The more the merrier

8th April, 2011 by Alan Lodge

Vodka still holds centre stage in the UK spirits market, but rum and gin also want a slice of the action, reports Alan Lodge.

The UK spirits market, like the vast majority of the alcohol sector, is currently enjoying much greater success in the off-trade than in the on-trade. The obvious reasoning behind such a performance is that people have scaled back on their spending and nights out in the aftermath of recession.

Yet the economic troubles have served another purpose, in that consumers who were forced to rein in their pub and club visits sought to recreate the best bits of their social life in their own homes. Suddenly everyone wanted to mix their favourite cocktails or mixed drinks in their own kitchens, with the off-trade reaping the benefits of a jump in the sales of spirits such as vodka, rum, Tequila and liqueurs.

Michael Laird, partner at industry consultant Cognosis, says: “Obviously cocktail culture is important, because it is high-visibility and exciting, and a great way to show off brands. But it is also clear that the majority of fast-growth white spirit consumption is not cocktail-driven – it is more simple mixes that are the real key to growth. The underlying growth drivers are more to do with easy-drinking, casual mixability than actual cocktail drinking.

“Being a simple bar call with Coke is a pretty powerful growth driver – and allows people to recreate the drink at home within reach of the fridge. With the shift to home drinking in the West right now that really matters.”

In total, the UK off-trade spirits market witnessed a rise of 1.5% in volume sales in 2010 to 4,177.7 million litres, while the on-trade suffered a 4.1% decline to 3,025.2m litres [Euromonitor].

Yet there are signs that the UK consumer’s tastes are changing, and the traditional powerhouses of whisky and vodka are coming under increasing threat from emerging or re-emerging drinks. The widespread down-trading that was anticipated in western economies might not have reached the depths that many had feared, but the door has been left ajar for individual brands and drinks categories as a whole to capitalise on the faltering market leaders.

Some drinks, such as Tequila, have suddenly found themselves talked of as growth drivers for the spirits category, just a few years after they were viewed as a fading force. Indeed, Tequila and mezcal saw off-trade volumes leap 6.1% in 2010, consolidating on an 8.8% rise the previous year.

Richard Brown, managing partner at Cognosis, says: “Tequila is an interesting category at the moment with great opportunities to create heritage stories. Patrón is an example of a Tequila brand which has come apparently from ‘nowhere’ to major brand status, drawing new drinkers into the category.

“I expect Bourbons to grow in the near future too, because Jack Daniel’s is doing a fantastic job in introducing new drinkers to American whiskey world-wide. Dark rum is certainly enjoying growth in several major markets now, and I expect that will trigger more branding opportunities in the future than in the past.”

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