James Phillips - CGA by NielsenIQ

It was always part of the plan to put a brew in, but for many years it it was just a plan. It's a hundred percent acquisition of Green Beacon. No, we had a chat with everybody. Anyone would have seen this coming a mile away. Super simple and direct question. And that's just what we're here to do, talk about beer and the brewing industry and have a conversation with the people who make the industry what it is and see what we can learn from them.

I'm Bruce News Editor Matt Kirkigaard and this week we're speaking with James Phillips, Client Solutions Director Australia New Zealand for CGA by NielsenIQ. We spoke to James last October for the first time to hear his company's insights as Australia came out of the pandemic economy.

Brews News has recently had a lot of focus on data and particularly on squishy data, so we thought it might be a good idea to go back and speak to James to see what CGA by Nielsen is seeing now and how that can apply to craft breweries. I also push James to go a little bit beyond just the data and see what analysis he can provide about what's driving some of the things that they are seeing.

It's an interesting conversation, especially for businesses negotiating the current market forces and economy. And I hope you find it as thought-provoking as I did. James Phillips, welcome to Beer's Conversation. Thanks for having me. Good to be back. Mate, it's it's good to have you back and uh very special uh you know, uh d I hope you feel honored. We don't often get people back so soon, but uh when it comes to data, it's certainly a um

something that a lot of breweries are wanting and needing, uh, to talk about some of the trends so they can plan their businesses. So thanks for being willing to come back. Not a problem. Definitely a hot topic with a lot of uh

Now we did speak to you uh a little over a year ago to talk about the new insights um from C GA by NIQ. Um maybe you can just remind us a little bit about the business and what you guys do and and and you know the the data that you collect. Yeah, sure. Um so CJ buying IQ. Um we're part of Nielsen IQ on NIQ now which has just merged with GFK, so we are officially the largest

master research business around the in the world. Yeah. The largest collection of three letter acronyms in the industry? Yeah, that too. Yeah. So we love an acronym. Uh like all big multinational businesses, we love an acronym, but The CGA part of it is um the on-premise side of of NIQ and we look after on premise insights, um uh in uh in Australia, New Zealand, hoping to provide our clients with probably the most comprehensive view of the on premise consumer.

and sales data that that's out there. Um so that allows us to really tap into what's happening uh in channels, occasions, brands, consumers, what they're doing across the on premise. Um but in terms of source of data we've got a few key sources, you know, from from global uh surveys.

Recently we came out with um our REACH survey which we do annually that looks at thirty four markets around the world and twenty seven thousand consumers. Plus also um we look at operators as part of that, so bartenders, bar managers, um, you know, venue operators and ask them questions about the on premise and it provides a really good landscape of why you need to invest in the prem on premise and how to win.

And then more interestingly from from an Australian perspective as well is now we're um launching this month Beverage Track, which is our uh sample of venue sales data in Australia. So we can actually now start to analyze sales trends across categories and brands and markets in Australia, which is super exciting. And it's kind of never before seen offering in data for for suppliers in Australia. So yeah, that's that's kind of what we do.

Um and then my role really here is to kind of drive that business across across Australia to New Zealand. It's almost become a bingo term on this podcast. Uh a term that was introduced to us called squishy data, how hard it is to get meaningful data

in the Australian market. Um and a lot of Australian brewers look at what they can glean from, you know, news reports or reports from in uh overseas. And I guess that that is a lead, you know, o often our market is led by what trends we're seeing overseas.

But at the same time the Australian market is very different, um, in a lot of ways. So even the legislation around hotels, um and the the excise uh regimes make it a very different offering. How do you guys take the data that you're seeing internally overseas and make it applicable to the Australian market? Yeah, that's a great question. Like it can come to life in a in a lot of ways.

We actually take that reach survey that we do and we can cut it by markets as well. So it gives you a really good comparison point versus how Australia differs to to global markets. Um, we were recently up in Queensland at the Pub Leaders Summit uh for twenty twenty three and um talked to that group of um operators and sort of leaders in the pub space. about the differences in the Australian pub consumer to the to the UK pub consumer and the global pub pub consumer as well.

And what we kind of found from that was how distinct and different the pub landscape is from something like the UK where it's probably the most similar to us in terms of pubs, but it also kind of really highlighted how Australians are so much more led by food offering in venues rather than just drinks. In the UK it's a big drinks driven market. So if you go to the pub

It's like your second living room for a relaxed or quiet drink. It's very drinks led. And the food offering as well isn't great. You know, you're going in for bangers and mash, which is not like the the schnitty of Australia I think.

Um in terms of that quality and expectation of like a really good food and drinks offering. Well that's where the terrible name, the gastro pub comes from for the f few places that do offer a higher food offering, but yeah, obviously gastro doesn't mean the same thing to them that it does here.

Yeah, look I like um they're probably uh undersold the UK pub experience because they do have some like really phenomenal premium and like um upmarket pub gastro pubs offerings and they they just think They sort of um segment the market there as well to kind of draw out the kind of two.

But in general what we find in Australia is that it's much more sort of food led experience, but also they use it for, you know, multiple kinds of occasions. So n also the drinking led experiences where In other markets it seems to be much more one or the other um versus Australia.

And and I I guess y you don't look specifically at breweries and and and brewery bars, do you? And I guess pubs are probably the closest analogue that we have um to For breweries to look at in terms of data that's similar to theirs? Look, we can break it break down our um data to look at breweries in some aspects. So our consumer research product opus. Um we actually do that as sort of a secondary channel. We look at a variety of different channels within that and we can sort of

therefore like that allows us to kind of craft the insights towards that kind of consumer. And so then if you can kind of compare who's a brewery visitor versus like a cinema visitor or a leisure visitor. um to the kind of main channels and the primary channels. So yeah, we do look at that.

Pub specifically because they're uh I guess a high beer consumption channel, um really domestic beers particularly, um, and also the main sort of drink led um occasion channel, they're probably the best comparison, but I'd also say um clubs and RSLs are another really strong channel where you can kind of look at the data and analyse that to understand what are wider beer consumers in Australia doing within those kind of channels.

But then there's obviously nuances and differences by each. So our data really allows us to unpack that as well. Sabrina came away from the Pub Leaders Summit very excited by some of the data that she heard and I think uh Some of the questions I'll throw at you uh today, uh th th I think there were one or two presentations that touched on fairly similar things as you'd expect at a Pub Leaders Summit. But um I've felt for a long time that

for a variety of reasons. Um that particularly states that have pokies, um, that they've seen pubs and pub groups create much bigger entities, but then also just the legislation and the cost around running hotels we've seen pubs grow into fairly significant enterprises, not your little

corner pub, you know, that is probably a little more in keeping with with that English pub. Is that a i is that a fair generalization that pubs have become bigger and so less connected to their communities over the last two or three decades?

Yeah, that's uh wow, that's uh yeah, really complex issue, right? And like I probably don't have the enough enough life experience to go back over the decades. But I we were talking before just quickly about how you kind of looked at like old A B C videos of that six o'clock o'clock swill or whatever it was before legislation changed with drinking hours and

it was such a male dominated environment. It wasn't food led. It was all about drinking as many beers as you could before six PM and then getting home. And nowadays I think in a really positive way, the pub and and and club environment as well is much more family friendly and caters to a number of different occasions.

And we talked about at the Publita Summit how there's this bigger sort of drive globally towards more experience within the on premise and and things like uh food markets and these kind of more um permanent food halls um seem to be catering to not only a number of variety of different kind of food experiences but also drink experiences as well.

And then also within that sort of more um entertainment experiences as well. So in the US we see this huge proliferation of um you know, entertainment themed venues, whether it's you're doing sort of cornhole in the you know, that game where they throw the the the bags of corn. Or they've got, you know, like uh in in uh Denmark I saw one that was all a curativo themed around Patoncan bulls.

Um, so like incorporating that within within the venue is becoming more important from an entertainment experience. I think the way Australia does it really well from the kind of super venues or the you know, like the really massive clubs and pubs that we see is they kind of cater to all needs and all occasions and and like all consumers including family environments. So I think in the in a in a great way.

these super venues, maybe they are being funded by Pokey Revenues. Um, it has created a more encompassing experience for for all consumers I think and whether it comes to food or experience or entertainment. I can see that um, you know, in a really positive way improving across the board in Australia. So Yeah, I think i i it definitely has changed. Yeah, and and and and the reason I ask that is because again, as as passionate as I am about beer, um writing about it.

I've actually had a feeling for quite a while that Breweries have sold themselves on the idea naturally sold themselves on the idea that people are coming in and the venue has been successful. Because it makes beer. I've actually had a working thesis that some of your data that we'll dig into would seem to point towards that. The success of the brew pub hasn't actually been just the fact that they make beer. It's been that they've been smaller, more intimate venues.

that are very connected to the community. And, you know, things like Cornhole that you mentioned, some of those games were games that bring people together. Um they're they're cheap for the breweries to put on. There's not a lot of uh expenditure. But The reason that people are coming and the the the feeling of community that people have felt around their local brew pub is less about the beer and more about the venue and what the venue is offering. Do you have any feelings around that?

Yeah, like probably more anecdotal feelings around it. Like obviously all the data we're we've been showing is that that kind of experience need with sort of games and entertainment in it is coming from like the millennials specifically, the kind of ones that over index massively. So not the Gen Z you know, younger consumers that are just entering, they probably still just want

fun drinks with friends, cool, trendy bars. Actually the the like um experience led venues, kind of overindexes towards millennials who are all the ones having kids right now or probably have young children as well.

So I think they want an environment where they can go and visit their friends, escape their um escape, you know, just kids at home and have that kind of experience with the friends and family that that sort of allows them to do it. So Um, yeah, anecdotally, you know, I've seen a lot of breweries that have sort of games, you know, a as part of the venue in a big beer garden where you can go out and play some. um uh, you know, different kinds of games like Cornhole and um

You know, whether it's like Connect four, giant Connect four or um what's along with all the bricks where you push it through and they they seem to be everywhere, right? So I think yeah, just that that sort of encouraged sort of a different kind of environment for those kind of brew pubs. And I think the scale of the venues a lot of the time allows for kind of kids to run around and and sort of do stuff as well. So but the food again I think that's like important to be able to

sort of get people in for a longer experience as well. Absolutely. We'll we'll we'll come to the food, but one of the slides that uh I'm looking at from the presentation is that consumers prefer to visit traditional drinking pubs, making these key venues to target.

Um and the number one was the traditional drinking pub with a beer garden. And I think forty six percent um of pub visitors uh reported that that was what they wanted to see. And uh again, that traditional pubs f f i is is more what I think of when I think of a lot of the craft breweries to have that rambling space um that is comfortable.

Yeah. So yeah, it's just a good example of how we break down our channels as well to be able to look at different segments within like pubs for instance. But yeah the The co the um the traditional drinking pubs with the beer garden is definitely the most popular in Australia. And I think that's like pretty conducive of Uh we're pretty sort of aligned to just the kind of um weather and climate we have in Australia. It's like outdoors, drinking is like kind of key.

But then yeah, the environment to be able to kind of do more than just drinking at the at the pub I think and have other offers is really important. Interestingly for that one though, what we found though was Although segments like Irish pubs, which I think is like the least visited segment, um, or like contemporary pubs where maybe the food offering is getting a bit more up market, maybe it's more food led. Those are the venues that are actually

um, you know, capturing more consumer spend and and creating more value from consumers. So I could probably attest to like the the Irish pubs having spent a lot of money in one visit there. So when people visit Irish pubs they probably spend a lot on drinks there but um, you know, the contemporary venues, you know, the ability to charge more maybe consumers.

Um it's a really interesting um proposition for for pubs to kind of change their proposition more towards food or more towards sort of a premium lens or refurb. And we're kind of in this environment in the pub space right now where there's a lot of uncertainty with like costs and I guess, you know, people have been talking about inflation, ad nauseum at the moment. So I don't want to bore you with that. But

There's a lot of transactions happening with pubs being sold. Like I think in in Neutral Bay here in Sydney Um the the Oaks sold for um a hundred and fifty million or something like that. So there's transactions and people can still see value in taking them on. Um and making those investments and potentially like looking at other venues to refurb and reposition to kinda capture more value. So

But where do you think the value is in in coming in out in pubs? Uh again, that's one of the things that I when I look at a lot of the news reports and looking at the vibrancy of the pub market and how valuable hotels are. Um it it seems to be about Yeah.

I d uh d d a lot of the value does seem to come from the the venues w that have poker machines, for example, create sort of value. Um Yeah. We don't seem to well sorry, we don't capture that kind of value from a spend perspective in terms of the gambling aspect but Yeah, you'd say it's definitely a big revenue stream from a food and beverage perspective. the ones that um seem to do the best are those kind of contemporary ones or uh the Irish pubs as I said. So

Yeah, it it's probably a tough balance, especially with where ESG's going at the moment. Um, you know, social responsibility around gaming and drinking it's becoming even bigger topic. So, you know, I think um uh venues will want to move away from that. And I think I even recently saw

a venue group or a venue selling their poker licenses to be able to reinvest. It might have been the odd one of the craft group. The odd culture group I think in Sydney. Yeah. Yeah. Yeah. Yeah. So you see that more and more, right? Where they're saying

you know, our proposition isn't about that. And you've got to understand that like there's all these hospitality venues that don't have poker machines that can still be profitable and still function and still create really good good offers as well. So It's not not essential to have poker machines in venues, but yeah, I'm sure it helps from a revenue perspective.

Now looking at your data, one of the slides you showed, pubs visitors seek out value and food quality when deciding where to visit. So value for money and quality of food on offer were sixty eight and sixty six percent. um respectively, um almost ten percent in fact exactly ten percent um higher than even good customer service. So we seem to be a very food driven market.

Hundred percent. Like food is the number one occasion driver for visiting uh the on premise and um even for pubs as well that under indexes. Um, but actually what we find in Australia is where it really overindexes is in, you know, having both food and drink occasions in visiting the on premise. So

Yeah, it it comes out again and again that food is sort of the main driver in Australia. And I think, you know, not everyone drinks, but I think a big piece of it is that the offering is much more around that full experience from food and drink. So, you know I think you have to think definitely about the food offering that you've got in venues to drive.

um a wider experience for consumers and it seems to be in in pubs as well, like it it's a pretty common offering that, you know, you can do really well in Australia. Does that get people in in the door or does that create the revenue? For example, you know, one of the things that I remember from having been around hospitality for for years is that, you know, you don't restaurateurs saying you don't make money on food.

you make money on the wine or things like that. Is is that true of pubs as well, where the food will get them to come in? But

The profit centre is really still you know, the the the beers or the wines or the the the the drinks that you sell? Yeah, like that's a good question. I to be honest, I'm not that close with the the venues around, you know, what the proportion of profit is to each, but what I can talk about is the increase in planning that's going on in in the market right now. So if you think about how consumers make decisions and what's getting them in the door.

What we've noticed is the pandemic really increased people's planning around visitation to venues. And what happened then after things more s sort of settled down and people started to be more confident in going back into to to venues was actually increased again. So they were like, Oh yeah, we'll plan more now that we're a bit concerned about, you know, we have to do all this booking, we have to check in, make sure we're sort of getting the right experience.

Now it's increased again and actually for the last subsequent years it's sort of increased um every time. So What that tells me is that they're looking for more and more information as they go into venues before they make a decision. And food being the main driver of that, you need to really have a great offering in terms of food.

in terms of like whether that that's prop making the the business profitable in terms of do they make more money from food or drinks, you know, it's obviously a clear driver to get them in there and sort of spend in general. And food pairings I think is such an important thing as well as part of it. So it's i for me it's a combination. You can't have one without without the other.

Um and you won't be able to just make profit with with just doing one thing potentially really well, like in general. Like I'm sure there's venues that do it and there's there's venues that obviously do well in terms of just being a bar and and not really having a food offering.

But the majority of venues, pub specifically, y you know, you need that food offering to kind of get people in the door. And what people are doing to go look for that information is they're researching it online even more. They look at the menus. um they research what the food is on offer as well. Like I know personally I've got three kids under three and if I'm going for a night out, I'm looking at the menu exactly what I'm gonna order. And then if I go in and

someone suggests we do sharing, I'm like r really put off the fact that I can't choose that one thing that I've been waiting for for like weeks to take you know. But that's been, I think, accelerated even more by you know, by this sort of um cost of living crisis if people call it that, or high interest rates, high inflation. people are having to make more considered choices with their spend in the on premise as well. So

the planning is increasing even more so um with sort of making sure they get the best out of their visits to to the on premise right now. Hmm. And and again I I I know that the data is yours and some of the insight are probably you know, y ne you need to as you said, be closer to pubs, but

You know, I d I find it fascinating that again looking at value for money and quality of food on offer, um, pub visitors reported sixty eight and sixty six percent respectively. It's a place I habitually visit, which I would have thought

was a very powerful driver was down around twenty four percent. You know, it's almost a third. So D is is that a sign that people don't have a regular local anymore or that they're more promiscuous in in where they go and that they do consider other things than just having a regular? Yeah, like i uh it's tough in Australia because the market is

you know, it's not like i there's that many sort of pubs on the corner in most cities these days. Like they've obviously that consolidation we talked to before means it's more sort of um Appointment to to go out, you know, you need to do all the planning again to go out. So all these things kind of tell me that. People are willing to kind of travel for that experience further than just their sort of suburb and where they go out.

Uh but but yeah, I think that means that you probably don't have these sort of big group of super loyal people that come in every night to the venue, um, that are the sort of the locals that go there for that kind of experience.

And I think also because of the nature of the Australian market where we've got, you know, seventy percent of trade through the off trade, people are enjoying that at home. That's their local, you know, their living room, their couch, that's where they consume their, you know, their beers every day and their drinks every day.

So when it comes to the on premise, you know, that that willingness to to travel or to experience something different, you know, it's'cause it's like a real treat, it's an affordable luxury, you know, you want to go experience the best a lot of the time.

But you know, there there's still uh there still is loyalty around drinks and what we see it And venues and what we see is where the the loyalty is kind of more towards the older demographic And the people that like to explore and experiment more so than others versus the you know, the total total or the sort of normal Australian consumer, they're sort of younger.

Willing to experiment a lot more and um we see some really interesting trends, particularly around Gen Z, you know, eighteen to thirty four year olds with different behaviours and and habits in the on premise.

uh y one of the markets that people really want to um th I I imagine it's still the case that the the younger consumers are the ones that have the higher disposable income'cause they're not yet locked into mortgages and families and that sort of thing. Yeah, yeah, so their behaviours are so different and actually domestic beer is the number one consumed category or the number one um penetration category in in the on premise market for consumers, so

the highest proportion of people in Australia drink domestic beer. But then actually when you look at eighteen to thirty four year olds, it's it's not. It's vodka number one for those guys, cocktails number two in terms of categories. And so If you think about your consumers of the future

You know, they're not the sort of plus fifty five guys who are still drinking beer and wine, it's the the younger consumers. They're under indexing on beer and wine, really traditional categories in Australia in the on premise, and over indexing in spirits and cocktails. Um so we're seeing this shift. And I think it's part of also um

you know, they're exploring more categories, they're willing to experiment more, which we just talked about, and this real fragmentation of the market. And that can be a really challenging environment for venues to be up to cater to because you've got limited shelf space, you've got limited tap space. How do you cater to those kind of new individuals? So that's a really interesting challenge that I think is entering the market.

And I think it's an even more interesting challenge right now with all these kind of conversations around tap contracts and, you know, the smaller craft brewers and independent brewers sort of complaining about the competition issues within the market. Because I actually don't think necessarily the big guys in beer are the big competition. I think it's uh actually macro competition coming in to that. So ginger beers, seltzers,

alternative options that are sitting on the tap bank, not just beer anymore. And and that's uh a kind of a concern from a macro level for for beer guys, I think. Very much do you have any insight into what's driving

the shift away from beer amongst younger you know uh the the the millennial consumers? Yeah, it seems to be a kind of a taste thing, I think, with um younger consumers. Um a lot of them look for refreshment and and flavour and I think that that kind of experimenting in flavour, you know, you've got limitless options in cocktails to be able to do that right. And we're noticing really um fruity emerging flavours coming through in cocktails as well and drinks in flavours. So

Strawberry, pineapple, all these kind of things that you might not traditionally associate with beer unless you kind of move into the more experimental craft space. It's definitely not sort of traditional flavours you'd kind of get from beer. But you see like big brewers like uh Asahi or C B experimenting with like free beer, have that big push with Endeavour recently to create I guess a new beer segment.

to appeal to a different kind of consumer with different um flavour preferences, right? So You wouldn't have any data around how that's going, would you? Uh, no, I don't because it's been much more of an off trade launch. Yep. Um anecdotally, I don't think it's gone.

Super well. No, I d well th that's my anecdote as well. Uh certainly what I've been picking up. But I was just wondering if we had some hard data around it. Yeah, I have noticed they had those kind of shop down pallets in the stores that are kind of Floor displays to the stores and they're still there from summer. So that's not a good sign, I'd say. Um it's kind of probably holding a lot of inventory um in the stores. You know, it it's interesting that you say, Frudy, um

i you know, th those lighter fruity tropical drinks and you know, again I'd hopefully I won't get people sending me angry letters saying that younger drinkers tend to have less mature palates. You know, th they tend to look for sweeter, um fruitier um drinks. But at the same time, um and and we've had brewers say for the two or three decades uh that consumers are losing their taste for bitterness. Um

At the same time, you know, coffee has never been a more popular beverage and it's by and large a a bitter drink. So and we've seen espresso martinis um replicate that trend on premise. Um Negroni, which is a very bitter drink, even things like Aperole that has an orange bitterness to it. Bitterness doesn't seem to be a huge barrier if there is a desire to to come at

those things. Do you have any insights around those elements? Whether, you know, th there there is a theatre or a sophistication or a just a trend around some of those drinks that we're seeing outside of just the plain sweet ones? Yeah, so there's a couple of pieces with that, you know, around the kind of sophistication and traininess, but also I think from, you know, the flavour profile versus sort of the bitter elements of beer. So

I think there's another macro trend obviously around health and well being, which you can see come to life in a number of ways in the drinks industry. So like no low is a key one we've seen. But more than that, it's like calories. Um, so hard seltzer has done a really good job of saying, you know, we're three hundred calories or whatever per serve. Or or how good any news, like a low calorie uh count.

Um, and I think younger consumers are more kind of health conscious in this way towards drinks. They're still willing to put alcohol in themselves, but they're they're kind of maybe saying, Well, I just don't want the carb issues of it And so I think there's a number of ways that health and well being comes to life in the drink space. Um, and it's not just necessarily abstaining, it could be, you know, rather than having the heavy beer and the

That sort of element. I want something that maybe still has that kind of bitterness profile and that kind of suits me, but maybe it's not so much. Um, not so heavy on the calories on that one. I think definitely on the kind of um trendiness and and and the kind of perceptions of it as well.

Um I think I don't think it's a very Instagrammable thing, a pint of beer, but I think definitely there's an element for younger consumers about sharing their experiences online um around cocktails and they're much more instagrammable. I just sent a post out about how TikTok can really drive drink trends on on LinkedIn and you know, last year the Negroni Spagliado was a huge one that I think in you know space of a week had

thirty million views on TikTok and bars were starting to offer something that hadn't really been heard of in Australia. Um you'd obviously heard it at the Negroni, but this new kind of serve became very popular. So just for for those of like me, like I love a Negroni but I've not uh had a spagliato. Yeah, so it was like uh these Game of Thrones stars and they were talking to each other in an interview about how what's your favourite drink?

And one of them said a negroni spagliado and and the other one said, Oh, what's that? Sounds great and it's like a Negroni with Prosecco in it. Okay. And um the other new one which seems to be qu quite interesting on TikTok, maybe because of its kind of uh like how different it is is the Parmesan espresso martini. So it's like an espresso martini with shaved Parmesan on top. And I think it's had like four hundred million views on TikTok, that hashtag

And there's all these sort of trendy bartenders shaving palms and on the rest of martini. It's apparently quite tasty. Haven't tried one either yet. So, um but stuff like that. You ca you know, uh a a beer is kind of due for a cocktail revolution. And actually, um our US team released some data on it recently that it's big over there, like a big arita or whatever it is. Um

a margarita beer thing, uh a beer cocktail is consumed by two and five cocktail drinkers and beer drinkers will drink a beer margarita cocktail in the US. But again, and uh we' we we we're outside of the world of data here, but Creating a cocktail that is blending existing core range spirit.

is much easier than shifting all production to something, you know, a and no offense to um you know, Espresso Martinez with Parmesan. I'm sure it won't be here next year. Um you know, it'll be huge in the time being. But There's a huge difference between buying a block of parmesan in a bar and shaving it onto a margarita or onto a drink this week and investing in a

uh Parmesan factory, you know, to have access to parm Parmesan for something that's very short. And that's I I I guess what we've seen craft breweries do, shift all of their production into beers that are mimicking what may be a relatively short term trend. Hm. Yeah, so it's it's a big Capex investment, right, to create like the fruity beer for for a segment that they think is there and they know the consumers want

But um they don't I don't think they quite hit the mark on that one. But we're seeing a lot of blurred lines in terms of categories, um, in drinks and it's coming to life in beer as well. For instance, in um In Asia I know Tiger Beer launched like a Soju infused Tiger. Um and so similar to the kind of Sentauri one nine six R T D that has Soju in it. I think it's also a bit of like um you know, obviously more sort of heritage drinks that that sort of match the market sort of coming through.

But we're also seeing a lot of blurred lines in terms of, you know, the free beer we talked about before, but also kind of like soft drinks now going into hard versions of them. I think hard solo came out. the last week or the week before from Asahi. So it's like an alcoholic solo which according to the guys I bought one off in Dan's, it's been flying off the shelves.

And so they're really experimenting with crossing categories and the beer cocktail example, you know, it might be a way where y if you take a bottle of beer or craft beer and stick it in a margarita, it it can look really different, right? And It's something that I think Americans are probably a bit more open to in terms of that kind of beer, cocktail.

experience, but it's obviously a um a market there that's big enough to sort of have it talked about and for us to do a bit of research on as well.

I wonder whether beer has the same brand perception as Prosecco, uh for example, where Prosecco is seen as being but uh One of the other trends talking about beer is you've seen, you know, swing back towards domestic beer and away from both imported and craft beer. Talk us through that. Yeah, like we've been sort of seeing a few things in the market that sort of suggested this was happening.

But actually we're seeing it happen globally as well, where the top performing big domestic gears are outperforming craft and international or imports. So we had in our global reach um study as well as segment around what's happening in Germany um with really similar kind of trends where the bigger share gainers or the top ten biggest share ca share gainers. The top four out of those were all

um the largest brands in German beer. So those ones that are ones that kind of swing back to Germany, but closer to home, yeah, our data's showing an increase in penetration in domestic beers, but a decrease in penetration in craft and imported

Um and so I think there's a couple of things here that uh that are coming to life for for consumers. Obviously there's a huge saturation of craft beers over the last five to ten years, right? So Um one, it's kind of a bit overwhelming for consumers, the the the amount of choice, whereas the reliability and trust and quality of established domestic brands can really um be important to consumers.

And a lot of what our data shows as well is that quality and value are so important to to consumers in in drinks as well as food. And so now when we're sort of seeing budgets maybe stretch, I think we're seeing consumers say, I'll opt for something that's less risk It's uh cheaper, I still get value out of it. I know the quality of the beer as well, I know what I'm gonna get when I purchase it. And so we've been seeing that shift um shift uh in our data with consumers sort of moving back towards

domestic beers, um out of craft and imported. And so I think they're trying to save money and they're looking for something that's that's sort of uh known quality. How much of that is the economy and how much of that is I started first seeing signs of this or people talking about this during COVID when in times of chaos. People look for security of the known and the comfortable. Yeah, so I think um

I think it's kind of a combination of both. Luckily in beer space, the kind of um known and secure ones are probably the more cost effective products as well. um for consumers. So because of the scale of the they can naturally just get

Um they can they're obviously a cost strategy business, right? Like they're not looking to charge really um really large prices for a craft and differentiated product. They they're they're sort of trying to get scale on operations and make profit that way, but they can keep the quality really consistent because of the sc scale of their operations and and um you know have that sort of sustained through over time as well. In Australia we're actually seeing

relaunchers of heritage brands as well. So they're taking a step further in that direction, particularly Asahi's doing it and C V's doing it so they relaunch powers back up in Queensland. A brand I'd never heard of but um obviously because of the the kind of regional action. Yeah, yeah, yeah. But you know, the so regional as well, so That's really Queensland focused. Yep. But you know, it's ten years since it was sold anyway, twenty years since it's been on tap and they've relaunched it.

Reshes as well. They brought back Reshes Real as part of that. two E's had a rebrand or they've sort of um for the first time they've updated their branding. That to me says they're trying to focus on growth of the brand and put more investment back into not only the branding, but the strategy and the distribution and potentially the pricing about it as well. Um Color Draft had their first major ad campaign in five years. So it's swinging back into this kind of classic

Australian beers and they're trying to take um advantage of it while they can, the big guy. So not only through um existing brands, but relaunching those classic Australian brands that that seem to have resonance right now with consumers.

Um the last question uh before I just sort of uh open up uh for you to say anything else that we've missed, one of the things that really grabbed uh Sabrina's attention from a couple of the talks was and you've alluded to it a little bit, the Instagram, um and theatre. Um and also talking about tap contracts but

One of the themes that a couple of speakers talked about was draft cocktails that we're seeing, you know, to which gives venues the ability to do cocktails at scale. Um but the potential for that to take up taps that are currently given over to beer. Is is that a threat, do you think, to the to the beer industry um wider use of taps for cocktails?

Yeah, I think so. I think um so we're seeing obviously changing preferences for younger consumers, so they're more likely to uh consume a cocktail than then older consumers as well. So that's their preferencing cocktails and then they want value and quality and draft cocktails, batch cocktails can provide that more so than like an inexperienced bartender who's had less than six months experience um in a venue trying to create a m a margarita for the first time. You know, so

We actually work with um Barcats here and and partner with them on a bit of stuff. Um And they're sort of a uh uh a hospitality recruitment specialist. They find short term assignments for for staff, maybe for um for events or venues when they kind of need someone, or they can just in general find hospitality jobs in the market. And they're saying to us that more than sixty percent of um people applied for jobs have less than six months experience.

Um, we talked to a big pub operator group here that said 75% of their staff have been turned over in the past year. So if you think about that. Well, working at Moet Hennessy before they used to call it Savoir Fair, or it's like know how. Like there is no know how for hospitality staff. So

for them to be able to create a really great experience with a cocktail at the bar, they're doomed to fail. And particularly in venues where it's high volume, high turnover. So I think the draft cocktails or the cocktails on tap

And where they can do really well is targeting those venues where it's high volume. It's less about the experience and more about getting it to the consumer quickly. But the barriers they overc have to overcome right now is that The reasons consumers say they're not drinking the products is they think they're too expensive or they should be cheaper than traditional cocktails.

Or they they have questions about the quality and the taste of them as well. Um, so I think that's probably a barrier that could be overcome by more education around them as well. And we're seeing a number of businesses launch into this space. So not only kind of more boutique ones, um, but also um big businesses like Australian Vintage

they've launched a brand called Mr Stubbs, um, where they're sort of putting it directly on on draft cocktails. Um, you know, traditionally a wine business but having um understood what they do, actually they're producing a lot of spirits now from removing alcohol from their brands.

'Cause it's a big process of I think it actually kind of some sort of centrifuge where they spin out all the alcohol from it and they thought, Well, why why are we sort of just getting rid of this, the you know, the externality of that, having that alcohol there, let's create a product from it. And then even Diagio in the uh UK and other markets have launched a tap product where it's the whole system's incorporated into it and you get a bit of that kind of

model where it's like you buy the system, like ice cream fridges, right? We buy the system and then you buy the refills as part of it and they maintain the system. They're launching that in Australia as well. We saw in an article recently that they're bringing that to market. But I think the strategy for these kind of guys is let's target big venues, let's target pubs where they don't have the capabilities, their staff aren't trained to do it, and they can get really efficient service on it.

And hopefully save a bit of money in operations and the costs of trying to produce that as well. And that's how they'll create value. The other thing around cocktails is that.

They're willing consumers are willing to spend double what they spend on a pint of beer in cocktails as well. And that comes directly from our research. So with increased excise tax, increased um taxes around spirits and beer, is there kind of a you know, uh a change in the dynamics and pricing architecture of consumers and they go

Actually a cocktail doesn't look that um expensive when it's a bit cheaper because it's on tap and I can get good value from it. So yeah, I definitely think um it's a threat to beer. Um, unless beer can think differently about how they create offerings maybe in in that space or can kind of cater to a a younger consumer.

Or the other way you can go is you can just get more targeted, increase your price, more differentiated and create a product that like is so unique to a certain subset of of the market that you always need to be on that tap lineup no matter what. You know, and that's hard in a crowded marketplace. Yeah, it's really hard and I think you're seeing a lot of um craft brewers struggle because of that, because their expectations were so much higher around growth.

Now um it's much harder to get funding to kind of t chase that growth, to kind of build yourself and and it's and it's a challenge for for the craft guys. But is there anything that we've missed? Um over the la over the last forty five minutes. Look, we can probably go on for forever about it, but I think you've kind of covered

kind of covered a lot of it as well, particularly the kind of topics around beer that that we've been kind of seeing as well. But, you know, in general, like I think it's it's a it's it's hard to kind of detach a lot of what the media's talking about.

in the on premise or in the market in general for the consumer versus what we're seeing. Um so I think we're kind of we're kind of maybe coming to a turning point, but so far the market's been super resilient as well for for for the on premise and um you know I think it's a really positive story right now around the on premise as a as a source of growth for a lot of suppliers.

And it's something you have to kinda double down on your focus right now and really understand. So that's kind of where we can help. Um in other in other things as well, I think um we kind of covered off a lot of sort of the value pieces and um, you know, sort of cost of living stuff. But I don't want to sort of talk about that forever. But uh but yeah, no, I think we covered off most of it as well.

Terrific. Well, James, thank you so much for your time and your insights and I'll put a link in the show notes to anyone w that does want to dig a little bit deeper into the data. Um They are able to buy it from uh CTA by NIQ um and they can reach out to you, I take it, um, if they want to take it further. Yeah, sure. Just get in touch any time. Happy to share my details as well. Beautiful. Well, mate, thank you very much for joining us and sharing your insights. Great. Thanks, Matt.

And that was James Phillips from CGA by NielsenIQ. You know the drill, we can only make this happen if you help us to make it happen. If you're a business that wants to reach the brewing industry, we do that. And you can have your message heard by the same people that you want to speak to. Email Sam at BruceNews.com.au to find out more.

We'll be back this Friday with a special edition of Beer of the Conversation. With BrewCon next week, we are all hands to the pump and won't have our news podcast, but look for some of the exclusive content that will be coming out of BrewCon if we don't see you there.