UK report: Spirits ‘benefitting’ from low-alcohol trend

20th February, 2018 by admin

Known for their love of life’s most treasured vices – fish and chips, custard creams and gin and tonics among them – Brits are turning over a healthy new leaf. But the UK market remains as important as ever to drinks brands, says Claire Dodd.

*This feature was originally published in the October 2017 issue of The Spirits Business

Bad weather, moaning about politics, and forming orderly queues – some things are just a fixture of British life. In fact, you could say that Brits are creatures of habit, lovers of tradition. But if the signs are to be believed, it looks like there’s one age-­old British habit that consumers are starting to shy away from: drinking.

Indeed, it seems some Brits are even beginning to abstain completely from one of their culture’s treasured pastimes.

“Consumers are more concerned about both physical and mental wellbeing than ever before, and they are increasingly seeking a more balanced lifestyle,” says Faith Holland, head of category and commercial insight at Diageo, the company that bought a stake in nonalcoholic distilled ‘spirit’ Seedlip in July 2016.

Seedlip: alcohol-free zone

Seedlip: alcohol-free zone

“We expect to see more low-­ and no­-alcohol spirits products emerge, as well as products that meet dietary or lifestyle needs, such as gluten free and dairy free,” she adds.

In retrospect, the booze­-maker’s decision to invest in a non­alcoholic brand for the first time in its 257­-year history may prove to be a pivotal one. In September, the UK held its first ever alcohol­-free drinks festival. Or to call it by its official name, The Mindful Drinking Festival. The event featured craft beers, wines, lower-­sugar sodas, infusions and non­alcoholic ‘spirits’ all served-­up by expert mixologists.

And many, like Holland, believe that increasing abstinence is one of the defining trends that will shape the UK market in the coming years. Some believe it’s generational.

Dan Bolton, managing director of distributor Hi­Spirits, says: “There’s clear evidence that younger consumers in particular are drinking less, but drinking better, and this is the other side of the coin in terms of the growth of premium spirits and cocktails – if someone is only having one or two drinks, they want them to be special.”

So where does this leave drinks brands? Well, drinking less doesn’t mean not drinking. And the trend is opening up opportunities for some categories, according to Darren Flanagan, development executive at Bibendum, drinks supplier to the UK on­-trade.


For bars, it’s opening up new serves. “‘Shim’ drinks are all the rage at the moment,” he says. “These lower-­alcohol cocktails use the likes of Sherry, vermouth and sake to replace hard spirits like vodka and gin. Fortified wines are getting a lot more love in bars following the rise of serving Sherry and vermouth with tonic. White Port is the next natural extension… [and] tonic’s next best friend.”

But that’s not to say that spirits are suffering. In fact, they’re benefitting, says Craig Greenberg, head of strategic planning and insights at William Grant & Sons. “Spirits have benefitted a lot from the health focus people have,” he argues. “One of the issues of drinking less and being healthy about it isn’t just giving it up. Ultimately, we do have more people who are teetotal. Around 17% of the UK population now abstains, which is about 3% higher than it was 12 years ago. And young people especially are drinking less. About a quarter of people aged 25 and under don’t drink. But those who do, are looking more for moderation.

“They’re saying ‘OK, I will have two or three drinks and they will be really nice ones that I fully enjoy.’ So, if you look at spirits compared with beer, there’s been a steady decline of beer volumes over the last decade and a half.”

Party off: millennials are focused on quality

Party off: millennials are focused on quality


The ongoing cocktail boom in the UK is also playing its part in fuelling growth, and exposing consumers to new categories as well as furthering growth in existing thriving sectors such as gin.

Mark Harris, channel director for Pernod Ricard UK, says there are now an estimated 9.2 million cocktail drinkers in the UK, and “aside from price, the description and details about the type of spirits included are the most influential factors when choosing a cocktail”. He adds: “Cocktails are worth £500m (US$660m) to the on-­trade and are stocked in a third of outlets, up by 33% versus two years ago.”

Which spirits are proving most popular? And which still have more room to grow? Gin, of course, is the notable success story of the past few years. According to new figures from the Wine and Spirit Trade Association (WSTA), total UK spirits sales in both the on­ and off­-trade grew by 2% in 2016/17, a figure bolstered by double-­digit gains from the gin category.

Gin sales increased “dramatically” in the year ending 17 June 2017, surpassing £500m in the on-­trade for the first time. In the off­-trade, the category continues to be the “standout performer”, up by 16% to £687m. It is outselling rum and ‘speciality’ spirits for the fourth consecutive quarter.

Such is the seemingly unquenchable demand that drinks wholesaler Matthew Clark says it now stocks more than 500 gins to meet the increasing demand for ‘craft’ products in particular.

Tequila too is doing well – albeit in specific outlets. While sales grew by 8% in the off­-trade to £14m, the category remained static in the on-­trade, with sales hovering around the £160m mark. But Bibendum tips mezcal for future growth. “Looking at London’s bar scene, more and more people are drinking it – and it’s not just shots,” says Flanagan, talking of Tequila. “They are opting for premium serves, with mixers and in cocktails.”

He adds: “Mezcal is a bit more niche at this stage, but becoming increasingly popular. There’s great diversity and an interest factor around the category, and quality is certainly improving. Mezcal gin is a further build on this trend – where mezcal is infused with gin botanicals, creating a lighter, slightly more approachable spirit with familiar flavours.”

Rum is also being tipped for future growth. Off­-trade sales rose by 5% year on year to reach £340m, spurred by flavoured, spiced rum, and ‘boutique’ and premium brands. In the on­-trade the category grew by 4% to reach £634m. The news is good for liqueurs too, with ever more unusual flavours coming to market, and sales buoyed by the cocktail trend. Total annual sales are up by 4% in the on-­trade at £792m. But showing that consumers perhaps still aren’t confident enough to mix at home, sales in the off-­trade were up by just 1% to £344m.

One category tipped for a renaissance is vodka. Christina Schneider, channel development manager at Bibendum, says: “Vodka is making a comeback. It’s riding the craft wave, with some great craft vodkas coming onto the market and filling the gap between cheap, entry­-level alcohol and super-expensive ‘bling’ brands – none of which premium bars want to use. “But beautiful, no­-nonsense products like Konik’s Tail have changed bartenders’ perception of the category and vodka cocktails are getting more love again.”

Bibendum PLB Group


Other notable launches include Belvedere’s brave bid to prove to consumers that vodka can and should have character. In October it launched its terroir-­inspired Belvedere Single Estate Rye series, which features two expressions made with rye from distinctly different locations and landscapes in Poland.

But, of course, it is whisky that remains the UK’s biggest beverage export, with shipments steadily rising. And it’s for exactly this reason that Brexit has the Scotch Whisky Association (SWA) worried. The European Union remains the biggest export market for Scotch, with a value of £559m – up by 4% – almost a third of the total exports from the region. So, remove the tariff-­free trade, and you have a problem, right? Well, for now, the devaluation of the pound since the Brexit vote has helped boost UK export competitiveness. Scotch whisky value exports rose by 3.4% to £1.8bn in the first half of this year, boosted by the popularity of single malt, according to a report from the SWA. But how will it fare once the UK finally withdraws from the bloc?

The SWA is seeking category protection and an open trade policy. Whether or not it will get it remains as unknown as all other factors surrounding Brexit. For now though, something that should comfort the SWA is just how much UK consumers continue to embrace whisky, in all its forms.

“An overarching trend that is influencing a great deal of spirit consumption in the UK on- and off­-trade at the moment comes primarily from a millennial audience that is becoming increasingly more discerning and demanding about the quality and complexity of the cocktails in their glass,” says David Miles, from distribution and marketing company Maxxium UK. “As a result of this demand, new expressions, styles and previously dormant categories have seen massive growth over the past 12 months as consumers look to explore new drinking occasions and serves.”

So, are the British abstaining? Or are they just being more mindful of what they drink? It stands to reason that in a market awash with choice, at the very least they’re just being more discerning. Nevertheless, there seems little doubt that moderation and a desire to consume in a more health conscious way will drive demand for more low- or no­-alcohol products. But, for this discerning bunch of consumers, they better be good.

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