November 19/Detroit/Detroit Free Press --There is no free lunch, they say. But for now, at least, a glass of water is free when people go out to eat, and, increasingly, water is all they are drinking.

New market research from the Port Washington, N.Y.-based NPD Group Inc. finds basic tap water is one of the fastest-growing beverages ordered in restaurants.

Tap water accounts for 10% of the 50 billion drink servings ordered in restaurants each year, says the company's CREST service, which continually tracks what people order away from home.

That translates into one in 10 restaurant guests not ordering an additional drink with their meal.

Since 2006, with restaurant traffic down 1%, the total number of beverages ordered (other than tap water) has dropped 6%, a decline of 2.7 billion servings, while tap water servings have gone up 2.8 billion, the report says.

The beverage categories taking the greatest hits were soft drinks and brewed coffee, which together represent almost half of all drinks served in restaurants.

The poor economy and high jobless rates explain some of the decline in beverage sales, says report author Bonnie Riggs.

But, she continues, "a key learning from this report is that much of the declines in beverage servings are tied to the price-value relationship the consumer perceives."

In other words, if customers see a cup of regular, garden-variety coffee priced at $3 -- one that would cost literally pennies at home – they are more willing to skip it at the restaurant. On the other hand, guests may be perfectly willing to pay $4 or even $5 for excellent coffee, beautifully served in a fine setting.

Not all categories of beverage sales are declining, Riggs noted.

Iced tea is growing, perhaps benefitting from the declines in soft drink sales that began even before the recession.

Sales are also rising for newer, more specialized kinds of drinks, such as smoothies, icy or slushy drinks, and specialty coffees, all of which are flooding the market at fast-food and casual-dining restaurant chains.

Riggs says U.S. beverage sales in restaurants will likely pick up again, once the economy improves.

However, she warns, "Beverage providers will need to address consumers' concerns and poor value perceptions to stem further losses."

By the time the economy gets better, though, more consumers may have gotten over the vaguely uncomfortable feeling they have when the server asks what they want to drink, and they reply, "nothing."

The more people say, "I'll just have water," the easier it gets.


From the November 21, 2011, Prepared Foods’ Daily News