Permissible treats to fuel a fresh wave of premiumisation as the on-trade returns

Article 31/03/2021

The ‘lipstick effect’.

The ‘lipstick effect’. That’s what we’re likely to see as the On-Trade reopens, as consumers look to reward themselves after lockdown with permissible treats and celebrate what they have missed. There is huge pent-up demand among consumers for visiting hospitality outlets and real excitement around being able to enjoy moments of conviviality with friends and family once again.

Like many others, I’m looking forward to supporting my local pub following a year of restrictions. People have missed the theatre of having a drink made in front of them, being able to enjoy more complicated cocktails, and the welcoming hospitality of the On-Trade. Couple that with rising positivity levels and with the Euros coming, it’s expected to be a great summer for the sector.

Whilst only a quarter of the On-Trade will be able to open next month, that’s just over 26,000 sites with external spaces and there is a further 10,000 with car parks, so there’s lots of potential for venues to transform those for outdoor trading and maximise capacity. Over the last 12 months, consumers have been treating themselves with affordable luxuries and trading up. We fully expect to see these behaviours boomerang back into the On-Trade and fuel a fresh wave of premiumisation, meaning Spirits and Premium+ Spirits can play a key role in the recovery as they command a higher spend per serve than other categories.

We know that consumers have embraced at-home cocktail making during lockdown, and we expect a heightened interest and appreciation for cocktails when the On-Trade reopens, particularly for serves that are harder to master at home, like Passion Star Martinis and Espresso Martinis. At Christmas we saw sales of Absolut Vanilia and Kahlua increase by more that 70%, and flavoured spirits have performed well in the Off-Trade. The same categories will continue to set the tone for the On-Trade recovery as consumers turn to long and refreshing serves suited to low tempo environments, such as flavoured Gins and Spritzes.

Of course, it will take time for the hospitality sector to recover. National lockdowns and tier restrictions have meant many operators have needed to furlough staff, and we have enormous empathy for the challenges they’ve faced. We, at Pernod Ricard UK, are deeply committed to the channel and have been helping to keep bartenders engaged and educated. Last year we partnered with the Wine & Spirits Education Trust to offer Level 1 Spirits training courses online for free to 2,000 hospitality professionals, and we’re proud to be rolling out a second phase of free courses over the coming months to continue upskilling the trade beyond the COVID-19 period.

When the On-Trade reopened last summer, our Brand Engagement and Advocacy team published a guide to help venues prepare to reopen safely and next week, we will be launching a refreshed version to help the trade recover and rebuild. Added to that we have an exciting programme of activity ahead as we’re significantly investing in our brands to introduce consumers to new serves and excite them with brand-in-hand activations such as terrace takeovers and new product sampling (in a COVID-secure manner of course), as we head into a blockbuster summer.

We know that hospitality leaders believe the sector could help significantly boost the UK economy as COVID-19 recedes, however, continued Government intervention will likely be needed to protect the livelihoods of the 3 million people working in the industry and it will take time to rebuild. We believe in the On-Trade and despite the dark clouds of the last year, silver linings can be found and we remain confident about the long-term future of the sector and look forward to supporting our customers as they reopen.


David Haworth

Managing Director