Australia's Hospitality Crisis Explained: How It’s Affecting Bars, Brands, and the Future of the Industry

Drinks Provisionist
Jan 30
4 min read

In the latest Drinks Provisionist blog we look at Australia’s hospitality crisis to understand what really caused it, what impact it is having on bars and brands, and why brands have a leading role to play in helping to fix it.

The term has taken a life of its own, and as is common when impactful phrases become second nature terms, the impact of the words lose their meaning. However, the word crisis is not being used over zealously in this instance. What’s currently happening in the Australian bar scene is indeed a crisis, what’s more, it puts the premiumisation agenda’s of the world’s biggest drinks companies in jeopardy, unless it is fixed.

Location closed sign — Photo by Tim Mossholder on Unsplash

What is the hospitality crisis?

If you talk to any business owner within the hospitality sector right now, one thing they all have in common is they’re struggling to get the right staff. In the upper echelons of the drinks trade, premium outlets and cocktail bars – finding the skills they require is both difficult and expensive.

The phrase ‘hospitality crisis’ seems to have come about post pandemic, with a well documented labour shortage caused by huge numbers of temporary visa holders (12% of whom occupy hospo jobs) returning to their home countries amidst a locked down Australia. Many didn’t return and Australian Government Data confirms that hospitality is the industry most struggling with a shortage of workers, with 45% of venues saying they’re desperate for staff.

Other factors are at play here too. Inflation and low consumer confidence in the economic outlook are affecting footfall and spend per head. Other costs are also rising compounding the issues. And finally, as Australian venues seek to recruit the next generation of Australian hospitality talent, they’re discovering generational shifts that make them less willing to tolerate poor working conditions, pay and concepts like upskilling in their spare time. For the cocktail industry, who have for years relied on staff studying in their spare time, attending training and brand events on their days off, this is a huge issue. Paying staff to spend hours training simply isn’t an option for many outlets, adding to a skills gap. Mid-tier venues are removing cocktail lists to facilitate ease of service and this highlights the risk to brands if the crisis is allowed to continue unchecked. Most large brand owners are pursuing a long-term strategy of premiumisation. Put simply, that is dependent on knowledgeable, well-trained staff to do the upselling for them in the trade. The smallest end of the brand spectrum is also under pressure, craft brands are dependent on endorsement from knowledgeable and credible advocates to get the word out about their brands.

What does this mean for brand owners?

The industry needs to invest more than ever in education. Brands have an important role to play in this and advocacy programs that already existed before the pandemic need to be stepped up with a sense of urgency. Not only do they need to be invested in, they need to adapt to speak to the shift in needs. Brands attempting to secure the time of venues for sessions that are overly brand centric, not relevant or focused only on self-serving outcomes will find that they’re not given the time of day. Instead, we recommend tailoring advocacy programs to the very clear needs of the trade right now:

Category education
Cocktail upskilling
General industry knowledge

This clear need represents a huge opportunity for small brands to upset the status quo. If new or emerging brands can deliver value adding initiatives faster than the incumbent dominate brands, they will quickly win favour. Venues are open to new ideas, new ways of working and new ways of partnering with brands for mutual benefit, now more than ever.

Woman making a whisky cocktail — Photo by OurWhisky Foundation on Unsplash

Additionally, forward thinking brands are partnering with official skills providers to help combat the perception that hospitality is not a rewarding career. WSET qualifications represent a diploma style award for knowledge attainment, and the hope is that as more employers start recognising and rewarding these skills, people feel they can stay in the industry for longer. Data from CGA states that the average ‘career expectancy’ of an Australian Bartender is just 5 years, whereas in Europe it is 7 and, in the USA, as high as 10.

Drinks Provisionist work with numerous international and local brands to develop industry leading advocacy programs and drinks strategies that deliver genuine value for the trade and unlock mutual growth. We have dedicated teams working to manage ambassador programs that deliver long term ROI beyond the short-term benefits of brand representation in the trade. Our recent work with Moet Hennessy Australia demonstrates the effectiveness of a well-honed advocacy approach even in times of crisis.

What are you waiting for? The current situation represents unprecedented times for the Australian industry, but innovative approaches represent huge opportunities for brands to establish a new order, and upset the status quo. Innovative thinking and great strong insights are required, two things Drinks Provisionist specialise in.