William Grant’s top UK spirits trends

The UK spirits market grew 4.5% to £9.1bn in the last year, driven by sales in the on-trade, although British consumers are still displaying recessionary habits.

Spirits continues to be the second-largest drinks category in the UK, but consumers are seeking more memorable experiences for their money

According to William Grant & Sons’ UK Market Report 2014, sales of spirits in the on-trade grew 5.1% in the year to April 2014.

Spirits is the second-largest drinks category in the on-trade, accounting for 18% of sales, although new openings are seeing “a larger proportion of sales driven by spirits, especially premium spirits”.

However, consumers are continuing to visit bars and restaurants less often, a habit borne from the recent recession. The report, compiled in collaboration with CGA Strategy and Nielsen, claims consumers are seeking memorable experiences and value for money when they do go out.

Rachel Perryman, client services director at CGA Strategy, said: “Like the improving economy, we are starting to see green shoots in the modern on-trade. This is the emergence of a new style of on-trade: dynamic, customer centric with excellence in execution in multiple areas of operations.”

The largest region for spirits sales in the on-trade is northern England, which accounts for 25% of serves. London is the second-largest market, with 22.3% of sales, while the midlands and central UK is third with 19%.

Scotland meanwhile is the number one market for malt whisky (25.1%), spiced rum (43.2%) and blended whisky (24.1%). Southern England consumes the most gin (7.6%).

The report identified the top five best-selling spirits brands in the on-trade by volume as Smirnoff Red Label vodka, Jack Daniel’s whiskey, Jågermeister liqueur, Gordon’s Gin and Bacardi rum.

Spirits in the UK off-trade

Sales in the off-trade meanwhile also grew by 3.6%, with premium expressions – priced over £23 for a 700ml bottle – up 6.4%.

Spirits is also the second-largest drinks category in the off-trade, behind light wine, but growing faster in value than both beer and wine at a rate of 3.6%.

While the increased in value is a result of increased pricing, both penetration and frequency of purchase declined in the period.

Just as in the on-trade, the report highlights that consumers are continuing to seek value for money when making purchases.

“We know that those who purchase spirits are the highest spending category shoppers of all,” said Katie Hemmings, commercial director at consumer research agency him!.

“It is therefore critical for retailers to satisfy them with a relevant range, along with product advice and great customer service.”

According to the report, alcohol is the most gifted category in the UK, bigger than chocolate and beauty. Almost a third of spirits sold in the UK during the year were purchased with the intention of giving the product as a gift, with 40% of those sales being Scotch whisky.

William Grant identified the five top-selling spirits brands in the off-trade by volume, are Smirnoff Red Label vodka, Glen’s vodka, The Famous Grouse blended Scotch whisky, Bell’s Original blended Scotch whisky and Gordon’s gin.

Click through the following pages for a more in-depth report on each spirit category’s performance in the UK.

Whisky

On-trade:

William Grant & Sons UK claims that the whisky category is worth £925 million in the UK on-trade, an increase of 4.1% on the previous year. Within this category, blended whisky is the most popular sector despite a 1.2% decline in 2013/14, reaching sales of £420m in total. Meanwhile, malt whisky is the fastest growing spirits category, registering an increase of 22.7%. The growing Irish whiskey category was also found to have increased 7.6% to £54m. As a complete category, whisky is stocked in 115,000 outlets in the UK on-trade and is the industry’s third largest category. London is the number one region in the UK for on-trade whisky sales.

Off-trade:

Research also shows that in the UK off-trade, the whisky market is worth almost £1.2bn, an increase of 1.7% on 2012/13 figures. In terms of value, Scotch accounts for 82.8% of all sales, while American whiskey is one of the main growth drivers, up 15.3%, and remains the third largest value segment behind malt. The grocery channel accounts for 82.3% of total whisky value sales. Figures also show that 68% of Scotch malt whisky shoppers are purchasing the category as a gift. The entire category has seen £12.8m of sales come from products launched in the past two years. Men were found to be the dominant whisky drinkers, taking up 70% of the market.

Brandy & Cognac

On-trade:

In the UK on-trade, Cognac is worth £213m, an increase of 0.7% driven by growth in the VSOP category, which is up 20.3% to reach sales of £30.4m. Brandy (excluding Cognac) is worth £24m, up 6.5%, while William Grant & Sons UK notes that bars have a “significant opportunity” to improve the category if they stock more mainstream, less expensive brands. Non-French brandy is the only category experiencing volume growth, increasing 41.2% while bars have also seen a move away from traditional neat or on the rocks serves to contemporary cocktails. The demographic brandy consumer is largely male and over the age of 45.

Off-trade:

Both Cognac and brandy are in decline in the UK off-trade. Cognac is now worth £94m, a 1.6% decline, while brandy is worth £284, also down 1.6%. French grape brandy accounts for 61% of all brandy value and 73.2% of all brandy volumes. Analysts claim the category has become polarised with shoppers seeking either French grape, or non-French grape, or trading up to VSOP Cognac, or above. Retailers are increasingly seeking to “demystify” the brandy category and stock a wider range of higher grade styles.

Rum

On-trade:

White rum continues to account for the majority of the category’s value in the on-trade, yet this is falling year on year as value sales of flavoured and spiced rums have doubled in almost two years, contributing an additional £50m to the category. Over 5,000 outlets have stopped selling white rum in the past year, meaning that a total of 109,000 now stock the spirit. Meanwhile, an additional 20,000 outlets have started to stock flavoured and spiced rums in the last two years. A total of 76% of consumers claim to drink rum as part of a cocktail and many are also gaining interest in aged expressions.

Off-trade:

In the off-trade, men and women enjoy white rum equally, while 1.7m consumers are now drinking spiced and golden rum, the majority of which sit in the younger age demographic. Scotland is the largest region for spiced rum in the UK, accounting for 21.2% of value sales. The only sub-category that is declining in both value and volume is white rum, meaning that the whole category is down in the off-trade. According to William Grant & Sons UK, promoting the versatility of rum through simple serves and popular cocktails can help push sales.

Vodka

On-trade:

Vodka is the most widely drunk spirit in the UK on-trade with 12m drinkers, adding £120m to the industry in the past two years. Flavoured vodka is now in decline, down 1.6%, while standard variants are driving category growth, up 6.6% in 2013/14. Vodka is also the most widely distributed spirits category, stocked in 985 of all on-trade outlets. Almost half of all on-trade vodka drinkers are aged under 34 years and 77% of vodka consumers drink the spirit with a mixer. Growth continues to be driven by premium vodka brands, which have experienced a 36.9% growth.

Off-trade:

Vodka is also the most widely consumed spirit on the UK off-trade, with an equal 12m drinkers. Although the frequency of purchasing has fallen, the vodka category has experienced a slight volume increase. Value growth has been driven by an increase in the average price point. Similar to the on-trade, premium vodka brands is showing significant growth, up 37.2%. Unlike the on-trade, flavoured vodka has grown 11% and is now worth £33m.

Gin

On-trade:

The gin category has grown by £70m in the past two years and is the fifth largest drinks category in the on-trade, accounting for nearly 8% of sales. However, analysts claims there’s an opportunity for bars to drive sales by stocking more premium brands. Consumers have been found to seek a greater understanding of brand stories and gin production, with a number of bars featuring on-site gin distilleries. Gin and tonic is still the main serve of the spirit and 78% of gin consumers use the on-trade to trial a new brand. London accounts for one quarter of the complete UK on-trade gin market.

Off-trade:

Gin is the most upmarket spirits category in the off-trade, with 43% of drinkers in the AB category. Premium gin is recruiting younger and more affluent consumers to the category. The entire category is also continuing to see an influx of new brands enter the market, with an increase of almost 50% in the past two years. Flavoured gins have also been found to be a “small but growing” category.

Liqueurs and Speciality

On-trade:

As a result of the cocktail boom in the UK, liqueurs and specialty brands have grown by £202m in the last two years. The category has seen extensive innovation in the period, with 36 new brands entering the market. Non-cream liqueurs has seen the most new brands launch driven by demand in experimental cocktails. There has also been an increase in the number of bars producing handmade bitters and flavoured ingredients. Liqueurs and specialities is the second largest spirits category in the UK on-trade, worth £1.2bn.

Off-trade:

The liqueurs and specialities category has grown 4% driven by an increase in average in prices and account for 67.5% of all spirits sold – more than any other category. However, 43.2% of the category is sold in the 12 weeks leading up to Christmas. Almost 11% of sales in the category come from new products launched in the last two years, while there has also been an increase in the amount of lower ABV variants enter the marketplace.