The days of heady growth for gin are over, forcing producers to take a more focused approach, says Felicity Carter
Sales of gin have passed their peak and become more sluggish, according to some in the industry. But the more difficult trading environment is driving many to sharpen their focus on quality.
“Most medium-sized distillers are flat on last year, and struggling to stay that way,” says Olivier Ward, editor of Spirits Beacon, the educational platform of Enotria & Coe. “At least a dozen microdistillers have closed already as costs mount, sales slow and the risk versus reward no longer stacks up for them.”
He points to the demise of small-batch gins Duck & Crutch and Loch Ness as examples.
“There are many contract brands quietly not reordering another batch,” he adds. Ward says significantly fewer gins are being released than in previous years. “Last year, I had been contacted almost 120 times by November,” while this year the number is closer to 50, with most launches coming from existing distilleries.
Prices have been dropping as well, he says, by an average of £3 a bottle. “Most of the mini-producers are under £40 now, which was not the norm in 2019.”
The days of gin-only distillers are also coming to a close, with distilleries branching out into vodka, rum and whisky.
Jamie Baxter, master distiller and consultant at Craft Distilling Services, has built more than 60 distilleries around the world, and says enquiries from the UK have slowed. This was inevitable; the Wine & Spirit Association said UK sales of gin soaring 27% in 2020, thanks to people being stuck at home during lockdowns, was a heady growth that couldn’t continue.
But Baxter does say that “there’s still plenty of room for well-made products with commercially astute management”.
Martin Reid, co-founder of online retailer Gin Cooperative, which stocks more than 500 Scottish gins, says that, although sales grew each month until August, “there are definite signs the cost of living crisis is playing a role in consumer spending habits”.
He adds that the flavoured gin trend “seems to be tailing off, with brands looking at key gin styles for inspiration: London dry, Old Tom, navy strength, distilled, and some new cask-aged expressions”.
Spirits Beacon’s Ward agrees, saying that while flavoured gin is not collapsing, “it’s not in rude incline and bouncing with new flavours every week any more, which is a key reason the entire category seems slow”.
Supply chain dramas are also having an impact, with fewer botanicals and glass bottles available from European suppliers, owing to layers of red tape introduced by Brexit, and manufacturing issues caused by the energy crisis. “It has hampered a lot of Scottish gin producers’ planned growth,” says Reid.
But producers and brands are devising novel ways to cope, like adding incentives such as an additional 5cl mini or other giveaways, rather than lowering the price.
Reid says the flavoured gins now coming to market “feel more considered and refined in terms of flavour profiles, using locally sourced botanicals”.
There are also more seasonal and limited-release gins being launched, aimed at collectors.
Lauren Priestley, head of category development for the off-trade at Diageo, says the category is still robust. “Pink gin in particular has been one of the driving forces behind the category’s growth, led by products such as Gordon’s Premium Pink, which was one of the most successful new spirits product developments in the past decade”, she says.
Jessica Williamson, content manager at Master of Malt, has identified a growing trend for what she calls “wonky nostalgia flavours”, such as Jaffa Cake Gin.
Another trend she’s witnessing is a significant drop in brand loyalty, which she thinks is a result of pandemic-weary consumers looking for fun. “People just want to try everything,” she says.
Overall, Williamson thinks this exploration is forcing brands to focus on quality, especially at the value end, where sales are growing as inflation bites.
Nick Gillett, managing director of spirits distributor Mangrove, whose gin brands include Portobello Road, Fair and Kokoro, says: “We’re seeing a resurgence in quality London dry gins, the type of gins that consumers can pick up to enjoy with ice and tonic.”
More sophisticated flavoured gins are also doing well, “meaning your Seville Orange at 40% abv, as opposed to a bubble gum-flavoured gin liqueur”.
Gillett says gins with organic, Fairtrade and sustainable credentials are doing particularly well, with “consumers becoming increasingly conscious when it comes to what they buy and the credentials behind those products”.
To sum up: sophisticated flavours, nostalgic flavours, well-made gins and classics are holding firm. Nevertheless, Ward at Spirit Beacon predicts that 2023 will be a year of consolidation.
“Consumers will continue to support local [producers], and direct-to-consumer sales will ensure microdistillers tick over”, he says. Gin isn’t going anywhere. Consumers are still embracing it, and are actively seeking quality and sophistication, as long as it’s keenly priced.