The annual Christmas uplift for the wine and spirits sector is set to rely heavily on the “premium” end of the market this year, according to Pernod Ricard UK.
Having commissioned its largest ever piece of research into the Christmas market, Pernod found that spirits growth during this period in 2012 was weighted heavily in the “Premium+” sector (see chart below), which it defines as £15.20 per 70cl and above. Nielsen data showed that in the final week before Christmas 2012, Premium+ held a 37% share of total UK spirits sales.
“The message is becoming more and more compelling,” said Simon van Moppes, Pernod’s commercial director for spirits. “Growth continues to come through premium spirits and they’re particularly important at Christmas.”
Likewise, the group found that “Premium” wine, which it qualifies as retailing for £6.50 upwards, steadily increased its market share during the 12 week Christmas period to account for over a quarter of the UK’s total wine spend.
As part of its bid to claim a larger stake in the premium wine sector, Pernod highlighted a series of 2013 launches across its portfolio.
Already in the UK market since early summer is its Graffigna Centenario 2011 Malbec, RRP £9.99, along with a Pinot Grigio extension to the Jacob’s Creek Cool Harvest range, RRP £8.65, which launched last month.
This August will see the introduction of a Garnacha from Campo Viejo, RRP £8.69, while October will herald the arrival of Brancott Estate Flight, a 9% abv Sauvigon Blanc with an RRP of £10.49.
The Christmas season is particularly important for the sparkling wine and Champagne categories, which sold 36% and 46% respectively of all UK volumes during this period last year.
Nevertheless, in a market that saw 2012 off-trade Champagne volumes slip by 7%, Pernod’s data indicated that this decline derived mainly from “lower price bands”. In contrast, brands in the £20+ price bracket enjoyed “strong, double digit growth” during the Christmas season.
Looking more closely at the main sources of off-trade growth and where future opportunities may lie, Pernod Ricard highlighted a shift in shopping habits across the FMCG sector in general.
According to Nielsen, total FMCG off-trade value sales in the UK during the 12 weeks to 5 January 2013 rose by 2.2% to £35.6 billion. Of this, the out of town and high street retailers retained the largest share, although the online and convenience sector both outpaced market growth, increasing value sales by 4.2% and 3.8% respectively.
“The largest contribution to growth last year came from people shopping across a number of different channels,” concluded Dan Reuby, Pernod Ricard’s customer marketing director.
Identifying the convenience sector in particular as an area that “remains a big focus,” Reuby highlighted its importance as a source of “small or last minute gifts”. As a result, he urged retailers in this sector to reassess their ranges, suggesting: “Smaller formats can be a great way of doing premium spirits.”
Despite evidence about the scale of this opportunity, van Moppes noted that among many retailers, “discounting on standard spirits is getting in the way of the trade up to premium spirits.”
He also predicted the continuation of a 2012 trend towards buying spirits as a main present rather than just “stocking fillers”.
Identifying the £20-£25 price bracket as key here, van Moppes added: “Whisky is the key spirit that is gifted,” as he stressed the need for gift packaging to the “fresh and modern; our range is constantly evolving – it needs to be inspiring.”
In order to tap into this opportunity, Pernod is expanding its current gift range with the addition of a new Glenlivet Selection Pack, RRP £35, and a Martell VS Gift Pack, RRP £26.
As for the UK on-trade, van Moppes pointed to evidence from CGA Strategy MAT data (see chart below) as he stressed: “no matter what the outlet – pub or prestige bar – premium is relevant. There are still many on-trade operators who are not optimising the opportunity to trade up.”