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Out-of-home Drinking - UK - September 2009

This is the first time Mintel has produced a separate report looking at the market for and developments in on-trade alcohol. On-trade alcohol sales have grown steadily during the past decade but this disguises an underlying trend of decline in real terms – much of the increase being due to tax and price increases rather than volume growth.

The current economic recession has served to hasten the rate of decline in on-trade alcohol sales, while a growing number of consumers claim to be drinking more at home. This report examines the internal and broader factors that drive the on-trade market, provides an overview of the market’s competitive context and provides data on recent and projected market performance, as well as consumer data such as who drinks in the on-trade and the factors causing some consumers to stop visiting on-trade outlets or visit them less frequently.

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definition
          • Abbreviations
          • Future Opportunities

            • Short-term pain for long-term gain?
              • But it’s not just about the money
                • Adding value is the key to longer-term growth
                • Market in Brief

                  • On-trade alcohol sales growing, but declining in real terms
                    • Figure 1: Trends in sales of on- and off-trade alcohol, at constant 2005 prices, 1998-2009
                  • Beer dominant but wine has been the major growth area
                    • Figure 2: Sales of on-trade alcohol, by type of alcohol, 2009
                  • Panoply of pressures affecting on-trade
                    • Deep discounting in off-trade provokes emotions
                      • Recession piles on further misery
                        • Fighting against the tide?
                        • Internal Market Environment

                          • Key points
                            • Pub closures climb as recession, smoking ban and supply tie overwhelms
                              • Figure 3: Net pub closures in the UK, 2005-09
                            • Beer sales, backbone of the pub, on the wane
                              • Figure 4: Trends in the pattern of beer volume sales, by channel, 1999-2009
                              • Figure 5: Trends in the percentage distribution of beer volume sales, by channel, 1999-2009
                            • Rising costs harm on-trade competitiveness
                              • On- vs off-trade price trends
                                • Figure 6: Trends in all prices versus those of alcoholic drinks, by channel, 2004-09
                                • Figure 7: Trends in beer and cider prices, 2008 and 2009
                                • Figure 8: Trends in real ale and lager prices, by type of pub, 2008 and 2009
                              • The ties that bind?
                                • Increased overheads pile on pressure…
                                  • Figure 9: Trends in the price of food versus all items, 2004-09
                                  • Figure 10: Trends in the price of gas and electricity* for non-domestic customers, 2004-09
                                • …while smoking ban doesn’t help
                                  • Duty calls
                                    • Figure 11: Trends in levels of alcohol duty, 2004-09
                                  • Competition from in-home drinking
                                    • Figure 12: Trends in where alcohol is drunk, 2004-08
                                  • ‘Home as the hub’
                                    • 24-hour licensing – help or hindrance?
                                      • Figure 13: 24-hour licences issued, 2007 and 2008
                                    • Binge drinking and alcohol-related disorder
                                      • Pre-loading
                                        • Combined effect is to reduce appeal of on-trade outlets
                                        • Broader Market Environment

                                          • Key points
                                            • Consumer confidence very weak but showing signs of recovery
                                              • Figure 14: GfK NOP Consumer Confidence index, May 2008-May 2009
                                            • Disposable incomes and spending under pressure
                                              • Figure 15: Trends in personal disposable income and consumer expenditure, at constant 2004 prices, 2004-14
                                            • Younger and middle-aged key to on-trade drinking
                                              • Figure 16: Trends in drinking out of home two or three times a week, by age, 2004-08
                                              • Figure 17: Structure of the UK 18+ population, by age, 2004-14
                                            • Growth in affluent groups could boost on-trade drinking
                                              • Figure 18: Changes in socio-economic group amongst the UK 18+ population, 2004-09 and 2009-14
                                          • Market Size

                                            • Key points
                                                • Figure 19: UK total household expenditure on on-trade alcoholic drinks, 1998-2009
                                                • Figure 20: UK on-trade alcoholic drinks household expenditure, at current and constant prices, 1998-2009
                                                • Figure 21: Spending per household on on-trade alcoholic drinks (£ per household in the UK at current prices), 1998-2009
                                              • Beer loses its fizz
                                                • Figure 22: UK household expenditure on beer for out-of-home drinking, 1998-2009
                                                • Figure 23: UK household expenditure on beer for out-of-home drinking and share of total out-of-home spend, 1998-2009
                                              • Wine hits a plateau
                                                • Figure 24: UK household expenditure on wine, cider and perry for out-of-home drinking, 1998-2009
                                                • Figure 25: UK household expenditure on wine for out-of-home drinking and share of total out-of-home spend, 1998-2009
                                              • Spirits growth falters
                                                • Figure 26: UK household expenditure on spirits* for out-of-home drinking, 1998-2009
                                                • Figure 27: UK household expenditure on spirits for out-of-home drinking and share of total out-of-home spend, 1998-2009
                                            • The Impact of the Recession on On-trade Drinking

                                              • Key points
                                                  • Figure 28: Annualised growth in real alcoholic drinks spend for out-of-home drinking compared to total real household expenditure, Q1 1985-Q1 2009
                                                  • Figure 29: Share of total household expenditure taken by alcohol for out-of-home drinking (real terms), Q1 1984-Q1 2009
                                                  • Figure 30: Items being cut back on in the recession, February 2009
                                                  • Figure 31: How the amount of drinking out of home has changed in the past 12 months, April 2009
                                                  • Figure 32: Net percentage decline in out-of-home drinking by adults in the past 12 months, by age and lifestage, April 2009
                                                  • Figure 33: Net percentage decline in out-of-home drinking by adults in the past 12 months, by socio-economic and ACORN group, April 2009
                                                  • Figure 34: Net percentage decline in out-of-home drinking by adults in the past 12 months, by detailed lifestage, April 2009
                                                  • Figure 35: Consumer switching behaviour between drinking at home and drinking out of home, April 2009
                                                  • Figure 36: Annualised rate of growth in consumer spending on alcohol in the on-trade, by type, Q1 2005-Q1 2009
                                                  • Figure 37: Change in out-of-home alcohol consumption in the past 12 months, by types of alcohol usually drunk, April 2009
                                                • How do recessionary cutbacks manifest themselves?
                                                  • Figure 38: Impact of recession on pub visiting, April 2009
                                                • Majority are unaffected
                                                  • Going less often…
                                                    • …eating out less…
                                                      • …and pre-loading…
                                                        • …but not trading down
                                                        • The Consumer – Competitive Context

                                                          • Key points
                                                            • What do people drink out of home?
                                                              • Figure 39: Types of alcohol, by where drink alcohol, 2008
                                                              • Figure 40: Trends in penetration of drinks consumed elsewhere, 2004-08
                                                            • Young prefer lighter drinks
                                                              • Figure 41: Popular out-of-home drinks among under-35s, 2008
                                                            • Middle-aged have middle-of-the-road tastes
                                                              • Figure 42: Popular out-of-home drinks among 35-54-year-olds, 2008
                                                            • Older drinkers are more traditional in their tastes
                                                              • Figure 43: Popular out-of-home drinks among over-55s, 2008
                                                            • Long-term trends highlight emergence of wine as an on-trade sector
                                                              • Figure 44: Share of on-trade alcohol market, by broad sector, at current prices, 1963-2009
                                                          • Who Drinks in the On-trade?

                                                            • Key points
                                                              • On- versus off-trade drinking
                                                                • Figure 45: Trends for drinking alcohol out of home versus in home, 2004-08
                                                              • On-trade drinkers
                                                                • Figure 46: Penetration of on-trade drinking, by gender, age and lifestage, 2008
                                                                • Figure 47: Penetration of on-trade drinking, by socio-economic group and Mintel’s Special Groups, 2008
                                                              • Who are the most valuable on-trade drinkers?
                                                                • Figure 48: Ten most valuable consumer groups for on-trade drinking of alcohol according to VII, by demographic group, 2008
                                                            • How do Consumers Feel About Drinking Out of Home?

                                                              • Key points
                                                                  • Figure 49: Attitudes towards drinking alcohol out of home, April 2009
                                                                • How do recent changes in out-of-home consumption affect attitudes?
                                                                  • Figure 50: Attitudes towards drinking out of home, by change in out-of-home alcohol consumption in the past 12 months, April 2009
                                                                • How do attitudes differ by the type of alcohol consumed?
                                                                  • Figure 51: Attitudes towards drinking out of home, by types of alcohol usually drink, April 2009
                                                                • How do people feel about drinking out compared to in-home drinking?
                                                                  • What defines a good local pub?
                                                                    • What attracts people to a particular pub?
                                                                      • What might encourage people to drink out more often?
                                                                      • Targeting Opportunities

                                                                        • Key points
                                                                          • Figure 52: Marketing targets based on attitudes towards on-trade drinking, April 2009
                                                                        • Indifferent (46% of drinkers) reign supreme
                                                                          • New Breed (23% of drinkers) need the right environment
                                                                            • Squeezed (18% of drinkers) feel the pinch
                                                                              • Pub food charms Value Diners (13% of drinkers)
                                                                                  • Figure 53: Attitudes towards out-of-home alcohol consumption over the past 12 months, by target group, April 2009
                                                                                • Squeezed most likely to have cut back on-trade drinking
                                                                                  • Figure 54: Change in out-of-home alcohol consumption in the past 12 months, by target group, April 2009
                                                                              • Appendix – Impact of the Recession on On-Trade Drinking

                                                                                  • Figure 55: Impact of recession on pub visiting, by demographics, April 2009
                                                                              • Appendix – Competitive Context

                                                                                  • Figure 56: Elsewhere drinkers, by demographics, by weight of usage, 2008
                                                                                  • Figure 57: Types of alcohol drunk elsewhere, by demographics, 2008
                                                                                  • Figure 58: Types of alcohol drunk elsewhere, by demographics, 2008
                                                                              • Appendix – How do Consumers Feel About Drinking Out of Home?

                                                                                  • Figure 59: Most popular attitudes towards drinking alcohol out of home, by demographics, April 2009
                                                                                  • Figure 60: Next most popular attitudes towards drinking alcohol out of home, by demographics, April 2009
                                                                              • Appendix – Targeting Opportunities

                                                                                  • Figure 61: Target groups, by demographics, April 2009

                                                                              Companies Covered

                                                                              • Asda Group Ltd
                                                                              • Bank of England
                                                                              • Beefeater
                                                                              • British Beer and Pub Association
                                                                              • British Market Research Bureau (BMRB)
                                                                              • Co-operative Group
                                                                              • Competition Commission
                                                                              • Department for Culture Media and Sport
                                                                              • Facebook, Inc.
                                                                              • Gfk NOP
                                                                              • Government Actuary's Department (GAD)
                                                                              • Guinness
                                                                              • HM Revenue & Customs
                                                                              • Lidl (UK)
                                                                              • Marks & Spencer
                                                                              • Office for National Statistics
                                                                              • Office of Fair Trading
                                                                              • Somerfield
                                                                              • Tesco Plc
                                                                              • Waitrose
                                                                              • Wm Morrison Supermarkets

                                                                              Out-of-home Drinking - UK - September 2009

                                                                              £1,995.00 (Excl.Tax)