Nielsen: Elbows Bend Cautiously as Economy Strengthens

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Nielsen: Elbows Bend Cautiously as Economy Strengthens

Despite signs of an improving economy, U.S. consumers remain somewhat cautious about their alcohol beverage spending, according to new research by The Nielsen Company

Presented at the recent Consumer 360 Conference in Las Vegas, Nielsen’s research shows that a significant percentage of consumers claim they’re going out less often now than before the economic downturn. Nearly half of consumers (47 percent) reported going to bars or clubs less often, while an even greater number said they’re paying fewer visits to casual (58 percent) and fine-dining (60 percent) establishments.

On the other hand, when asked how they’ll change their habits as the economy improves, 37 percent of consumers said they would visit casual restaurants more often, while less than a third of consumers said they’d make frequent returns to fine-dining (27 percent) and bars or nightclubs (16 percent).

Interestingly, the results showed a significant generation divide: younger millennial consumers (age 21-27) signaled their intent to go out much more often as the economy improved, while consumers 55 and older expresssed much less optimism about their future “going out” prospects.

“Staying in continues to be the new night out,” said Danny Brager, VP and group client director for beverage alcohol at Scahumburg, Ill.-based Nielsen. “As the economy worsened, consumers turned to at-home dining and entertaining, and now that the economy is starting to improve, uncertainty about the extent of the recovery continues to dampen the consumer ‘rush’ to go out more often. This trend continues to serve as a significant opportunity for alcohol beverage retailers, who are actively promoting products and beverages that can help enhance consumers’ ‘night out’ at home.”

While “trading down” has been the buzz of the economic downturn, more than three-quarters of consumers surveyed claimed they haven’t changed their alcohol beverage purchases because of price. Of that group, one-quarter of these consumers are simply buying less often. A lesser amount (13 percent) continues to buy the same products, but wait until they go on sale. Twenty percent tried less expensive products but weren’t happy with the quality or experience.

Compared with before the start of the economic downturn, 16 percent of beer consumers, 18 percent of spirit consumers and 23 percent of wine consumers said they usually purchase less expensive products.

Of those that did trade down, more than two-thirds (79 percent of wine consumers, 67 percent of beer consumers and 63 percent of spirits consumers) said they can generally find good products at lower prices. And for those that aren’t finding the quality as good? They’re willing to sacrifice some quality for the sake of savings.

The majority of trading-down consumers told Nielsen they would continue to buy less expensive products as the economy continues to improve (75 percent of wine consumers, 70 percent of beer consumers and 66 percent of spirits consumers). When examining those consumers that reported that they would trade back up, millennials (age 21-34) in particular are relatively more likely to trade back up, compared with other age groups across all alcohol beverage categories.

“Although trading-down activity dominated the recession discussion, especially among wine consumers, a large segment of consumers stood pat in their price selections,” said Brager. “That said, there is a noteworthy segment of consumers who did trade down, and it appears that we probably won’t see much of a trade-up comeback from that group. Alcohol beverage companies need to determine how to deal with consumers whose trading-down actions are more entrenched.”

Compared with the start of the economic downturn, about one-third (36 percent) of consumers said their purchases are more planned, and less on impulse. “This presents tremendous opportunities for alcohol beverage manufacturers and retailers to reach these consumers before they enter the store,” noted Brager.

Nielsen surveyed about 7,500 U.S. alcohol beverage consumers of legal drinking age in April/May 2010. Responses from the online survey are across age groups, income level and gender.