Six lessons for the on-premise’s complicated comeback

With patio season in full swing, bars and restaurants increasing capacity and vaccinations on the rise, the recovery of the on-premise is fully – and blissfully – underway.

While capacity restrictions remain in place in most U.S. states, at least 15 have allowed restaurants and bars to fully reopen. And data show drinkers across the country are eager to return.

In April, on-premise sales velocity exceeded figures from 2019, pre-coronavirus, according to Nielsen CGA. That trend continued through May, signaling at last the sector is climbing out of the tailspin wrought by the pandemic.

In fact, distribution of core brands like Coors Light, Miller Lite and Blue Moon is slightly ahead of 2019, and Miller Lite and Coors Light are selling around 80% of their 2019 volume over the last four weeks, Jeff Long, chief commercial officer for Molson Coors Beverage Company, told Beer Business Daily.

“I think we expected to build more to those 80% to 90% levels over the summer, so to be in May and have those over and around 80% of their 2019 volume, given that about 15% to 20% of outlets have closed feels like a really good spot for those to be,” Long says.

It’s a clear sign that consumers are ready to return to establishments, says Hilary Jamieson, director of shopper marketing for Molson Coors Beverage Company, whose team has studied the on-premise landscape, collecting data and insights.

“We know people are champing at the bit to be out with friends, enjoying a drink at their favorite bars and restaurants,” she says.

While there is plenty of reason for optimism, the recovery has only just begun, says Lester Jones, chief economist for the National Beer Wholesalers Association.

“There are these little roadbumps that are getting in the way of our overall economic recovery and our on-premise recovery because the on-premise is all about people getting out and about,” he says. And while many drinkers are eager to get back, some still remain wary.

Add to that a patchwork of guidance and regulations that differ from state-to-state, from city-to-city, and even from block-to-block, combined with some retailers balking at buying kegs, and Jones says it’s no wonder the on-premise isn’t rolling full steam quite yet.

The numbers bear that out. Draft volume, for instance, captures just 4.5% of beer sales in the channel so far in 2021, whereas it typically amounts to about 8%, Jones says.

“We’ve been stuck at two-thirds of the way (to full recovery) for the last six weeks,” he says. “The reality is we need kegs, we need craft, we need those things that sold well in 2019.”

Still, the trends are positive, especially after the trauma of the last year.

“People have spent so much time at their own homes this past year, and the way to win them back is to lean into those occasions that people cannot get at home,” Jamieson says.

Indeed, Jamieson’s team found that after being cooped up for so long, people are ready to experience something a little different, including flocking back to their favorite bars and restaurants. To that end, they compiled six lessons for the on-premise as it heads towards a full recovery.

Consumers will be visiting the on-premise more

Between sales numbers and anecdotal evidence, it’s clear people are itching to get back to the familiarity of the on-premise, says Mike Schouten, shopper insights manager at Molson Coors.

“Already 67% of consumers have returned to the on-premise, with nearly a quarter of those coming for drink-led occasions. With more and more people getting vaccinated and feeling more comfortable in social situations, that number is poised for growth,” he says.

Consumers will reach for familiar brands

On-premise accounts need to prioritize core offerings, both packaged and draft, as consumers continue the trend of reaching for familiar brands, according to Molson Coors data. A full 47 share of on-premise beer sales are from top 10-selling brands, up three points pre-pandemic. Additionally, 70% of consumers say they will stick to familiar food and drink items when they return.

“Accounts will draw traffic if they are offering some great deals on those familiar brands during the gameday watching experience, and for those summer patio vibes, Taco Tuesday and other similar occasions,” Jamieson says.

They are ready for experiences

“Social occasions are the thing that people miss the most about bars and restaurants. They’re going to be ready to get back to the on-premise to be with their friends and to have those experiences that they can’t have at home,” Schouten says.

Giving consumers something to look forward to experiencing with their friends – something they can’t do at home, like gameday promotions, live music, etc. – is a recipe for winning, Schouten says. Bringing in innovations that appeal to younger drinkers will be important, too, as nearly half of 21- to 34-year-olds say they will be prioritizing new food and drinks when they return to the on-premise.

They’ll order more takeout

“The takeout-and-delivery opportunity is incremental,” Jamieson says. “Consumers will continue to enjoy that at-home occasion. So to win in this space, retailers must be visible online so consumers know what they’re offering and what they can order in just one click.”

Research shows that 77% of consumers will continue their takeout habits at the same or greater rates than in 2020. A third of consumers took alcohol to go, and 80% say they will take away drinks at the same or greater rates this year.

Consumers are looking for value

Just as consumers are looking for familiarity, they’re also looking for value as the economy continues to recover. Half of consumers say they will seek out value, and they say “a good deal” is more important than lower prices. This creates opportunities for value and loyalty programs to drive repeat visits and orders, as well as a chance to offer a range of everyday prices to meet the needs of all consumers.

They are using digital more than ever

“Digital is more important now than it’s ever been,” Schouten says. “Eighty percent of 21-34-year-old consumers tell us they almost always look up an account on their phone before they decide to visit. They want know more about the experience, the menu and the specials that are being offered before they make the decision to go.”

Digital isn’t going away, and it’s become embedded in the on-premise experience, from contactless ordering and payment options to online storefronts, social media and beyond. Data show that 70% of all consumer purchases are digitally influenced, up from 49% before the pandemic.

“Making digital part of everyday operations is key to succeeding in the new normal. It’s just something consumers expect,” Jamieson says. “If consumers can’t find the information they’re looking for, they’ll go elsewhere.”

The common theme for the last year has been uncertainty, but the new on-premise is poised to succeed now and in the future, whatever may come, by meeting consumer expectations and making customers comfortable. Even as overall sales match 2019’s performance, Jones says the industry needs to look forward.

“The question isn’t, ‘How do we get back to what we had in 2019?’ It’s, ‘How do we evolve?’” he says.