For most of us, January has always been a strange time of year – money would be tight as we would have overspent in the run up to festive holidays, have gifts that need to be returned, would have gone back at work (although many may never have gone off work!) and I can guarantee almost of all us would have eaten and drunk too much too!
The festivities often start way before Christmas – the work Christmas Party, Christmas drinks with friends; all before the big day itself and then there is New Year’s Eve on top of it all. As all this happens, the pounds pile up, and we get to January carrying somewhat more about with us than we want. The Christmas hangover sets in. The third Monday of January is announced as ‘Blue Monday’ – the most depressing day of the year, as we are politely reminded by the credit card company that a hangover is not all you have to worry about.
Now in recent years some new phenomenon has developed to encourage and help us all to get over our Christmas hangover; namely Dry January, which started in 2014 as an initiative by the charity Alcohol Concern, and has now grown rapidly. In its first year an estimated 17,000 people took part, and a survey by the charity published in December 2017 estimates that up to 3 million of us will attempt it in January 2018, with Drinks Retailing News telling its members in December to prepare for 6 million participants.
This is a massive shift in consumer behaviour for retailers to deal with in a such a short space of time, but as Drinks Retailing News also alluded to, there are opportunities for retailers to avoid their own sales hangover in January, which as many of you will know is typically the most challenging period of the year for most retailers. For specialists and multiples alike, there are ways of diversifying the offer to customers that can help capture at least some of the shift in spend lost to potentially lower alcohol sales.
‘If you can’t beat em, join em’ – shifting to low/zero alcohol
It is not always the case that the beer drinkers want to get away from the drink completely – many still love the taste for it, and still want to experience it even if at the same time wanting to cut back. Many of you will be familiar with the famous low-alcohol Kaliber beer, made famous by Billy Connolly in adverts in 1993. So the idea isn’t new – however, the that in 1990 the total market value for low/zero alcohol beers had been worth just a measly £38m during the whole of the 1990’s. Guinness, owner of the brand, then attempted a reboot in the early 2000’s, but it wasn’t until recently that the market trend into low/zero alcohol really started to notice.
In December 2015, The Drum noted that research by the alcohol giant AB InBev UK showed that 32% of the British public had by that point alcohol-free beer, and that one in ten women were drinking it on a weekly basis. The survey also found that 34% of people would be looking to consume alcohol-free beer in January 2015, an increase of 16% from 2014. Indeed, Fortune was reporting a similar opportunity when it said in August 2017 that “the move toward health will make low and no one of the fastest-growing categories in beer” with year-on-year growth rates expected to soar, with AB InBev planning to grow the mix of its sales in the category to 20% by 2025.
‘If you can’t join em, beat em’ – shifting to other categories entirely
For the multiples and supermarkets, both online and instore, where offers have diversified over the last 30 years, there is an opportunity for the retailer to play on the Dry January sentiment shared by many of its customers. ‘Give them what they want’ is a perfectly reasonable approach – after all Drinks Business showed in January 2016 that while an average of nearly £1 in every £10 is spent in on alcohol is supermarkets, in January this drops to just 46p. It is a tall order for any retailer to make up that gap in alcohol alone. So what other categories can be played into?
Our very own IMRG-Capgemini E-Retail Sales Index for January 2017 reported that the strongest category winners in January were Homeware on a like-for-like sales basis vs Jan 2016, with also strong lifts in Gifts at a staggering +62% growth, which suggests an opportunity for multiple retailers to re-focus on non-food related home and gifting categories during the January window, as people look to refresh their homes and take their minds off of their hangovers.
As many of us will know, shifting the pounds becomes a key aim of many a Christmas hangover sufferer, with One-Click Retail reporting on Amazon category highlights for January 2017 showing key upwards trends for the month versus the year before had been Nutrition & Wellness, Fitness & Exercise Equipment, Weight Loss & Smoking Cessation. So playing into fitness and weight loss categories is a clear opportunity again also.
‘Don’t join em to beat em’ – pouring alcohol on ‘Dry January’
There are some in the retail industry who have much less room for manoeuvre (one cannot imagine the ‘Queens Head’ shifting its tables and chairs to make way for the sofa sale of the century). There is a counter to the trends we have already discussed, which is that alcohol sales actually aren’t that impacted by Dry January, with the Drinks Business reporting Kantar Worldpanel’s head of retail and consumer insight, Fraser McKevitt, saying that sales of beer had increased by 4% over 12 weeks to 29th January 2017, with wine up by 1% over the same period. McKevitt proclaimed that “a Dry January was certainly not on the cards for many of us”. This was backed up by evidence from our own IMRG-Capgemini E-Retail Sales Index reporting that for the period from January to May in 2017 Beers, Wines and Spirits had growth rate of 18.6%, well about the average for the period of 13.6%, suggesting that far from ditching the drink, we either continue buying in January as we have always done, or simply make up for it as we move through Spring.
Despite this, there are many reports of a clear impact, with Vice magazine quoting a restaurant owner in January 2016 stating “frankly, it’s a disaster,” and that spend per head was at least £10 less than it might be at another time of year, with non-alcoholic drinks just not being able to make up the gap on alcohol.
Clearly Wetherspoons takes a different angle, with Vice reporting in the same article Wetherspoons spokesperson Eddie Gershon that “if some people wish to stop drinking or drink less in January, that’s their decision. However, people enjoy going to pubs and that is not going to stop because of a campaign. For the last 15 years, all Wetherspoon pubs hold a January sale, where a number of drinks – alcoholic, non-alcoholic, coffee etc – are reduced in price”. So, planned discounting could be a route for retailers of all types to try to bridge the gap, encouraging consumers to continue drinking, or at least stockpiling their cellars.
So not such a Dry January after all?
So as we have discovered here, there are number of ways retailers can deal with the Dry January phenomenon, that appears not to be going away anytime soon. Retailers can try to avoid the hangover by offering them something different, joining the crowd or simply driving a counter-cultural behaviour with consumers. The fact remains that Dry January does and will continue to have an impact on consumer behaviour, and retailers should look to mitigate its impact on them in the way they are able to.