january, 2009 building better beverage programs through on-premise consumer insights presented by

January, 2009

Building Better Beverage Programs Through On-Premise

Consumer Insights

Presented By

Session Overview • Building better beverage programs starts with on-premise specific consumer insights.

• This session will feature the latest on-premise national accounts consumer research fielded exclusively for the Cheers Beverage Conference.

• This year’s session will focus on the hot topics of the impact of the economy on beverage purchases, pricing service and drink menu effectiveness.

• The session also includes a review of the latest consumer beverage trends from our Cheers Consumer Trend Monitor.

Contents

• Methodology

• Impact Of The Economy Of Beverage

• Pricing

• Service

• The Drink Menu

• Cheers On-Premise Trend Tracker

• Summary

Methodology

Methodology

• Custom on-premise national chain consumer research conducted by Next Level Research and Nova Marketing.

• This study was fielded exclusively for the 2009 Cheers Beverage Conference.

• The study was conducted in December, 2008 using the on-line Zoomerang Database

• Zoomerang is the leading on-line survey tool with a national data base of over 5 million consumers.

• The study provides quantitative information on the on-premise consumer at a 95% confidence level.

Consumer Screens

• All consumers were at least 21 years old

• Split 50% male / 50% female

• Evenly spread throughout U.S.

• Must have Visited an On- Premise National Chain within the last 30 days

• Must have ordered an alcoholic beverage at an On-Premise National Chain within the past 30 days

National Chain Focus Study includes consumers from the top Casual Dining,

Fine Dining and Hotel chain consumers.

Consumer Composition

1,784

1,124

500374 321

456

0100200300400500600700800900

1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,000

ConsumersEntered

Past 30-DayChain

Past 30-DayChain TBA

Past 30-DayChain Beer

Past 30-DayChain Wine

Past 30-DayChain Spirit

Study included 500 past 30-day national chain beverage alcohol consumers providing 95% confidence level.

Drill Down Topic

#1

The Economy

Full Service Restaurant Spending As a result of the economy, three-quarters of consumers

say they are spending less at full-service bars and restaurants.

Source: NLR/NOVA: Dec 2008 with 500 past 30 day national chain beverage alcohol consumers

Females cutting back slightly

more than males

Reducing Full-Service Restaurant Spending

Nearly 80% of consumers say that they are going out less often with 25% spending less when they do

go out.

Source: NLR/NOVA: Dec 2008 with 380 past 30 day national chain beverage alcohol consumers that are cutting back

Ways To Reduce Spending Per VisitConsumers looking to cut back on their spending per visit order less expensive entrees, take advantage of special promotions,

cut back on side orders and cut back on cocktails.


Ways To Increase Consumer VisitsConsumers would respond to traffic driving promotions like

buy one get one meals and ½ priced drinks.


Drinking Behavior Changes When asked how their beverage alcohol purchases have changed over the past year, consumers are equally split

between ordering the same and ordering less per occasion.

More males are ordering the same while more females are ordering less/occasion.


Drill Down Topic

#2

Pricing

Bar & Restaurant Choice When deciding which full-service restaurant to visit, food, prices, service,

location, atmosphere and alcoholic beverages are the most important factors.


Most Importance Beverage Alcohol ItemsConsumers rate “Everyday Drink Prices At A Good Value”

as the most important beverage program element.


Importance Of Price When Ordering Drinks When ordering beer, wine and spirit drinks in full-service bars or restaurants, price is

very important for only 28% of consumers but somewhat important for half the consumers.


Knowing The Exact Pricing In AdvanceMost consumers do not know the exact price of beer,

wine and cocktails before they place their orders.


Drink Taste Expectations – Spirits Consumers strongly agree that cocktails made with premium

brands taste better than those made with house brands.


Drink Taste Expectations – Wine Consumers strongly agree that premium branded wines

taste better than house wines.


Drink Taste Expectations – Beer Consumers strongly agree crafts and imported beers taste

better than mass domestic beers.


Drink Taste Expectations – Summary Across beer, wine and spirits consumers strongly agree

that better brands taste better.


Drink Price Expectations

Across beer, wine and spirits most consumers expect to pay more for premium brands.


How Much MoreOn average, consumers expect to pay $1.81 more for a

premium beer, $2.44 more for a premium wine and $2.80 more for a premium cocktail.


Drill Down Topic

#3

Service

Key Elements Of Beverage Service Consumers rank prompt drink delivery, appropriate/clean

glassware, prompt order taking and server greetings as the most important elements of good beverage service.


Speed Of Service Satisfaction Levels

Consumers are generally satisfied with the speed of drink service that they currently experience in national chains.


Speed Of Service Expectations After placing their order, 85% of consumers expect to

receive their drinks 2 – 5 minutes.


Preferred Server / Bartender Greetings Consumers clearly prefer server / bartender greetings that provide

them with more information


Responsiveness To Suggestive Selling If trade-up brands were suggested, 50% beer, wine and spirit

consumers would order them.


Ways Servers Can Enhance The Experience

On an open ended basis, the dining experience could be enhanced if servers were faster, offered more

suggestive selling, were more knowledgeable and friendly.


Drill Down Topic

#4

The Drink

Menu

Beverage Purchase Decision TimingNearly 80% of consumers do not know what beer, wine

and spirit drink they will order in advance.


Beverage Purchase InfluencersBeverage menus and bartender/server suggestions are

the most important order influencers.


Nearly 70% of on-premise national chain consumers try a new drink at least every 90 days.

New Drink Trial


Reading Drink MenusWhen visiting full-service bars and restaurants, nearly

90% of consumers read the drink menus.


Reading Drink MenusFemales read drink menus more than males and younger

consumers read them more than older consumers.


Types Of Drink MenusConsumers clearly prefer stand alone drink menus over drink

listings on food menus, table tents or insert cards.


Number Of Drinks On Drink MenusOn average, consumers want to see 14 beer, 14 wine and

16 cocktail offerings on national chain drink menus.


How To List Beer MenuConsumers prefer to have beer selection listed by

domestics, imports and crafts on national chain menus.

Source: NLR/NOVA: Dec 2008 with 374 past 30 day national chain beer consumers

Information On Drink Menus

In addition to the drink name, consumers most want to see drink descriptions on national chain menus.


Drink Menu Visual Tests

• Five separate drink menu visual tests were conducted as part of this study.

• The menu visuals were presented to consumers in a random order to prevent any order bias.

• Patrick Henry Creative Promotions provided the menu visuals for this study and consulted on the menu questions.

Drink Menu Visual Test #1

• Tested the consumer purchase intent of three different margaritas, presented on the menu in three different ways:

1. Functional descriptions

2. Romance copy descriptions

3. Romance copy descriptions with price

Menu Visual Test #1A - FunctionalBased on functional descriptions, 47% of consumers would

order House, 31% Top Shelf and 22% Ultra-Premium.

Source: NLR/NOVA: Dec 2008 with 456 past 30 day national chain spirit cocktail consumers

Menu Visual Test #1B - RomanceAdding romance copy, reduces House orders from 47%

to 33% increasing trade-up from 53% to 67%


Menu Visual Test #1C – Romance & PriceAdding romance copy and price maintains trade-up at 67% with

slight trade down from Ultra to Top Shelf.


Menu Visual Test #1 – Results Summary

47%

33% 33%31% 31%

36%

22%

36%

31%

0%

5%10%

15%20%

25%

30%35%

40%45%

50%

Functional Romance Romance & Price

House

Top Shelf

Ultra-premium

Adding romance drink copy to menus drives significant drink trade-up and the addition of price is trade-up neutral.



• Tested the consumer purchase intent of three menus with varying degrees of drink photography:

1. Six drinks with no photos

2. Same six drinks with one photo

3. Same six drinks with a photo for each

Margarita Menu With No Photos

Margarita Menu With One Photo

Margarita Menu With Photo Of Each Drink

Menu Visual Test #2 - Results

A. No Photos

Consumers clearly prefer drink menus that feature a photo of each drink.

B. 1 Photo C. Photo Of Each Drink

14% 17% 69%



• Tested the consumer purchase intent of three different wine menu layouts:

1. Progressive (all mixed in)

2. Progressive (by varietal)

3. By varietal and price

Progressive Wine Menu – All Mixed In

Progressive Wine Menu By Varietal

Progressive Wine Menu By Varietal And Price

Menu Visual Test #3 - ResultsConsumers prefer their progressive wine lists to be

organized by varietal and price

Mixed By Varietal By Varietal And Price

13% 35% 52%

Source: NLR/NOVA: Dec 2008 with 321 past 30 day national chain wine consumers


• Tested the consumer purchase intent of three different beer menu layouts:

1. List with text only

2. List of logos

3. List of bottle shots

Beer Menu – Text List Only

Beer Menu – Logos

Beer Menu – Bottle Shots

Consumers prefer the bottle shot beer menu layout most and the logo menu approach the least.


35% 45%20%

Text List Logo List Bottle Shot List Source: NLR/NOVA: Dec 2008 with 374 past 30 day national chain beer consumers

Menu Visual Test #5

• Tested the consumer purchase intent when premium brands carried are communicated on the menu.

Chili’s Drink Menu Example


When beverage menus feature listings of the premium brands that are carried at the bar, most consumers say

that it makes them more likely to order cocktails.


Top 10

Drill Down Findings

Summary Of Top 10 Takeaways 1. Consumers are going out less often and they are more

promotionally minded than ever.

2. Drink prices that offer good value are important but price is not very important to consumers when they place their order. In fact, most consumers do not know the drink price they will pay in advance.

3. Consumers believe premium brands taste better than standard brands and they expect to pay more for them.

4. Two of the most important beverage service elements are taking orders quickly and delivery drinks promptly.

5. Consumers prefer server / bartender greetings that provide them with more information and they will respond to suggestive selling recommendations.

6. Most consumers do not know what they will order in advance and the drink menu is the key influencer.

7. Consumers prefer stand-alone drink menus with about 15 beers, 15 wines and 15 spirit drinks on them.

8. Adding romance copy to the drink descriptions on the menu drives significant drink trade-up.

Summary Of Top 10 Takeaways

9. Consumers clearly prefer drink menus that feature a photo of each drink.

10. On the beer menus, consumers prefer the beers arranged by domestic, import and craft and they prefer bottle shots over brand logos on the menu.

Summary Of Top 10 Takeaways

2009 On-Premise Beverage AlcoholConsumer Trend Report

Beer Category

Trends

Beer Trends By Type Domestics continue to dominate on-premise

consumption but crafts and imports gained ground in this year’s survey.


Light Vs. Full Flavored Beer Regular and light beer consumption is split almost

equally with regular consumption increasing slightly this year.


• Regular beer drinkers split their consumption equally across domestics, imports and crafts.

• Light beer drinkers skew heavily to domestics.

Light Vs. Full Flavored Beer – By Type


Top Domestic Beer Brands • All of the top 3 brands are all lights with Bud Light, Miller Lite, and Coors Light all increasing in popularity.

• Other growth brands include Michelob Ultra, Rolling Rock, and Miller Chill.


Beer Imports By Country• Mexican beer continues to be the most popular import.

• Irish, German, Dutch and Belgians round out the top 5.

• Rankings changed this year with clarification of the top brands by country.


Top Import Brands • Corona and Heineken continue to be the top 2 brands but both dipped slightly in popularity.

• Rounding out the 5, Guinness, Corona Light and Dos Equis all posted strong popularity gains.

• Other growth brands include Newcastle, Bass, and Stella.


Top Craft/Specialty Brands • Samuel Adams continues to dominate the segment and it grew significantly in popularity.

• Blue Moon jumped over Killian’s and Smirnoff Ice into the #2 spot.

• Other growth brands include Killian’s, Sam Adam’s Light, Yuengling, Sierra Nevada, Magic Hat and Shiner Bock.


Wine Category

Trends

Domestic & Import Wine Trends Domestics continue to dominate on-premise

consumption with imports gaining ground and almost 20% don’t know.


Wine Trends By Type The top on-premise wine types are flavored reds, light-flavored

blushes and medium flavored reds, which increased significantly.


Top Wine Varietals• White Zinfandel and Merlot are tied for the top varietal spot.

• Pinot Noir, Zinfandel, and Rieslings posted strong gains this year.


Top 15 Domestic Wines• Sutter Home and Beringer tied for the top domestic brand spot.

• Beringer, Kendall Jackson, Mondavi, Clos du Bois, Chateau St. Michelle, Corbett Canyon and Sterling showed gains vs. last year.


Wine Imports By Country • Italian wines continue to dominate the imports.

• Wines from Germany are showing the most growth.


Top 15 Imported Wines• Yellow Tail dominates imported wine brand rankings.

• Black Swan, Santa Margherita, Bella Sera, Ecco Domani made significant gains this year.


Spirit Category

Trends

• Vodka, Rum and Tequila continue to be the key on-premise spirit segments.

• Most segments showed increases vs. last year indicating consumers drink repertoire includes multiple segment.

Spirit Category Trends

Source: NLR/NOVA: Dec 2008 with 456 past 30 day national chain spirit consumers

Top 15 Cocktail Flavors• Strawberry continues to be the #1 drink flavor.

• There is a 4 way tie for 2nd most popular flavor with Apple, Lime, Cranberry and Mango.

• The growth flavors are Strawberry, Cranberry, Mango, Pomegranate and Sour Apple.


Emerging Cocktail Flavors• This year’s study included a new question on emerging flavors.

• Consumer are most interested in the Passion Fruit, Mango, Blood Orange Acia Berry, Blueberry and Pear flavors.


Top 15 Spirit Drinks • Margarita continues to be #1 but it slipped back while Rum & Coke grew to a close second. • Mojito and Screwdriver increased significantly while Flavored Martini decreased in popularity.

• Sex On The Beach was added to this year’s survey.


Next 15 Spirit Drinks • Red Bull & Vodka, Jaeger Bomb and Mai Tai increased significantly.

• Fuzzy Navel, Vodka & 7-Up and Kamikaze were added to this year’s survey.


Top 15 Call Brands

• Bacardi continues to be #1 but Grey Goose has grown into a very close 2nd position.

• Smirnoff dropped in popularity while Patron jumped significantly into the top 15 brands.


Top 10

Cheers On-Premise Consumer Trend Report Findings

Summary Of Top 10 Takeaways 1. Domestic beer continues to dominate consumption but craft

beers are growing the fastest.

2. Total beer consumption is equally split between regular and light beer with light beer skewing most heavily to the domestics and least to the crafts.

3. Mexican beer continues to be the most popular import type with Irish, German, Dutch and Belgian round out the top 5 imports.

4. Domestic wines continue to dominate consumption but imports are driving the growth and almost 20% don’t know whether they drink imports or domestics.

Summary Of Top 10 Takeaways 5. White Zinfandel and Merlot are the most popular varietals

with Pinot Noir, Zinfandel, and Rieslings each showing strong popularity gains this year.

6. Italian wines continue to be the most popular import type with wines from Germany showing the most growth.

7. Within spirits, Vodka, Rum and Tequila continue to be the key on-premise spirit segments.

8. Strawberry is the most popular spirit drink flavor with growth coming from Mango, Pomegranate, Sour Apple and Cranberry flavors.

Summary Of Top 10 Takeaways 9. Margarita continues to be the #1 drink but its popularity slipped a bit while Rum & Coke pulled into a close second.

10. The Mojito is the growth story and it seems to have grown at the expense of Flavored Martinis.

Closing • We have been conducting custom on-premise consumer research for over

five years.

• The research has ranged from macro beer, wine and spirits studies to micro studies on specific drinks.

• Our studies have been conducted for both suppliers and directly for chain operators.

• It is very exciting to see the research helping to guide more informed beverage decisions that help drive growth.

• Over the next few weeks, we will be following up with you to get your feedback on future research topics.

Thank You!

Questions

Mike Ginley, Partner

Next Level Marketing1330 Post Road EastWestport, CT 06880

203-292-6295

[email protected]

Jeff Grindrod, Partner

Nova Marketing 1 Darling Dr.

Avon, CT 06001860-676-7900

[email protected]

january, 2009 building better beverage programs through on-premise consumer insights presented by

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