Premium direction: the latest spirits trends
The off-trade spirits market grew by £130 million in the past year as consumer confidence shot up, according to latest annual market report from William Grant & Sons UK.
It reveals that the take-home BWS market grew 1% in volume and 3.5% in value to £15.4 billion as the number of UK off-trade outlets grew 1.6% to 60,000 (Nielsen, year to April 26).
The on-trade suffered another dip in volume and value sales and pubs continue to close, leaving suppliers focusing more heavily on the take-home market.
Spirits were down 0.8% by volume in the off-trade but grew 3.6% by value, adding more to the market than any other drinks category as consumers increasingly buy more expensive products.
Chris Mason, managing director at William Grant & Sons UK, said: “Premium brands are extremely well placed to benefit from the trends the market is experiencing. This is why building premium brands that consumers desire is core to our business.
“It is these higher-end spirits that can offer more in terms of value to appeal to the consumer.”
Premium spirits were up 6.4% and William Grant believes consumers now have the confidence to spend more on “quality products with a story and a more pleasurable, engaging experience”.
Toby Clark, director of research at Mintel, which provided insight for the report, said: “On every measure of financial confidence that Mintel records, consumers are becoming steadily more positive."
Nielsen analyst Lucy Desborough added: "Consumer confidence is recovering, but consumers continue to be more selective in what they buy.
"Premium BWS brands are the core area of growth right now. As the population gets older, more affluent and with more single households, we can expect the trend for premiumisation to continue, so the role for premium spirits is more relevant than ever.”
The report pooled insight from Dunnhumby, WG&S, HIM and Evolution Insights with data from Nielsen, Mintel, CGA and Kantar, and analysed how shoppers make spirits purchases in the off-trade.
It said: “While many elements of what to purchase occur prior visiting a store, two-thirds of decisions are made in-store. Price promotions play a key role, even for shoppers with more knowledge, with almost 60% of branded spirits sold at a promoted price.
“Promotions can also drive impulse purchasing with a third of shoppers claiming to buy a spirit not on their shopping list.”
But it added that 90% of shoppers will typically pay above expectations for categories viewed as more premium – such as malt whisky and Cognac – and will spend more for gifts, celebrations and parties.
Unlike other BWS areas, supermarkets are growing spirits sales faster than convenience stores, Grocery accounts for four-fifths of sales and value is growing at 4.2%, compared to growth of 1.3% in convenience.
The report suggests that shoppers enjoy perusing the BWS aisle in supermarkets and spend longer browsing this fixture than any other.
In convenience, just 1% of shoppers buy spirits and William Grant said there is a great opportunity for future growth, but that retailers should push the category harder as spirits shoppers spend £14.80 per trip, compared to an average spend of just £6.13 for those that do not buy spirits.
Katie Hemmings, commercial director at HIM, said: “We know that those who purchase spirits are the highest spending category shoppers of all.
“It is therefore critical for retailers to satisfy them with a relevant range, along with product advice and great customer support.”
Cocktail recipe ideas, increased visibility of different categories and drinks recommendations will help keep spirits shoppers satisfied, according to the report.
Analysts agree that there is a strong opportunity for the convenience sector to become a key player in the spirits market, while agreeing that online channels will continue to grow.
Nielsen’s Desborough said: “Convenience and online continue to be key battlegrounds, with online growing strongly. Capitalising on these channels will be critical in retailers and brands defending against the discounters. Liquor in particular is well-placed to benefit.”