What are the benefits and perils of self-serve alcoholic beverage dispensing?

GlobalData is a London-based company, and it produces thousands of reports, briefings, forecasts and data books each year in markets from healthcare and financial services to retail and technology. Occasionally, GlobalData will send us a preview of one of these pertinent reports, and the info is always quite interesting. Here’s one on self-serve alcoholic beverage trends:

With self-serve alcoholic beverage dispensing technology gathering market momentum, major brands may need to adapt to ensure consumer loyalty, says leading data and analytics company GlobalData.

The company’s report, ForeSights: Self-serve Alcoholic Beverage Dispensing Technology, states that the new on-premise concept has the potential to disrupt the bar and restaurant industry by enabling consumers to dispense their own alcoholic beverages from taps. The technology, which tracks consumer behavior and encourages sampling, presents both opportunities and challenges to alcohol manufacturers.

As alcoholic beverages are age-restricted in most markets, service staff must provide drinks in bars, restaurants and other establishments. This results in long wait times and poor service at peak hours, which can lead to lost sales. Some pub operators, like Wetherspoon in the U.K., have introduced apps that allow consumers to order from their seats and avoid lines, but this still requires intervention from wait staff.

Tom Vierhile, Innovation Insights Director at GlobalData, says: “Self-serve alcoholic beverage technology frees the consumer from having to wait for beverage service in a crowded situation. Once an establishment validates a consumer is of legal drinking age and is not over-served, it provides the consumer with a radio-frequency identification (RFID) card or bracelet to enable self-service of alcoholic beverages. The RFID system can link to a credit card for payment.”

Much of the appeal of self-serve alcoholic beverage dispensing technology is linked to three major benefits– reduced waste, improved consumer choice (and sales) and lower labor costs (as bars and restaurants can reduce staff since consumers would be serving themselves to some degree).

Vierhile adds: “The technology encourages sampling while tracking consumer behavior at a granular level. Unlike with bottled products, a consumer does not have to commit to or purchase an entire bottle to try a new beverage.”

GlobalData’s Q3 2016 consumer survey (stats below) found that consumers globally are much more likely to try new or different varieties of wine, ale and craft beer than other types of alcoholic beverages, including spirits and cocktails. People between the legal drinking age and 24 are over twice as likely to try different ales/craft beers than consumers aged 65-plus (25 percent versus 12 percent), but these age differences do not exist for wine.

Vierhile concludes: “Bars and restaurants have been the primary targets for self-serve alcoholic beverage technology, but new installations in supermarkets, hotels and other hospitality venues like cruise ships indicate that the concept may have broader application than first thought. Major brands may have to find new ways to encourage consumers to be brand-loyal in a climate that encourages sampling.”