Emerging era of ‘new gin’ fuels innovation

With gin launches continuing to proliferate, how can brands stand out in an increasingly crowded marketplace? SB discusses the challenges of ‘ginnovation’ with key players in the category.

The rise of gin is seemingly unstoppable

You know there’s a gin renaissance when a summer beer garden in London is filled not with pints but G&Ts. Once the mainstay of the Boomer generation, gin is now enjoyed by people of all ages and genders – and its rise is seemingly unstoppable.

“At the time that I launched I think there were over 600 gins out there in the UK,” recalls Mark Holdsworth, Half Hitch Gin brand owner. It was 2014 when he launched his Camden-based gin into the mêlée which has swept across many parts of Europe, the US and Australia.

The proliferation of new brands has been astonishing – and a drinks journalist can barely go a week without word of a new brand crossing her desk. Is the pace sustainable, and, if consumers start to feel the fatigue sneaking in at the corners of the trade, could a contagion of ambivalence catch on? “You’re absolutely right, the category really needs to differentiate otherwise you’re toast,” Holdsworth states.

The first point to address is whether or not there is a real danger that gin fatigue could creep into consumer consciousness. “Most gin brands that you see today will be gone or significantly weakened in three to five years’ time,” forecasts Hans-Eric Waborg, managing director at Facile, a Sweden-based drinks producer which exports mainly to Spain and Holland. He foresees a gin crunch of sorts, simply due to the volume of products on offer.

Holdsworth is a little more sanguine. “I think the wholesalers are quite often strong gate-keepers. They won’t list things without sounding them out,” he says. If a brand doesn’t make the cut, it simply won’t get listed – in a way, the market will manage itself.
But others are more optimistic. “There is no danger in the immediate future,” reckons Nick Williamson, marketing director of Campari UK, which owns and markets the Bulldog Gin brand.

“What we may see is a peak in the number of gins that bars will carry on their back bar, but in terms of excitement and passion among consumers, we will see it grow as gin appeals more to the mainstream.”

Williamson’s comments suggest we’ve yet to even reach peak gin – a thought echoed by Hawthorn’s Gin co-owner, Will Turnage. Consumers don’t get fatigued, he argues, with very few even realising so many variants are available until they happen upon the gin shelves in a supermarket.

“There is little brand education in the on-trade and almost none of this filters down to the consumer, so they are largely indifferent to what they drink,” he suggests. “They order what the bartender recommends or, as is normal, just ask for a G&T. Until we become like the Americans who brand-call everything, there will always be a need for a ‘house’ gin and a few premium upsells.”

Kate Harrison, marketing manager, premium gins, at Quintessential Brands, which has several names in its stable including Greenall’s, Bloom Gin and Opihr, is perhaps the most emphatic. “None!” she responds, when asked if the sector is at risk of fatigue. “Gin is the category experiencing consumer focus and has been for the last six years – longer in Europe. With so many brands, different flavour profiles and serves, consumers won’t be getting tired of gin any time soon.”

One aspect of the category which is testing the patience of producer and consumer alike is the issue of ‘craft’ – see page 6 for the debate in further detail. The ‘craft’ epidemic has arguably plagued gin to a greater extent than any other sector – and in a quest to promote a point of difference brands are now seeking to extricate themselves from the term.

“Nobody walks in to a bar and asks for a craft gin and I don’t think anyone walks into Waitrose or Sainsbury’s and asks for a craft gin either,” asserts Alex Wolpert, founder of the East London Liquor Company. “I think that ‘craft’ has been piggybacked and hijacked by people who are keen to slightly misuse the word over the past few years and it really has been rendered a little bit meaningless.”

So, in this emerging era of ‘new gin’, where the markets are continually flooded with newness and the ‘craft’ claim has lost its lustre, what makes a brand stand out? What does genuine innovation look like? “When we meet gin enthusiasts at food and drink festivals, they tend to put provenance first,” attests James Hayman, managing director of Hayman’s Gin. “They want to understand how and where the gin is made, who by and the story behind it, as well as taste it before making a purchase.”

For Campari UK’s Williamson, it’s flavour that still holds the key. “With such an enormous selection, particularly in the on- trade, consumers may feel daunted with such an offering. However, flavour profile is going to be the main draw for consumers, coupled with recommendations from peers and bartenders. Once an individual has an idea of the flavours they like, they tend to look for recommendations from others within this flavour profile.”

Mike Miller, marketing director of Catalyst Brands, a UK-based brand agency and trading division of Matthew Clark which distributes brands including Larios Gin, agrees, and calls for greater organisation to help the sector further prosper. “The secret will be to establish distinct styles of gin within the category so that consumers can make an informed choice based on their preferences,” he says. It’s worked for Scotch whisky, and to a certain extent, brandy. Could gin be the next beneficiary of a style-led categorisation approach?

Taking inspiration from outside the sector is key for Gary Westlake, founding partner at design agency Purple Creative, too. “The real fight is now for signature occasions. A perfect example outside the category is Aperol, which has not only popularised a signature serve but is owning an occasion – in its case actually stealing the ‘sundowner’ occasion from right under gin brands’ noses. Gin brands beware!”

And awareness of not only the occasion but the purpose behind the purchase is also critical, as Quintessential Brands’ Harrison notes. “A high percentage of gin bought is as gifts – packaging is one of the most important aspects of a brand.”

A significant trend to emerge from the category in recent years has been the demand for and consumer interest in locally produced gins. While nothing new, the strength of feeling surrounding such releases is quite striking.

“I think that’s probably where a lot of producers are going, if you look at the number of gins named after a city or town – Edinburgh, Liverpool, Durham, Newbury,” muses Marcus Black, joint managing director at Spirit of Harrogate, which prides itself on its locally and internationally sourced botanicals and Harrogate aquifer water used in production.

Luke Smith, distiller at Sunderland-based Poetic License Independent Small Batch Distillery, is a case in point. “On our packing we like to shout about the fact that our gin is made in the North East, and have found that our bottles are often picked off the shelves by those who live, or were born, locally.” He adds the local focus often tempts drinkers from outside the region to try something from a locale not normally renowned for its gin production, too.

Scotland is also gaining traction as a gin-producing region. “Locality is a factor, particularly in Scotland, where a number of craft gin manufacturers have created bespoke brands and products,” says a spokesperson for Halewood International, which has a number of gin brands in its stable, including its recently acquired Liverpool Gin brand, produced in the city.

One of the more surprising opportunities to emerge in terms of generating point of difference is the area of price. The standard gin segment has been in decline for a long time, a fact linked to both generational difference in brand preference and demand for higher quality.

“So, while the standard segment has seen volumes decline consistently by 1% over the last 10 years, premium gins have been growing by an average of 4% over the same time,” explains Eric Sampers, global brand director for the English gins portfolio at Chivas Brothers, citing IWSR figures. “We are now at the stage where the global volume of premium gin is approaching that of standard gin, whereas 10 years ago standard brands outsold premium gins by two to one, and this is a trend that is set to continue.”

It’s a shift well-noted by Wolpert, who eyed this premiumisation as a chance to shine at the lower end of proceedings. “I think what puts us in a slightly different bracket is that we’re so accessible. There is no distillery in the UK on our scale at our price point, so retailing at £20 a bottle for London Dry Gin is incredibly good value.”

The price factor has not escaped the attention of Diageo either. “Price is
everything,” states Charlie Downing, global marketing manager for gin. “What’s really actually very unusual in gin right now is that there’s a lot of growth and excitement and vibrancy at the top end of the category in super-premium and premium gins.”

So much so, that Purple Creative’s Westlake describes the current pricing structure as gin’s “biggest unexplored opportunity” – and he’s looking beyond the current ceiling. “The sky’s the limit when it comes to buying vodka and whisky, with limited editions going for eye-watering prices, but gin tops out quickly in comparison. This makes the gin market more accessible to the average drinker, but leaves a big opportunity for a distiller to start serving thirsty gin connoisseurs – with bigger wallets.”

In a separate but similar area, East London Liquor Company has inadvertently created its own niche via its socially ethical operation – a factor which strongly resonates with that key millennial market.

“Our whole business model is based on being commercially ethical: can we charge a fair price for gin and can we pay our team a fair wage?” says Wolpert. “It’s a bit of a taboo to be commercially ethical because people have a preconception that you have to be mean to make money.”

In any business, knowing your target consumer inside out is key. But for some gin brands, really digging down and finding a precise market is not only enabling them to win in terms of differentiation – it’s proving lucrative, too.

“The point of difference that we look at is a combination of route to market and a niche approach,” explains Nick Radclyffe, owner of Foxdenton Estate, a Lancashire-based, family-run producer. “We primarily target country sports – hunting, shooting, fishing. We can be king of a small market which can be more profitable for a small supplier than taking on the big companies.”

Facile’s Waborg agrees. His Imagin was thought to be the first blue gin to come onto the market when it was launched in 2002. “Current UK interest is coming from the Beatles Society and the annual Beatlesweek in Liverpool, including the Cavern Club,” he says, referencing the link to the John Lennon song of a similar name. “This interest might be part of our future marketing campaigns.”

But the biggest opportunity underpinning gin’s future expansion, dependent on the outcome of Brexit negotiations for many suppliers, is the vast, untapped potential offered by overseas markets.

“What I think will keep gin going, certainly in the UK, is the potential for export,” Spirit of Harrogate’s Black explains. “If the government’s aim is to [grow] UK gin exports to the sort of level that Scotch whisky is at, and with the support that I think they are giving people and producers, and assuming that the global economy picks up a little bit from where it is at the moment, then that is a very exciting prospect for all producers of gin in the UK, big and small.”

It might sound like a good deal of ‘ifs’, but Sampers, of Chivas Brothers, is certain. “The gin category is in the midst of its most exciting period for decades, with new products, new ways to drink gin and new recruits to the category. With this in mind, gin fatigue is not an imminent problem for us. In fact, Beefeater sales would suggest quite the opposite is happening. Beefeater is achieving value growth in markets around the world, including mature gin markets Spain (+3%) and France (+9%), [with] double-digit growth in Germany (+53%), Italy (+31%) and Portugal (+66%).”

Diageo’s Downing is also emphatic. “Fish where the fish are. The US and Europe are probably the world’s largest markets by standard price. There are emerging markets in Latin America: Mexico, Colombia, Brazil are obvious pockets of growth, and increasingly we’re seeing growth out of pockets in Asia as well. There’s a lot of activity in global travel in those markets.”

Ultimately though, there’s one underlying reason people indulge in a G&T – or indeed any drink.

“There is the whole other side to our enjoyment of drinking alcohol which is just that you want to have something that tastes great and don’t always want to be discovering something,” concludes Elizabeth Wright, global head of Gordon’s. “It’s like when you just want to have beer that tastes great.”

It turns out that keeping it simple and focusing on enjoyment could be gin’s most straightforward route to maintaining its growth after all.