Diageo thinks the UK’s drinks industry could be worth £47bn by 2022 – here’s why

Low ABV drinks, experiences and instagrammable cocktails will make the UK’s alcohol industry an extra £5bn by 2022, taking its value to £46.7bn, according to a new report by spirits giant Diageo.

Seedlip has forged lucrative partnerships with venues such as Savage Garden, creating low-ABV drinks menus during key times of the year like Dry January. (Photo: Seedlip)

The Diageo Drinks Report, which has used historic and predictive data to estimate the country’s drinks industry will grow by 12% in the years, equivalent to an additional £5.2 billion, identified four routes drinks producers and on-trade businesses could follow to help capitalise on this potential growth.

Much like William Grant & Sons’ report launched last year, Diageo’s “growth platforms” focus on consumer experiences, added value, special occasions, and the rise of health-conscious drinking.

Trend 1: Balanced Choices

Seedlip’s Mr McGregor cocktail (Photo: Seedlip)

Alcohol consumption is declining worldwide, according to the report, which found that just over 6 million brits don’t drink alcohol, a rise of 59% year-on-year, but giants like Diageo see this as an opportunity rather than a threat to business.

Low ABV drinks  are becoming more popular. Sales of non-alcoholic beer rose by almost 60% in the 12 weeks to 12 August 2018, according to figures from Kantar Worldpanel, while an earlier report noticed a dramatic rise in the sales of low-ABV spirits.

“Until recently, no & low-ABV products have been limited to a number of low flavour, low ABV beers, high sugar fruit juices, or to a ‘lime and soda’,” the report said.

“Times are changing, and a wider range of choice is opening up across a whole range of no & low ABV, low sugar, low carbonation or free-from products.”

Last year, Diageo-owned gin brand Gordons launched two flavoured, low-alcohol gin and tonics in bars and pubs, after the initial release of the pre-mixed drinks at supermarkets in June 2018. Non-alcoholic spirits brands like Seedlip, meanwhile, are also proving lucrative with premium on-trade listings worldwide.

However, although things are improving, the report noted that a poor range of choices in the non-alcoholic category is still a “barrier for entry.” Going further than simply offering lower alcohol drinks, an increasing number of low-calorie beers and low sugar alcoholic RTDs have entered the market within the past year.

Diageo’s report noted that consumers are looking for “more health, craft and sustainability products.”

Trend 2: Creating Unique Memories

Family Helfrich, part of the GCF groupe launched the world’s first Instagram wine list in 2017.

There are 44 million active social media users in the UK alone, according to figures from a 2019 report by Euromonitor. Consumers, the report said, want to “be active participants in more diverse and visceral experiences that stimulate our senses and emotions – and which can in turn be shared on social media.”

The report found that social media can be a lifeline for a new business, whether its a product launching in supermarkets, or a cocktail bar. Seven in 10 adults surveyed by Euromonitor discovered a new beverage on social media and considered buying it and 71% of consumers who have a good experience with a brand are likely to recommend to others on social media. Moreover, consumers, on average, needed to see a product between two and four times before making a purchase.

“showcasing your offer – the experience, the range, the serves – online is key to driving footfall into outlet.”

Trend 3: Exploration

Beer label Lowlander infused an IPA with spruce needles and juniper berries for Christmas 2018.

Today’s consumers have a wide range of choice when it comes to drinking. Distillery numbers have doubled in the UK since 2009, and there are now more breweries operating today than in the 1930s.

“Interest in British brewed and distilled products is rife,” the report said, “and there is a buoyant market, both nationally and internationally for British-made alcoholic beverages.”

Diageo’s report suggests that increasing the variety of ingredients on your cocktail card, as well as providing insights about their provenance, is an easy way to tap into the desire for discovery.

According to Peter Simpson, Head Brewer, Guinness Open Gate Brewery, drinkers are “more adventurous in their beer choices and looking for beers with more interesting and complex flavours.”

Trend 4: Celebration

You’ve heard it before: consumers are drinking less, but better. They’re spending less money, but when they do spend it, they increasingly go for premium products.

“Alcoholic beverages are a perfect pairing for celebration, with the pop of a champagne bottle long being synonymous for a special occasion, or a round of beers energetically held aloft signifying sporting success,” the report said.

Sparkling wine sales have continued to take over from their still counterparts in the UK, while spirits have become an increasingly important fixture of special occasions. Around 40% of British consumers now offer cocktails pre/post dinner in the home and “easy impressive meals for company”, according to the report. Introducing products that make a sense of occasion easy to create at home, therefore, should be on producers’ radar.