First Drinks Report reveals ‘polarisation’

11th July, 2014 by Neal Baker

The UK drinks market is “more polarised than ever” as premium brands increase their market share according to William Grant & Sons marketing director Gary Keogh, who last night (10 June) launched the First Drinks Report 2014.

premiumspirits

The annual spirits and Champagne report carried out by William Grant & Sons UK – formerly known as First Drinks – revealed current consumer trends and how shopper habits are changing as the country emerges from recession.

Speaking on the research, Keogh said:  “The market is more polarised than ever and it is premium brands which can really take advantage of this trend.  Value can mean many things from functional benefits to packaging and personality”.

With new analysis undertaken in both the on and off-trade, this year’s report highlights the evolution of shoppers’ habits when it comes to seeking value in what they spend.

Global luxury wine and spirits are worth £45bn, and with 620,000 millionaires in the UK (a figure forecast to rise 30% in the next eight years), the high-end on and off-trade channels are becoming increasingly important for premium spirits.

image002This end of the market is continuing to drive market growth, particularly in the on-trade where value is up 13.7% according to the report.

In the off-trade, value has increased by 6.4%, outperforming the growth of non-premium spirits which are up 4.5%.

The report also reveals strong value growth in the malt whisky and spiced/flavoured rum categories.

Rum’s versatility and use in cocktails has contributed to its growth, particularly in the on-trade.  Gin is also performing well, with a wealth of new brands has helping to fuel general consumer interest in the category.

With premium gin growing at six and a half times the rate of mainstream gin, the opportunity remains for further growth.

William Grant and Sons whiskyChris Mason, Managing Director of William Grant & Sons UK, said:  “As this report concludes, premium brands are extremely well placed to benefit from the trends the market is experiencing. This is why building premium brands that consumers desire is core to our business.

“It is these higher-end spirits which can offer more in terms of value, to appeal to the consumer.  In the year ahead we aim to work even more closely with our customers to deliver premium experiences – be they online, in-store or in outlet.”

Facts and figures

The on-trade

·         The on-trade remains in a state of flux, with research showing that consumers continue to make less frequent visits.

·         However, when they are out, 79% of drinkers consider spirits and it’s the spirits category which is driving growth – the on-trade spirits market is worth £5.4bn, up 5.1%

·         Spirits are the second largest drinks category in the on-trade, accounting for 18% of value sales

·         38% of consumers use menus to confirm their choice of drink – rather than to inspire new drink choice

·         77% of consumers would welcome bartender recommendation

The off-trade

·         Two thirds of off-trade purchases are made when in-store

·         Almost 60% of branded spirits are sold at a promoted price in the off-trade – price promotions play a key role for shoppers

·         90% of shoppers will visit the main spirits aisle after seeing promotion shelves to validate their decision and ensure they are getting value for money

·         Shoppers will pay above expectations for categories viewed as more premium such as malt whisky and Cognac

·         Whilst smaller size bottles encourage trial of products and categories, 48% of people buying a 35cl bottle will only purchase this smaller size and not larger variants

·         A quarter of shoppers state that a free gift with purchase will encourage them to spend more in-store

Online

·         45% of the population have purchased their groceries online with a third planning to use online more this year

·         Online retailing is one of the fastest growing channels in the grocery market, with 24% growth achieved last year.

·         Shoppers spend on average 9% more when purchasing online versus in-store

Gifting

·         68% of Scotch malt whisky shoppers are purchasing the category as a gift

·         73% of people have purchased an alcohol gift in the past year – of these, 51% of shoppers have bought spirits as a gift

·         40% of spirits gifts are Scotch whisky

·         29% of total spirits category value sales are purchased with the intention of gifting, estimated to be worth over £1bn per annum

·         When purchasing gifts, shoppers are willing to trade up by an average of 11% versus their standard purchase

Prestige

·         London is the wealthiest city in the world with more billionaires than any other, well ahead of Moscow in second place

·         London has set itself apart as a leader in international drinks trends – many hotels and bars are aiming to be the most iconic in the capital

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