Shift Happens

Over the past couple of years our category has faced pandemics, natural disasters, supply issues driven by war and unprecedented global supply constraints; and the most challenging economic conditions within recent times.

So how have these events changed the dynamics within the liquor category?

A change of scenery

The pandemic presented an opportunity for many of our customers to reevaluate their lives and opt for a change of pace. We saw a migration from NSW and Victoria to QLD and WA, and we have seen a correlating shift in transactions.

In addition, we saw migration from Metro to Regional and once again transactions followed. In fact, this shift has caused an even more pronounced impact to transactions than crossborder migration.

Finally, we have seen a shift in sales from Attached and Metro to Standalone and Drivethrough formats, and unsurprisingly, states and regions that have a greater representation of these store types have been more resilient throughout this period.

Out and about

Throughout most of 2020 and 2021, lockdowns significantly impacted the on-premise channel with off-premise the benefactor.

In fact, on-premise’s share of total liquor occasions was 15% during that time. This has since skyrocketed to 25% in 2022 as we feel more comfortable to socialise and there is probably more headroom for growth.

Occasions

Off-premise occasion decline has come from heartland in-home occasions as customers return to relaxed out-of-home consumption and on-premise. Given the inherent link between occasion and sub-category choice, sub-categories suitable to out-of-home group settings are benefiting as a result of this shift in behaviour.

On the road again

Tourism was also significantly affected by Covid. I was surprised to learn through Tourism Research Australia that almost 60% of overnight stays in Australia are in Victoria and NSW - highlighting the reliance on interstate travel to these economies. Since 2019, these stays have declined in NSW and Victoria by -33% and -32% to June 2022 which would also be impacting our categories.

QLD tourism however was much more resilient through this period and liquor transactions also proved more resilient than other states. As interstate travel continues to pick up, we should expect to see dynamics shift again.

Looking ahead

While we all hope that the level of disruption will be nowhere near as dramatic as the last two years, the pace of change continues to ramp up. It’s our job to reflect on the lessons learned during these unprecedented times and apply a more critical eye to the leading indicators at a macro level.

We need to take the learnings and adjust our ‘go to market’ strategy to match the current conditions, but we also need to anticipate the potential opportunities that the macroeconomic environment may present.

Let’s work together to ensure we have co-created plans in place for those opportunities.