DRINKING AND DINING HABITS ARE CHANGING FAST

Australians are becoming more selective about how often they go out, what they drink and how much they spend when they do. For hospitality venues, the impact is being felt across everything from beer and wine sales to restaurant trading conditions.

The cost of serving alcohol continues to rise, with beer excise increasing automatically every six months under a system that has been in place for more than four decades. The result is a significant tax component built into the price of beer, adding another layer of pressure for both venues and consumers already dealing with higher operating costs.

Consumers are pulling back on wine too

The changing drinking landscape is particularly evident in wine. Australian wine exports have fallen below 600 million litres, the lowest level recorded since 2004, with export value also declining as global wine consumption continues to weaken.

The broader wine industry is consequently facing pressure throughout the supply chain, from producers through to retailers and hospitality venues. As consumers moderate their alcohol intake, products that offer a lower alcohol alternative are attracting greater attention.

Mid strength wine in the 7 to 9 per cent range is emerging as one area of opportunity, reflecting a broader consumer preference for products that allow people to participate in drinking occasions while consuming less alcohol.

Restaurants are facing a difficult trading environment

The pressure is even more immediate across food service. Restaurants and cafes are contending with higher wages, weaker tourism conditions and increasing transport and commodity costs, creating a challenging combination for operators.

Industry forecasts suggest venue closures could remain elevated through 2026, following an already significant level of business failures and closures across the sector.

The introduction of a ban on credit card surcharges in October will add another cost consideration for operators. Businesses that previously recovered some payment processing expenses through surcharges will need to find alternative ways to absorb or manage those costs.

What this means for venue managers

The underlying consumer trend is clear. Customers are being squeezed from several directions and are becoming more deliberate about when they eat and drink out and how much they spend.

For venue managers, moderation needs to be treated as a mainstream consumer trend rather than a niche requirement. Mid strength, low alcohol and alcohol free products are increasingly relevant to the core beverage range and can provide customers with greater choice without removing them from the occasion.

At the same time, rising wages, food and beverage costs and changes to payment surcharges will continue to place pressure on pricing.

That makes value communication increasingly important. Customers need to understand what they are receiving for their money, particularly when prices are rising. Venues that combine a well-considered product mix with clear value, choice and moderation options will be better positioned to respond as Australia’s drinking and dining habits continue to evolve.

 

Sources

• If we scrap the “beer tax” for five years, will pub culture and live music thrive again? – ABC News

• Australian wine exports slump amid global decline in alcohol consumption – ABC News

• ‘Bloodbath’: Sydney restaurants brace for one of the toughest winters on record – The Sydney Morning Herald