media-ites” by Jones, spend £20.43 on average in the pub and over-index for spend on wine, spirits such as gin, vodka and rum, as well as craft beer.
‘Business class seekers’ – 35% of whom watch sport in the on-trade – are affluent trend followers, according to Jones. They cough up on average £21.41 per visit and spend more than the average consumer on premium spirits.
‘Mainstream minded’ consumers – 32% of whom watch sport in the on-trade – drink in popular places but save it for the weekend and are more health-conscious during the week. They spend, on average, less than the other two highlighted consumer groups – £16.00 – and over-index for lager, cider and craft beer.
However, as per the numbers behind Euro 2016, the on-trade should prepare for a different demographic make-up compared to Premier League footfall this summer with more women and over-35s watching international fixtures in the pub.