Experts anticipate ‘a stronger Christmas this year than last year’ for drinks industry

According to leading data bodies CGA by NIQ and Circana, both Australia’s on- and off-premise liquor sectors should be expecting a notable uplift in sales over the remaining four weeks of 2024.

Jarna McLean, Director of Health & Lifestyle at Circana, believes the upcoming Christmas trading period will outperform that of 2023 for Australia’s liquor retail.

“I think that we will see a stronger Christmas this year than last year; however, it will be quite a late Christmas,” McLean told Drinks Trade.

“Everyone is working until the last minute and I think no one's really thinking about the break in the summer holidays until they're in it, so we will have a later summer kickoff.”

When asked whether this forecast should influence retailers' approach to managing stock levels, McLean said she didn’t want to give too much of a recommendation beyond that "it would be fruitful to be positively conservative.

“By that I mean expect to have a decent Christmas, but don't go blowing the budgets on things that don't have a decent sell-through on the other side.”

Similarly, recent research by CGA by NIQ suggests that Australia’s on-premise is also in line for a big uplift in sales over Christmas and New Year.

“For many businesses, Christmas trading can make all the difference between positive and negative growth for the year,” said Tom Graham, CGA by NIQ’s Senior Manager of Customer Success.

“After tough trading conditions in recent months it’s a crunch period for spirits in particular, and with consumers’ confidence rising we can be cautiously confident about seeing a release of some pent-up demand for drinking out.”

According to CGA’s On Premise User Survey, 83% of Australians will visit pubs, bars, restaurants, and other licensed premises in the last week before Christmas, along with 69% between Christmas Eve and Boxing Day.

Additional opportunity for venues lies in catering to changing seasonal purchasing habits, with 29% of Australians likely to buy ‘festive drinks’, 29% likely to buy drinks for other people over Christmas, and 28% likely to stay out for longer than usual over the festive season.

Additionally, CGA expects spirits, and especially rum, to offer the greatest opportunity for on-premise volume growth this Christmas after its OPM service registered a 26% increase in spirits sales in the last four weeks of 2023, nearly triple that of beer.

For off-premise channels, Jarna McLean says the spritzer category - both as spirits bundle packs and in the currently-trending premix form - will present particular opportunity in 2024.

“What I would recommend - if [retailers] are wanting to focus on one or two segments that they would be willing to put a little bit more stock in - where we're going to see the biggest trends in flavour and excitement this year will be those lighter pressure options. If you're looking at products that go well into spritzers - light and bright flavours, anything around the lemon, ginger, those citrusy and zingy type flavours - they're the flavour trends that are really out there at the moment and will accelerate even further this summer.”

Recently, Circana hosted its annual State of the Industry webinar event which forecast 2025 as an “opportunity to reset after years of disruption from some pretty significant external forces.” Despite this, Australia’s liquor retail sector is already outperforming pre-pandemic sales revenue figures.

“When we talk about how overall performance is ‘on par,’ for want of a better term, versus 2019, keep in mind that that is really value sales,” Jarna McLean told Drinks Trade.

“Now, if you double click down into that, there are a whole heap of pressure points that suppliers and retailers (particularly your small independent mum-and-dad bottle shop owners) are really feeling. A big part of that is around legislation, around taxation, and around the pressures that either of those puts against margin.

“So yes, we're seeing top line value growth to be still in the positives (though marginally in the positives), but the downside of that is that we are actually seeing, in most instances, margin compression.”

On a broader scale, the latest IWSR Bevtrac data reveals that the global on-premise industry is showing signs of recovery, albeit at a cautious pace.

“IWSR’s latest Bevtrac data shows a growing revival in the on-trade for some markets, offering a much-needed boost for the industry,” said Ivana Mitic, Senior Insights Manager for Bevtrac at IWSR.

​​“The global beverage alcohol market is experiencing a period of profound change: moderation is becoming ingrained in consumer habits, while no-alcohol offerings and premium categories are gaining traction.

“As consumers return to bars and restaurants, we see a renewed focus on premium experiences and diversified offerings, laying the groundwork for future growth.”