Despite overall negativity about the future, there is a glimmer of hope in the UK beverage alcohol market. Recent data from IWSR’s consumer price sensitivity tracker has shown increased levels of personal confidence amongst UK beverage alcohol drinkers since September 2022. Although the number of individuals who prognosticate a worse future has halved since the previous year, the majority of beverage alcohol consumers remain cautious about their spending habits. Nevertheless, current consumer data indicates a rise in consumer happiness compared to the Autumn of 2022.
Consumer sentiment suggests that alcohol spending has taken a back seat due to rising inflation, as UK drinkers are strategizing to cut costs without sacrificing socializing opportunities. With many treating going out as a luxury occasion, the at-home drinking experience has become more appealing to consumers. As a result, IWSR has noted two key behavioural trends of UK alcohol drinkers in addressing the impacts of rising inflation.
Firstly, consumers are looking to maintain significant drinking occasions, but at their discretion. For instance, although many individuals choose to go out less frequently, they are still prepared to indulge themselves when they do. Secondly, with anxieties regarding personal finances growing, consumers, especially millennials, are reducing their alcohol expenditure. Data suggests that individuals are cutting costs by preferring promotions during their alcoholic beverage purchases rather than not purchasing at all. For instance, a third of UK alcohol drinkers opt for a better-quality drink at home, rather than going out, indicating an increasing interest in drinking at home.
Overall, these shifts in consumer behaviour continue to shape the UK total beverage alcohol market. The on-trade channels, including bars, restaurants, hotels, and nightclubs, which held almost 40% channel share of the UK market in 2019, are now recovering but are not expected to match pre-pandemic levels. Similarly, though the off-trade channel, which includes supermarkets, off-licences, shops, and online-stores, saw significant sales spikes during the pandemic lockdown period, sales are now normalizing as the on-premise recovers. As a result, many large retailers have been successful in maintaining increased footfall, making it difficult for the on-premise channel to achieve 2019 levels again.
Finally, online-sales, which had been on the rise before the pandemic, experienced significant acceleration during the pandemic and lockdown periods. Although ecommerce sales are still higher than in 2019, the channel has witnessed a market correction after initial system issues during the pandemic. Despite these circumstances, the online infrastructure has adapted quickly, meeting consumer demand for alcoholic beverages.
