Diageo GB highlights £5bn growth opportunity in alcohol

25th April, 2019 by Nicola Carruthers

The alcohol market in Great Britain is predicted to rise by £5.2 billion (US$6.7bn) to £47.7bn (US$61.4bn) in the five years to 2022, according to a new report from Diageo.

The low- and no-alcohol trend has been highlighted as a growth opportunity

This marks a value increase of 12% between 2017-2022, with a compound annual growth rate (CAGR) of 2.9% for the same period.

The Diageo Drinks Report 2019 by Diageo Great Britain looks at key changes in the market over the last 10 years as well as future trends.

Spirits have been outperforming beer and wine for a number of years, the report noted, with spirits growing by 7.4% in value to £11.1bn (US$14.2bn). Gin led the growth of spirits, growing by 52.2% in value, with “positive growth” coming from malt whisky (3.6%) and rum (4.1%).

Consumers are also making more premium choices and looking for provenance and “delivery of experience”, according to the report.

The report also said that the “mix of categories is beginning to significantly change” boosted by the rise of cocktails, cider, ready-to-drink and sparkling wine. A blurring of categories has seen spirit-flavoured beer, spirit-flavoured cider and low-abv flavoured gin liqueurs come to the fore.

The report predicts six global trends including ‘urban centricity’, where cities “are increasingly drawing in population” and ‘one-world connection’, the ability for internet users around the world to connect digitally through messages, news and recommendations.

Another trend, ‘advanced living’, highlights consumers’ faster access to knowledge, while ‘experience economy’ looks at the demand for value-driven experiences.

The ’information travels fast’ trend emphasises how consumers have more access to global news and ‘demanding convenience’ follows the ‘I want it now’ mentality.

The report notes that in the last decade frequency of visit has declined by 10.5%, however overall spend in trade has grown by 26.2%. Spirits have grown to almost one in three serves in total beverage alcohol (Nielsen data), while beer and wine have reduced their share of sales.

Four key ‘growth pillars’ – ‘balanced choices’, ‘make the moment’, ‘exploration’ and ‘celebration’ – are also highlighted in the report.

Balanced choices shines a light on “responsible consumption” and the low- and no-alcohol category. Most leading bars stock one type of non-alcoholic spirit, the report claimed. Young adults are leading the category, with 46% of people under the age of 35 likely to order a mocktail, compared to just 16% of consumers over the age of 35.

The make the moment pillar looks at the rise of digitally-enabled socialising and the opportunity to drive sales through “capturing moments”. Online searches for ‘pubs near me’ have grown 34% in the last year, with summer being the key time to search, the report said.

There has also been “rapid growth” in ‘third-space’ experience-led offerings such as festivals and outdoor events, with 50% of on-trade suppliers having festivals and other events as a top three marketing target for the year.

The trend for aperitivos was also highlighted with Google searches for vermouth growing 30% in the last year to reach one million searches in 2018.

Madeleine Bedford, Diageo’s senior customer category manager, said: “Consumer drinking habits are changing, with an increased focus on premiumisation and heritage.

“As consumers grow more confident and their repertoires become broader, it is no longer appropriate to look at drink categories in isolation.

“To unlock true value, we must identify where and how consumers want to enjoy drinks and ensure there is always a relevant offer for them.

“Our Transforming Drinks Experiences initiative identifies ways retailers can take advantage of shifts in consumer behaviour and maximise profits from the total alcoholic drinks category.”

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