Preferences of Gen-Y consumers such as those at Gaithersburg, Md.-based Sodexo’s campus accounts provide valuable insights into beverage trends. RESEARCH BY CATEGORY: Cocktails & Spirits Beer & Wine Soft Drinks & Smoothies Tea & Coffee Water

The not-so-simple answer is yes—and no. A healthy percentage of operators report greater sales in the past year across alcoholic and nonalcoholic beverage segments, according to R&I’s 2008 Beverage Census. Yet while 10% to 25% of Americans say they’re buying more in categories such as coffee, bottled water, beer and cocktails than last year, these increases are tempered by similar percentages of diners who report buying less.

R&I’s findings provide more details on how the economy is taking its toll. More than half of operators (55%) raised prices on nonalcoholic beverages in the past year, while 66% hiked prices on alcoholic drinks. Meanwhile, 14% ramped up pricing specials on nonalcoholic drinks—these figures rise to 20% for limited-service restaurants and 25% for chains overall—and 34% are offering more specials on alcoholic choices.

So where do the opportunities lie amid Beverage Census’ facts and figures? Delving into the data reveals how much profit potential exists in beverages these days and where foodservice operators can find it. The exclusive survey, conducted in September among representative samples of 845 consumers and 809 operators, details not just what kinds of beverages operators are menuing and where they’re having success, but also what consumers buy most—and what they’d like to see more.

At any time, but especially amid a faltering economy, focusing on beverage sales is a smart strategy since the majority of dining experiences include drink orders. On average, consumers buy nonalcoholic drinks 68% of the time when dining out. They order alcoholic drinks 17% of the time on average, a number that grows to nearly 20% for Americans earning $50,000 a year or more and to 23% among Gen-Y diners.

Even more important for operators, beverages, in general, account for a hefty slice of sales and in many cases—most notably, fountain drinks and alcohol—offer more-attractive profit margins than just about anything else in foodservice.

Nonalcoholic drinks comprise 17% of sales on average; they represent a larger percentage for noncommercial (25%) and limited-service concepts (20%) than for full-service restaurants (12%). Alcoholic drinks, meanwhile, account for an average 12% of sales overall, trending much higher in fine dining (25%), lodging (23%) and casual dining (20%).

While alcohol sales are following their historical pattern of being somewhat recession proof, the new wrinkle is that this time around, Americans are boosting spending on beer, wine and cocktails at home rather than at restaurants. Growth in retail sales of alcohol for at-home consumption outpaced on-premise growth this year, with an estimated 3.5% increase (at inflation-adjusted prices) in retail sales versus a 3% decline in sales at eating places, reports Chicago-based researcher Mintel International. Mintel predicts on-premise sales soon will swing back to the positive side, rising 3% in 2009 and higher in the ensuing years.

Among nonalcoholic choices, carbonated soft drinks still garner the greatest percentage of sales, but per-capita consumption continues to fall, making room for faster-growing nonalcoholic categories such as energy drinks, bottled water and iced tea.

In the following pages, R&I breaks down more-detailed sales trends, top selling drinks and up-and-coming menu items by beverage category to help operators grab their share of this profit potential.

Contact writer at aperlik@reedbusiness.com