For a large portion of Australia’s pub, bar and late-night economy, alcohol is not simply a product category - it is the financial engine that has historically subsidised labour-heavy kitchens, long trading hours, entertainment, and high fixed occupancy costs.
In 2023–24, the Australian Institute of Health and Welfare (AIHW) reported that 217.1 million litres of pure alcohol were available for consumption in Australia (a 3.7% fall year-on-year), and per capita availability fell from 10.5 litres (2022–23) to 9.8 litres (2023–24), which is the largest year-on-year drop since the series began in 1960–61.
A structural decline in alcohol consumption therefore creates a disproportionate threat to profitability. It is not just fewer drinks sold, but the erosion of the highest-contribution part of the sales mix.
What is falling, and where the mix is headed (by beverage type)
From a venue economics perspective, the most important point is that the decline is occurring across the board, with differing impacts by category:
- Between 2022–23 and 2023–24, AIHW recorded a 6.3% decrease in spirits, reversing a long growth trend that had run since 2014–15. Over the same period, cider fell 3.7%, wine 3.5%, and beer 2.0%.
- In 2023–24, the composition of pure alcohol available for consumption was wine 42%, beer 32%, spirits 23%, and cider 3%.
These shifts matter because different venue models are exposed to different categories. Cocktail bars and premium late-night venues are more sensitive to spirits; pubs and sports bars are heavily exposed to beer; bistros and “occasion dining” venues depend on wine attachment to defend food margins.
In practice, a decline in spirit consumption bites hardest because spirits commonly underpin higher-value transactions (cocktails, premium pours, and late-night spend), even where overall volumes are smaller.
Who is drinking less (by demographic), and why that changes trading patterns
Consumption declines are not evenly distributed by age and gender, and that matters because hospitality profitability is usually concentrated at specific times and in specific groups.
AIHW’s National Drug Strategy Household Survey (NDSHS) shows a long-run shift away from frequent drinking. For Australians aged 14+:
- Daily drinking fell from 8.5% (2001) to 5.2% (2022–23), while the proportion who had “never consumed a full serve” rose to 14.9%.
- In 2022–23, 69% had consumed alcohol in the previous 12 months, meaning nearly one-third either had not drunk in the prior year or had never consumed a full serve.
- Around 31% consumed alcohol at “risky levels” (per NHMRC adult guidelines), and males were more likely to exceed guidelines than females (39% vs 23% for people aged 14+).
For younger people, the pattern is nuanced and commercially important. While there is a strong narrative of “Gen Z abstains,” the venue reality is often “fewer drinkers, but riskier sessions among those who do drink”, which can make revenue more volatile and harder to forecast. For people aged 18–24, AIHW reports risky drinking rates of 45% for males and 40% for females in 2022–23.
For under-18s, the longer-term decline is stark (and it feeds forward into future venue demand). AIHW reports 31% of 14–17 year-olds consumed alcohol in the previous 12 months in 2022–23, compared to 69% in 2001.
The commercial takeaway is that many venues face a double challenge, a shrinking base of routine drinkers, combined with greater reliance on episodic, occasion-led consumption that is more sensitive to price, policing, transport, and social trends.
Why the financial impact is larger than the revenue decline suggests
Venues that “depend on liquor sales for profitability” generally have three characteristics:
- Alcohol is the primary contributor to gross profit, not merely topline. Even modest declines can collapse EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) when fixed costs (rent, insurance, utilities, base staffing) are high.
- Alcohol is the elasticity buffer. When customers trade down or drink less, they typically do not proportionally increase food spend to compensate. In many formats, the substitution is toward lower-cost choices.
- Supplier economics weaken with volume. Lower throughput can reduce rebates, promotional support, and trading terms that operators implicitly rely on - even where those benefits are not line-item obvious until they disappear.
This is why venues can remain “busy” yet become financially fragile. Their foot traffic holds, but spend per head and margin mix deteriorate.
What does this mean for pubs, bars and dining venues
Spirits pressure (-6.3% in 2023–24) is a direct headwind for cocktail-led venues and late-night bars, where premium pours and mixed drinks often account for the highest contribution per transaction.
Wine’s dominance (42% share of pure alcohol) means the broader hospitality market remains structurally exposed to wine behaviour - particularly for higher-end dining and suburban bistros where wine attachment protects food margins.
Beer’s 32% share underlines why pubs are not insulated; even a smaller percentage decline can translate into significant absolute dollars for high-volume sites.
Replace the margin engine, not just the volume
The more robust playbook is to redesign the profit architecture.
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Build a premium “moderation beverage” programme
Treat no/low as a high-value category: adult non-alcoholic cocktails, crafted sodas, zero-proof pairings, and elevated presentation. The objective is to preserve beverage margin contribution when alcohol units decline. While premium beers have developed a viable low/no alcohol alternative, non-alcoholic wines are still in their infancy.
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Simplify Food Menus
Simplify menus, reduce waste, and design for kitchen productivity. If food is taking a larger share of sales, it must be operationally scalable without eroding service quality. The best example would be 24 York’s steak frites only menu.
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Rebuild the Experience
If fewer patrons drink routinely, venues need reasons for guests to stay longer and spend more, ticketed events, tastings (including no/low), chef collaborations, and experience-led programming that is not alcohol-dependent. Think Christine Mansfield’s annual takeover of Cho Cho San in her former Paramount location.
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Tighten operational control because small leaks become fatal
In a lower per-capita environment, discipline in stock variance, pour control, roster-to-demand matching, and weekly gross profit tracking becomes a survival capability, not a “best practice.”
