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On-Premise Update: Key Players Innovate To Target Millennial Tastes

May 14, 2015

While the inclement weather thwarted on-premise growth in the first few months of the year, the channel’s foundation appears strong amid a flurry of innovation that’s frequently targeting a key demographic: Millennial consumers.

On-premise operators say Millennial drinking habits are driving their beverage business. “We’ve seen a shift to more craft beers and cocktails,” says Mary Melton, beverage director at P.F. Chang’s, which has 211 locations nationwide. She adds that the craft sensibility—largely driven by Millennials—has led to an expanded craft presence on her beer list, and a call for craft spirits in cocktails, along with fresh ingredients and fresh juices. While Melton has seen a steady increase in whiskies like Jameson, Woodford Reserve and Maker’s Mark, the chain’s five bestselling cocktails all feature white spirits, including the Asian Pear Mojito, Organic Agave Margarita, Chang’s Mai Tai, Red Sangria and Moscow Mule.

Millennials have also had a dramatic effect on the wine side. At the 74-unit Morton’s The Steakhouse (owned by Landry’s), where wine sales comprise 65% of total beverage sales, divisional vice president of wine and spirits Tylor Field says by-the-glass (60%) outweighs bottle sales (40%), with guests looking to experiment. Tapping into that trend, the chain has begun a sampling initiative with wine portions delivered via Coravin, the technology that allows small servings of wine to be extracted from bottles without removing the cork. “A key driver in demographics is the ‘$30,000 millionaire’,” says Field. “The younger working set wants luxury and will splurge on it but you need to let them manage that budget.” The steakhouse is currently testing Coravin in three properties and plans to expand the program. Labels include Tignanello Super Tuscan, Cakebread Chardonnay, Justin Isosceles Red and Gaja Sito Moresco.

Bill Terlato, CEO at Terlato Wine Group, sees significant upscaling. “Consumers are trading up, choosing quality over quantity,” he says. “The average by-the-glass is nearly $11 now, so it’s clear that wine drinkers are willing to spend for quality.” Terlato is in the process of extending its Terlato Family Vineyards line with a Pinot Grigio and Friulano from Friuli, both of which will be almost exclusively focused on-premise.

A full report on the on-premise channel appears in the May 1 issue of Impact.

 

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