On-Premise Operators Suggest More Involvement in Ailing Channel


The latest numbers from research firm GuestMetrics show that the on-premise channel has yet to fully recover from its long-term slump. Traffic to full service restaurants and bars was down 1.5% for the 4 weeks to July 13. Meanwhile, spirit volumes were down nearly 1% and wine volumes were flat year-to-date.

With no immediate signs of a turnaround, the alcohol industry is forced to deal with the channel's tepid growth and the changes that have resulted. At the recent Wine & Spirits Daily Summit, a panel of experts working in the on-premise discussed the types of changes they've observed and the winning strategies that go along with them.

"One of the things that I've seen is a paradigm shift in the last 12 months," said Mark Gmur, founder of the Mark Wine Group, a wine company that acts as an on-premise sales representative for a portfolio of independent wineries. "Instead of just having good wine you have to have good wines and really great ideas to sell through. [Operators] are really looking for that help to sell through."

It's easy for distributor reps to take their spot for granted once they get menu or back bar placement, he continued. But it's really something they've "got to stay on top of now" through training and continuing to help motivate the staff.

Mac Gregory, former director of food and beverage for Starwood Hotels and new chief of Saint Marc USA, said one of the positive things he's noticed on-premise is alcohol companies are being a "little more friendly" toward each other. It seems counterintuitive, but he said competitor's are "trying to really share the market, rather than beat each other out of it ." In addition, he sees many of them focusing on incentivizing those employees in direct contact with guests. "I have seen a lot of creative work there, especially offering Visa gift cards and movie tickets."

But there's also been some negative effects. At Starwood, Mac was dealing with corporate offices more often than sitting down with company representatives; it's a turn-off for him is when companies employ the mentality: '"We don't need to stop by because you have to carry [our product].'"

One distinct trend, that many wine suppliers likely think is troubling is the shrinking wine list. You may recall our report in May that eight of the ten largest casual dining restaurant chains cut their wine selection by a combined 17% in the 8-month period to March 2014, per WineMetrics data.

Ryan Arnold, divisional wine director for Lettuce Entertain You Enterprises, feels that millennials are somewhat responsible for this trend because they don't want "encyclopedic books" for menus. They prefer to have a small list and recommendations from the experts. "I think the smallness is here to stay, for sure," he said.

But Mac argued that it's not necessarily a bad thing. "Yes, I think wine programs are getting smaller, but for the right reasons," he said. "Why be all things to all people... We should be what we are and be the best at that." At Starwood, for instance, the Sheraton chain focuses primarily on wine, the St. Regis chain focuses on its private label bourbon and W Hotels are all about cocktails. "I don't see any category going backwards."

Our main takeaway from this panel is that more involvement at every level is the best way to go. Providing operators with help to sell through, doing maintenance and education at venues where you've already got placement and helping operators realize that they don't need to be all things to all people are just a few of the examples from this panel that will help suppliers and distributors perform to the best of their abilities.


AFTER POSTING SOLID VOLUME GROWTH for the month of June (up 3.5%), spirit trends off-premise slowed for the 4 weeks to July 19 to 3.1% growth, per Nielsen and UBS data. Sales trends were much the same story: up 4.7% in June and up just 3.1% in July. July's slump was second only to May, while the best months we've had this year were January and April.

LAST MONTH TEXAS-BASED DEEP EDDY VODKA hit the quarter million case milestone and now the company has announced $13 million in new financing from investors. Deep Eddy is already available in 49 states, but continues to invest in marketing and expansion. You'll recall, the company is opening a new distillery and tasting room in Dripping Springs, Texas. Deep Eddy's portfolio includes the straight vodka, Sweet Tea Vodka, Ruby Red grapefruit-infused vodka and Cranberry-infused vodka.

Until tomorrow,

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