In the latest data from Circana, off-trade private label value growth outstripped brands in almost all categories across BWS (including low/no alternatives). In the year to March 2024, private label spirits saw a 3.7% lift, while branded spirits dropped -1.2% in value for the period. Beer and cider rose 7.1% in private label, while brands grew 4.5%. Wine and Champagne private label value growth was up 6.5%, while brands were flat at 0.7%. RTDs were the only category where brands grew value ahead of private label, but there’s more to the story, says Ananda Roy, SVP strategic growth insights EMEA at Circana.

Speaking to Drinks Retailing about the new figures, Roy says branded alcohol companies have started the fight back against private label, especially in the run-up to the festive season. But he cautions that promotions are not sustainable, and ultimately brands will need to invest in innovation to compete effectively in growth segments, especially in alcohol-free beers where a range of challenger brands and retailer labels are competing aggressively through a wide array of flavours and ingredients.

He says: “Firstly, we’re seeing significant growth of low and no alcohol options. And you can argue, particularly with zero alcohol, ‘does the [branded] alcohol business really have equity or can a number of challenger brands and retailers with their private labels bring innovation and variety’?

“Private labels have been very focused on the no and low category.”

Secondly, Roy points to RTDs. He says the combination of cash-strapped consumers looking to the off-trade, as well as their desire to experiment, is driving interest and innovation. He flags M&S as a particularly good example for private label RTDs.

Roy also makes an interesting observation around spirits vs RTDs.

“In the UK, you’re seeing the decline of rum as a spirit but you’re seeing rum-based cocktails growing,” he explains. “That reflects changing consumer tastes. And then there is the desire for more variety – especially at a time when consumers are drinking more at home.”

Speaking about the overall consumer sentiment, Roy says alcohol has become a “transitioning essential”, as shoppers face higher prices for food and other basket staples.  

He explains: “It has become a product where consumers are buying less or drinking less, or stocking up less, or looking at alternatives, such as rum-based cocktails, rather than buying an expensive bottle of rum. So, spirits as a category is becoming a transitioning essential.”

However, he adds that when consumers choose to drink, they are opting for “premium, more indulgent products”.

He says retailers that have strong equity in food are also attracting consumers with exciting private label innovation in drinks.

“Although consumers are drinking less, when they do drink, they are trying out new tastes.”

Looking forward, Roy believes there could be a shift in the merchandising dynamic, as retailers look to use more energy efficient chiller cabinets with doors.

“You could argue this dampens some of the visual impact,” he says. “When you think about frozen for example, oftentimes you have this sort of misty frozen cabinet. You certainly can’t touch products unless you open the cabinet.

“When I talk to some of my retail clients, it is certainly something that they are looking at as a way of conserving energy, so it is really going to set the cat amongst the pigeons in terms of the visual appeal.”