Research: Deep dive into cannibalization rates in On-Premise venues

Summary

This research document investigates the structural transformation of the on-premise beverage sector, focusing on whether the rise of NoLo (no- and low-alcohol) beverages, adult-soft-drinks, and cannabis-beverages represents a 1:1 cannibalization of traditional alcohol or an opportunity for occasion expansion. The findings strongly support the latter, driven by the-flexitarian-consumer.

Key Findings

• Occasion Expansion over Substitution: Data from the adult-non-alcoholic-beverage-association-anba reveals that 93% of consumers who purchase NA beverages also purchase alcohol. In the on-premise environment, 22% to 25% of visitors opt for NA alternatives.
• Zebra-Striping Behavior: Research by lucky-saint and kam-and-drinkaware indicates that 28% of UK drinkers actively engage in zebra-striping during pub and bar visits. This behavior extends dwell time and captures a larger share of the occasion rather than purely cannibalizing alcohol sales.
• The ABV Ecosystem: The on-trade lags behind off-trade retail in visual-merchandising-beverage. Relegating NA options to the bottom of menus creates discovery friction. Analysts advocate for an abv-ecosystem where NA and low-ABV drinks are integrated alongside full-strength options to normalize cross-ABV consumption. lyres notes that poor visibility results in millions of pounds in missed revenue.
• Competitive Threats: Traditional alcohol is losing on-premise occasions to carbonated-soft-drinks-csd (56-57% substitution rate according to nielseniq), coffee (41-44%), and cannabis-beverages.
• Operational Friction: Serving 0.0% beer on draft introduces severe na-quality-assurance-burdens due to the lack of ethanol, requiring strict hygiene to prevent bacterial growth. Achieving taste-parity also heavily relies on bartender advocacy and proper serving temperatures.
• The Spend Paradox: ANBA reports that households purchasing NA beverages spend $213 more annually on total alcohol than exclusive alcohol consumers, though it remains unclear if this translates directly to on-premise environments.