Future of Foodservice Beverages Looks Bright


Anyone looking at the current ‘bar scene’ in Canada through a pre-pandemic lens would likely find it unrecognizable. More than a year of ever-changing restrictions has created an entirely new playing field; one where the summer busy season has taken on a whole new shape and an even greater importance for operators.

The eased restrictions of Summer 2020 were seen as a relative bright spot for the industry in the midst of a year of unprecedented challenges, with customers eager to get out of their homes flocking to patios. And, many have been hoping this summer will bring a similar boost — especially given the tight restrictions in many regions throughout the first half of 2021.

Overall, beverage sales in the industry have taken a hit, as retail captured a greater share of consumer spending. As Saskatchewan-based Farm Credit Canada’s (FCC) Food and Beverage Report 2021 notes, in 2020, the beverage industry “was defined by public-health orders; foodservice and bar closures; and recession.” However, beverage sales, including alcoholic beverages, saw sales growth in 2020 (up 3.9 per cent) and are projected to increase further in 2021.

The FCC report also predicts alcoholic beverages are a key category set to benefit when public-health measures are lessened, as pent-up demand and strong desire to re-connect with friends and family over drinks combined with consumers’ increased savings and income.

Technomic senior manager, Research & Insights, Bret Yonke also predicts “a return to normalcy” following the pandemic will lead to a recovery of bar-and-beverage sales, as more guests return to on-premise experiences.

“We certainly look forward to a trend in in-restaurant dining,” says Jesse Sahlin, director of Bar & Lounge for JOEY Restaurant Group, echoing the sentiment of many in the industry.

In the meantime, the shift to more (or exclusively) off-premise orders has posed a significant challenge for restaurant bar-and-beverage programs. As Yonke explains, “[This trend has resulted] in some consumers purchasing beverages from foodservice less often…They’ve got beverages in the fridge at home, so they are opting to save money by not ordering a beverage with their meal.” And, he adds, this especially hurt the full-service restaurant segment. “Pushing beverages in online ordering apps/platforms is key, but is often a difficult sell.”

In line with this, data from The NPD Group’s CREST foodservice database reveals opportunities to upsell are being missed in digital platforms, particularly within the beverage and dessert categories.

Emerging channels
A key positive change that came out of the recent hardship has been changes to regulations, including those that allowed the expansion of outdoor-dining spaces, as well as the sale of alcohol with delivery and takeout. The latter in particular has been lauded as a significant lifeline for the industry and, as Luke Chapman, interim president, Beer Canada notes, presents “a great opportunity” in the beverage-alcohol space.

This new opportunity has been a source of significant innovation within beverage-alcohol sales as producers and foodservice continue to explore and leverage new channels. This led many operators to create new, experiential offerings. “Crises present both dangers and opportunities,” shares Sahlin. “The upside of this unfortunate condition is that it [made] us find new ways to stay connected with our guests and at-home experiences became paramount.”

For JOEY, this initially led to the development of cocktail kits designed to translate the brand’s signature cocktails into an at-home experience. “Seeking to enhance the enjoyment of these kits, we began adding interactive elements like bartending-technique notes and the materials for a blind tasting from your couch, which led to our virtual events,” Sahlin explains. “These are now available to personalize the enjoyment of kits with any number of friends or co-workers through video conferencing.”

JOEY also created a gift guide for the holiday season, offering its cocktail kits, bottles of wine and beer packages paired with food items. And, as Sahlin notes, the success of this gift guide highlighted customers’ desire to supplement the restaurant experience they were unable to enjoy with enhanced at-home experiences that incorporated “multiple elements of beverage and culinary ingredients.”

“Focusing on offerings like cocktail kits; wine-tasting packs; special beverage pairings with to-go orders; and off-sales wine, beer and spirits became our only way to serve our guests,” says Sahlin. “While they were adapted out of necessity, these offerings represent examples of our hospitality that we never realized could be a part of our future — and they have become a point of pride for our group.”

Other operators have taken similar approaches to JOEY, exploring new ways to reach and entice customers with beverage offerings. Make-at-home kits, virtual tastings, subscription services and other curated experiences have been at the forefront of new offerings as striking the correct balance of convenience and experience have become the cornerstones of successful pandemic beverage programs.

And, while some operators see value in continuing at-home beverage experiences beyond the restrictive conditions of the pandemic, Yonke predicts, “Things like kits were more of a flash-in-the-pan trend early on in the pandemic and [are] not something that will have long-term implications for most operators.”

That said, special occasions and corporate events will likely remain a key opportunity for these kinds of offerings while the prospects for group gatherings remain limited. As Juanita Dickson, president & CFO of Gusto 54 Restaurant Group, explains, creating at-home experiences built around meal kits proved very successful for the group’s restaurants. And, while alcohol only represented a small aspect of this offering, creating a complete at-home experience has proven to be of great value, she explains, citing the success of the group’s Eat the City meal-kit program. “It exceeded our expectations — we did quadruple what we thought [we] would,” she shares.

The fast track forward
As many experts have been quick to point out, the conditions of the pandemic only served to accelerate trends and changes in consumer demand that were already taking shape — and adoption of new sales channels is only one example.

Values, knowledge and health all factor into consumer decisions to a greater degree as a result of these shifts. In particular, FCC identifies ‘health alternatives’ as offerings that are increasingly valued by consumers. And, this genre encompasses a number of trends — largely driven by millennial and Gen Z — that have seen significant growth over the past year, including low- and no-alcohol offerings, low-calorie options, functional ingredients and unique flavour profiles.

In the beverage-alcohol space, one of the top stories remains the growth of the RTD category — particularly hard seltzers, many of which check a number of top-trend boxes. An example that offers a unique take on the category is Ontario-based Sapsucker’s recently launched Sapsucker Hard line. The sparkling-maple-water beverages feature vodka and fruit flavours and are organic, all-natural, sustainably sourced and contain naturally occurring minerals, vitamins and antioxidants.

Other convenience formats, such as canned wines, have been on the rise as well, as have light, low-alcohol creations, such as rosé spritzers. In fact, Sahlin points to “lighter styles of cocktails” as offerings that will be in high demand in the second half of 2021.

However, indulgence beverages should also be on your radar, as comforting and indulgent treats remain a key way consumers have been coping with the pandemic. On this front, A&W Food Services of Canada Inc. has begun to rollout A&W Brew Bars across the country, which expand the brand’s beverage lineup, incorporating new offerings such as frozen beverages and espresso-based drinks.

A focus on convenience and changes to how consumers want to engage with brands will also impact the on-premise beverage experience going forward. In response, Starbucks has been acting on its Americas Trade Area Transformation initiative, which centres on strategic store closures intended to “clear the way” for development of innovative and more-efficient store formats. The plan has also led to the expansion of Mobile Order Curbside Pickup and Starbucks Delivers in Canada. “As the great human re-connection gains momentum, and in anticipation of behaviours and daily routines continuing to evolve, we’re meeting our customers wherever they need us to be with the right store in the right place and at the right time,” Starbucks Corp. president/CEO, Kevin Johnson, explained during the company’s Q2 earnings call.

Written by Danielle Schalk

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