“Soaring popularity of third space venues” among young adults report finds

The Third Space Report takes a close look at multi-purpose and interactive sites like competitive socialising venues, event, music and food spaces and stadia—all growing channels that are competing with more traditional On Premise destinations.

Including insights into the size of the prize and needs of all the leading third space segments, the report primes drinks suppliers to maximise distribution and sales in all categories and “builds the fullest picture yet of the demographics, needs and paths to purchase of third space users.”

The third space is particularly appealing to younger adults like Gen Z—a lucrative target for all drinks brands, with more than two in five (43%) of them eating or drinking out weekly. They tend to have a more limited income compared to older groups, since they are in early stages of their careers, but as a proportion of total income their spend is in line with other demographics. Gen Z are very willing to spend money on their leisure activities—but they have some unique demands and are interested in experience-led activities that provide more than just food and drink.

This is attracting many consumers to third space venues, and nearly half (49%) of Gen Z drinkers in these places use them at least weekly—29 percentage points more than Gen X. In turn, this makes the third place a vital channel for brands to target and engage Gen Z consumers.

The value of the segment is reinforced by CGA’s sales measurement data, which shows these venues achieve an average of 19% more drinks volumes per month than traditional On Premise units. As well as being a change to reach a valuable consumer group, third space venues can provide greater returns on investment with significantly higher rates of sale.

Rachel Weller, CGA by NIQ’s commercial leader, UK and Ireland, said:

“Contrary to some perceptions, Gen Z are going out as much as older consumer groups, and they are a highly lucrative target. However, their habits and priorities are different, and it’s vital that suppliers meet them where they are—which increasingly means third space venues. Engaging with these venues is critical for the future of drinks brands, and compelling messages and innovative strategies are needed to recruit consumers, as well as secure sales and share. The Third Space Report provides the ideal starting point for success in this dynamic but competitive sector.”