18/05/2023

A third of UK alcohol drinkers would rather treat themselves to a better-quality drink at home than go out

While consumer sentiment has improved, beverage alcohol consumers in the UK are still mindful of how they spend their disposable income

Although optimism for the future remains generally downbeat amongst UK beverage alcohol drinkers, there is evidence that the mood is improving.

Latest findings from Bevtrac, IWSR’s ongoing beverage alcohol consumer price sensitivity tracking, show that personal confidence levels have become more positive since September 2022. Although the overall picture remains negative, the percentage of those that believe they will be worse off in a years’ time has halved since last year, as has the number of people who are worried about the year ahead.

UK beverage alcohol consumers are also now more confident that they can pay their bills compared with September last year. Importantly, IWSR’s latest consumer data (based on consumer surveys conducted in February 2023) also shows that UK drinkers are happier than they were in the Autumn of 2022.

“While consumer sentiment has improved from the lows of 2022, beverage alcohol consumers in the UK are still mindful of how they spend their disposable income, and many say that alcohol spending is one of the first to be cut,” says Richard Halstead, COO Consumer Insights, IWSR Drinks Market Analysis. “To balance rising costs, UK alcohol consumers are adapting their lifestyle habits; going out is treated as a more occasional luxury, while the at-home occasion offers opportunities to socialise on a more regular basis,” he adds.

Consumers are responding to the impact of rising inflation in different ways, leading to two key behavioural trends in the UK:

1. Preserving the occasions that matter

The majority of UK alcohol drinkers still go out, and when they do, they still want to treat themselves. The percentage of people saying that they “won’t drink alcohol in bars and restaurants at all” has fallen by three percentage points between 2022 and 2023. However, many are choosing to go out less often, and find themselves saving up for the occasional big night out slightly more so than they did in 2022. Just under a third of all UK alcohol drinkers expect to use the sector less or not at all; current on-premise usage is net negative.

2. Allocating shrinking disposable income to essentials

Meanwhile, anxieties over personal finances, which is especially strong amongst millennials, are driving consumers to cut back on alcohol ahead of expenditure on other household categories. Recalled category momentum is trending negatively for almost all drinks categories in the UK, and buying on promotion is the favoured means of cost-cutting for drinkers – more than double that of not buying alcohol at all. A third of UK alcohol drinkers would rather treat themselves to a better-quality drink at home than go out.

These shifts in consumer behaviour continue to shape the channel share of the UK total beverage alcohol market:

• In 2019, the on-premise held almost 40% channel share of the UK market. The on-trade is recovering, but is not expected to meet pre-pandemic levels.
• The off-trade saw huge spikes in sales during the lockdown periods. As the on-premise recovers, sales in the off-trade are normalising. However, many large retailers have been successful at holding onto the increased footfall, and it is unlikely that the on-premise will reach 2019 levels again.
• Ecommerce had been gaining share prior to the pandemic, but the imposition of the lockdown and the shutdown of the on-trade boosted the online channel. After faltering initially, the ecommerce infrastructure in the UK was able to adapt quickly to meet the dramatic increase in consumer demand. Although ecommerce sales remain considerably higher than in 2019, the channel has since seen some market correction.

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