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Bar and restaurant operators spent much of 2021 trying to recover from the effects of the pandemic. According to the National Restaurant Association’s 2021 State of the Restaurant Industry Report, restaurant and foodservice industry sales fell by $240 billion in 2020 from the previously expected level of $899 billion.

What’s more, food service research firm Datassential reported in March 2021 that 10.2% of U.S. restaurants, or nearly 80,000 eateries, have closed permanently since the pandemic began. How did this affect on-premise beverage alcohol consumption? It fell about 40% overall.

 According to the Beverage Information Group’s 2021 Cheers BARometer On-Premise Handbook, distilled spirits fell 39.0% in 2020 due to the on-premise closures of the COVID-19 pandemic. The categories that fared the best were American Whiskey, Tequila and Irish Whiskey. These segments continued to promote heritage themes, high-end quality, value, innovation and variety. Categories experiencing challenges in the on-premise included gin, Scotch and prepared cocktails.

While consumers have discovered the joys of home mixology, it’s also made them appreciate the skills of a seasoned bartender. A Kantar Profiles/Mintel survey conducted in July 2021 found that respondents were most interested in ordering high-alcohol cocktails when they visit a bar or full-service restaurant. They also want cocktails made with healthy ingredients.

Trend watchers predict that the whiskey and sparkling wine categories will continue to do well. The popularity of tequila and mezcal shows little sign of slowing anytime soon, while interest in other agave-based spirits has been heating up.

Total wine consumption for on-premise establishments decreased 39.2% in 2020 after a few years of steady growth. Marina Velez, Research Director, Beverage Information Group, said that ‘a key challenge for the wine industry is reaching new demographic groups to maintain or increase potential growth. It has helped that wine has been progressively stealing the spotlight at traditionally beer-dominated events/venues such as sporting events, concerts, outdoor activities and festivals’.

Velez continues that ‘while the US wine market is slowly regaining steam, the landscape of the industry has changed so much that a full recovery will not mean business as usual. The on-premise market is much smaller than it was in 2019, while e-commerce is exponentially more important, and the fight for market share is more intense than it ever has been. The wine category is facing significant challenges to market share from spirits and beer. Many on-premise operators have pared down wine lists and are offering fewer by-the-glass options’.

Overall volume consumption within the beer industry has either remained flat or decreased for the on-premise segment over the course of the last decade. In 2020, the on-premise beer consumption dropped 41.3% as bars and restaurants closed their doors nationwide. The industry continues to fight intense competition from the spirits and wine categories for share of consumers’ drinking occasions.

One challenge for the beer industry is how to appeal to new demographic groups, such as women and Millennials, to maintain or increase potential growth. Although the meteoric rise of hard seltzers has led the beer industry in terms of growth, the boom seems to be waning both in on-premise and off-premise.

 

 

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