First Drinks unveils market report and new ID

Current consumer trends and how shopper habits are changing as the country emerges from recession can be found in the annual spirits and Champagne report from William Grant & Sons UK - the UK distribution and marketing arm for William Grant & Sons, previously known as First Drinks Brands. 

The report investigates the impact this is having on the way the industry engages with customers to ensure a strong connection with brands and their stories.

With new research undertaken by the company in both the on and off-trade, this year’s report highlights the evolution of shoppers’ habits particularly when it comes to seeking value in what they spend.

New evidence in this year’s report suggests the perception of value is also evolving, now relating to brands that offer added value. In addition, the growth of scarce and desirable products is growing in popularity as consumers are being exposed to more and more choice. Other forms of scarcity are emerging in importance such as access to unusual experiences and knowledge. Seeking out something that is limited or unique in the way it is crafted, is increasingly common. This remains especially relevant for premium brands in the drinks sector, such as limited edition whiskies.

Immersive experiences remain a key brand engagement tool. With many higher-end brands excelling at offering drinkers interesting serves, personal touches and quality experiences, it’s no coincidence that premium spirits continue to drive market growth, particularly in the on-trade where value is up 13.7%. In the off-trade, value has increased by 6.4%, outperforming the growth of non-premium spirits which are up 4.5%.

The report also reveals strong value growth in the malt whisky and spiced/flavoured rum categories. With companies like William Grant & Sons UK investing in educating the consumer at the point of purchase on whisky flavour spectrums, more shoppers are being encouraged to explore the category, further boosting sales. Rum’s versatility and use in cocktails has contributed to its growth, particularly in the on-trade. Gin is also performing well; an explosion of new brands has helped fuel general consumer interest in the category. With premium gin growing at six and a half times the rate of mainstream gin, the opportunity remains for further growth.

Chris Mason, MD of William Grant & Sons UK, comments:  “As this report concludes, 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 which can offer more in terms of value, to appeal to the consumer.  In the year ahead we aim to work even more closely with our customers to deliver premium experiences – be they online, in-store or in outlet. 

“This is an exciting time for our business as we take the next positive steps in our evolution.  Becoming William Grant & Sons UK will allow us to benefit from the international footprint of our group, with its fine reputation as innovators and builders of premium, international brands.

“We are in a good position to drive long-term value for our outstanding portfolio of premium spirits by continued investment and strong working relationships with customers and our partners.  This approach will enable us to deliver successful business solutions to our customers, to the benefit of their consumers.”

Facts and figures:

The on-trade

• The on-trade remains in a state of flux, with research showing that consumers continue to make less frequent visits.  However when they are out, 79% of drinkers consider spirits and it’s the spirits category which is driving growth – the on-trade spirits market is worth £5.4bn, up 5.1%
• Spirits are the second largest drinks category in the on-trade, accounting for 18% of value sales
• 38% of consumers use menus to confirm their choice of drink – rather than to inspire new drink choice
• 77% of consumers would welcome bartender recommendation – many bars need to take advantage of this through staff training

The off-trade

• Two thirds of off-trade purchases are made when in-store
• Almost 60% of branded spirits are sold at a promoted price in the off-trade – price promotions play a key role for shoppers
• 90% of shoppers will visit the main spirits aisle after seeing promotion shelves to validate their decision and ensure they are getting value for money
• Shoppers will pay above expectations for categories viewed as more premium such as malt whisky and Cognac
• Whilst smaller size bottles encourage trial of products and categories, 48% of people buying a 35cl bottle will only purchase this smaller size and not larger variants
• A quarter of shoppers state that a free gift with purchase will encourage them to spend more in-store

Online

• 45% of the population have purchased their groceries online with a third planning to use online more this year
• Online retailing is one of the fastest growing channels in the grocery market, with 24% growth achieved last year.  However, BWS online sales still only represents 4% of UK grocery sales. With heavier items a key driver for shopping online, it is important for retailers to embrace this buying channel with spirits
• Shoppers spend on average 9% more when purchasing online versus in-store

Gifting

• 68% of Scotch malt whisky shoppers are purchasing the category as a gift
• 73% of people have purchased an alcohol gift in the past year – of these, 51% of shoppers have bought spirits as a gift
• 40% of spirits gifts are Scotch whisky
• 29% of total spirits category value sales are purchased with the intention of gifting, estimated to be worth over £1bn per annum
• When purchasing gifts, shoppers are willing to trade up by an average of 11% versus their standard purchase

Prestige

• Global luxury wine and spirits are worth £45bn. With 620,000 millionaires in the UK (a figure forecast to rise 30% in the next eight years), the high-end on and off-trade channels are becoming increasingly important for premium spirits
• London is the wealthiest city in the world with more billionaires than any other, well ahead of Moscow in second place
• London has set itself apart as a leader in international drinks trends – many hotels and bars are aiming to be the most iconic in the capital, creating unique serves and experiences that inspire consumers and bartenders across the globe

14 July 2014 - Felicity Murray The Drinks Report, editor