White Spirits and RTDs - UK - January 2020

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Inflation and innovation fuel growth in white spirits
Value and volume growth set to slow
Figure 1: Forecast total value sales of white spirits and RTDs, 2014-24
On-trade suffers as consumers seek better value at home
Low/no alcohol trend represents threat and opportunity
Companies and brands
Stiff competition sees Smirnoff value sales decline
Gordon’s feels the squeeze from crowded gin category
Figure 2: Leading brands’ value shares in the UK retail gin market, 2018/19*
White spirit brands leverage low/no alcohol trend
RTD repositions as more sophisticated choice
Advertising spend rises 36%
Gordon’s champions traditional, while Hendrick’s retains exclusivity
The consumer
Gin has overtaken vodka to become the most popular white spirit
Figure 3: Types of white spirits drunk in the last six months, by serve, September 2019
Majority still reach for mixers to make white spirits palatable
Flavoured spirts resonate strongly
Canned RTDs are attracting new demographics
RTD brands could challenge beers and wine at the dinner table
A third would pay more for eco-credentials
Figure 4: Attributes seen as worth paying more for in white spirits, September 2019
Explore naturalness in RTDs
Low/no alcohol white spirits are attractive to those looking to cut back
What we think
ISSUES AND INSIGHTS
Harness uniqueness to create premium spirits
The facts
The implications
Leverage low/no alcohol trend as an opportunity
The facts
The implications
Canned format can reinvigorate RTDs
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Inflation and innovation fuel growth in white spirits
Value and volume growth set to slow
Falling prices slow gin boom
On-trade suffers as consumers seek better value at home
Low/no alcohol trend represents threat and opportunity
MARKET SIZE AND FORECAST
Inflation and innovation drive value and volume growth
Ongoing uncertainty set to inhibit value and volume sales further
Figure 5: Total value and volume sales of white spirits and RTDs, 2014-24
Figure 6: Forecast total value sales of white spirits and RTDs, 2014-24
Figure 7: Forecast total volume sales of white spirits and RTDs, 2014-24
Forecast methodology
MARKET SEGMENTATION
Falling average prices slow meteoric growth of gin
Vodka continues modest growth
Higher prices drive growth in white rum
On-trade keeps tequila/mezcal afloat
RTDs continue recovery
Figure 8: Total value sales of white spirits and RTDs, by segment, 2014-19
CHANNELS TO MARKET
On-trade volumes slump as UK drinkers stay home
Figure 9: UK value and volume sales of white spirits and RTDs in the on- and off-trade, by type, 2017-19
Gin performs strongly in both the on- and off-trade
Vodka struggles in the on-trade
On-trade pushes up prices in white rum
Off-trade leads when it comes to RTDs
MARKET DRIVERS
Multiple factors affect spirits prices
UK remains one of the highest taxing countries for spirits worldwide
Conservatives pledge to review alcohol duties
No-deal Brexit could see relaxation of duty-free policies
Politics remains a major source of uncertainty for spirits
Wage growth pulls ahead of inflation
Figure 10: CPI vs average weekly earnings, 2013-19
Minimum Unit Pricing saw alcohol sales hit 25-year low in Scotland.
Health concerns pose threat to high ABV spirits
Awareness of link between alcohol and poor health continues to grow
A third of UK adults looking to cut back on booze
Low/no alcohol trend creates opportunities for lower ABV RTDs
Ageing population could hamper white spirit sales
Figure 11: Change in age structure of the UK population, 2014-19 and 2019-24
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Stiff competition sees Smirnoff value sales decline
Gordon’s feels the squeeze from crowded gin category
White spirit brands leverage low/no alcohol trend
RTD repositions as more sophisticated choice
Advertising spend rises 36%
Gordon’s champions traditional, while Hendrick’s retains exclusivity
MARKET SHARE
Value sales decline at Smirnoff in face of stiff competition
Influx of innovation threatens to oust smaller vodka players
Figure 12: Leading brands’ sales and shares in the UK retail vodka market, 2016/17-2018/19
Gordon’s continues growth but feels the pressure
Whitley Neil and Beefeater experience meteoric growth
Premium own label gin makes its mark
Figure 13: Leading brands’ sales and shares in the UK retail gin market, 2016/17-2018/19
Bacardi reverses decline in white rum
Figure 14: Leading brands’ sales and shares in the UK retail white rum market, 2016/17-2018/19
Own label fuels growth in tequila
Figure 15: Leading brands’ sales and shares in the UK retail tequila/mezcal market, 2016/17-2018/19
WKD loses market leader spot to Gordon’s
Figure 16: Leading brands’ sales and shares in the UK retail RTDs market, 2016/17-2018/19
LAUNCH ACTIVITY AND INNOVATION
The trend for low- and no-alcohol spirits continues
Lidl challenges premium players with alcohol-free botanical craft spirit
Seedlip ventures into mocktails
GinISH adds appeal with sugar-free recipe
Punchy Drinks creates alcohol-free tequila
Clean Liquor adds a dash of celebrity to alcohol-free
Figure 17: Examples of new launches of low- and non-alcoholic spirits, 2019
On-trade responds to alcohol-free trend
Asda trials ‘Low and No’ fixtures in stores
Ethically- and environmentally-conscious spirits and RTDs on the rise
Rock Rose launches gin in recyclable pouch
Basil Blush Vodka Spritz switches to local ingredients
Figure 18: Examples of ethical and environmentally-friendly claims in new launches in white spirits and RTDs, 2019
Nelson’s Gin Distillery achieves recognition for taking production off grid
Vodka takes inspiration from gin with flavour
Smirnoff launches Fruit Infusions
Black Cow Vodka opts for sustainable strawberries
Vodka brands trial more adventurous flavours and ingredients
Figure 19: Examples of new launches of flavoured vodkas, 2019
Sparkles and shimmer add new level to colour innovation in gins
Amazon set to increase competition in own label
Figure 20: Amazon’s launch of own-label gin, 2019
…while other UK multiples are tapping into seasonal novelty
RTD launches look to cater to a more sophisticated palate
Bacardi launches adult alcopop Breezer
Thomas Tipple looks to recreate cocktail hour at home
Funkin’ Nitro infuses RTDs with nitrogen
Figure 21: Examples of new RTD launches catering for a more sophisticated palate, 2019
ADVERTISING AND MARKETING ACTIVITY
Advertising spend on white spirits and RTDs up significantly in 2019
Figure 22: Total above the line, online display and direct mail advertising expenditure on white spirits* and RTDs, 2015-2019
Bacardi’s ad spend surpasses Diageo in 2019
Bombay Sapphire aims to spark more creative consumption
Bacardi Rum seeks to secure young fans with ‘Do What Moves You’ campaign
Patron Tequila uses Day of the Dead to encourage use in cocktails
Diageo normalises advertising budget after 2017 spike
Smirnoff Infusions launches with plans to reach 94% of UK adults
Infamous marks first global campaign for Smirnoff Original
Ketel-One encourages ‘thoughtful’ drinking
Pernod Ricard on track to double advertising spend in 2019
Beefeater creates themed campaigns for flavoured gin launch
Malibu Rum targets Millennials with ‘snackable’ content
William Grant & Sons continues to boost spend behind Hendrick’s Gin
Quintessential Brands Group supports Greenall’s
Gin boom prompts craft brands to prioritise marketing spend
Lidl flags up improved white spirits offer
RTD brands push a more premium positioning
Nielsen Ad Intel coverage
BRAND RESEARCH
Brand map
Figure 23: Attitudes towards and usage of selected brands, November 2019
Key brand metrics
Figure 24: Key metrics for selected brands, November 2019
Brand attitudes: Gordon’s the most trusted brand
Figure 25: Attitudes, by brand, November 2019
Brand personality: Smirnoff most accessible brand
Figure 26: Brand personality – macro image, November 2019
Gordon’s is traditional, while Hendrick’s is sophisticated
Figure 27: Brand personality – micro image, November 2019
Brand analysis
Absolut bridges income divide
Figure 28: User profile of Absolut, November 2019
Hendrick’s retains air of exclusivity
Figure 29: User profile of Hendrick’s, November 2019
Whitley Neill viewed as both stylish and special
Figure 30: User profile of Whitley Neill, November 2019
Gordon’s achieves demographic inclusivity
Figure 31: User profile of Gordon’s, November 2019
Smirnoff most likely to be considered a favourite
Figure 32: User profile of Smirnoff, November 2019
Bacardi retains high satisfaction levels
Figure 33: User profile of Bacardi, November 2019
Glen’s Vodka offers value
Figure 34: User profile of Glen’s Vodka, November 2019
THE CONSUMER – WHAT YOU NEED TO KNOW
Gin has overtaken vodka to become the most popular white spirit
Majority of consumers use mixers to make white spirits palatable
A third would pay more for eco-credentials
Explore natural low sugar recipes in RTDs
Use RTD format to appeal to low/no alcohol trend
USAGE OF WHITE SPIRITS
Gin has overtaken vodka to become the most popular white spirit
Figure 35: Types of white spirits drunk in the last six months, by serve, September 2019
Gin resonates across all ages – but young consumers lead
Premiumisation of gin and vodka hasn’t prompted consumers to try neat
Flavoured spirts resonate strongly
Figure 36: Types of flavoured white spirits drunk in the last six months, September 2019
TYPES OF RTDS DRUNK AND LOCATIONS
Canned RTDs are attracting new demographics – including women
Figure 37: Types of RTDs drunk in the last six months, September 2019
Figure 38: Types of RTDs drunk in the last six months, by types of RTDs drunk in the last six months, September 2019
RTD brands could challenge beers and wine at the dinner table
Figure 39: Locations for drinking RTDs in the last six months, September 2019
ATTRIBUTES WORTH PAYING MORE FOR
Consumers demand a more proactive approach to sustainability
Figure 40: Attributes seen as worth paying more for in white spirits, September 2019
Pair trend for craft spirits with sustainability
Appetite for sustainability strong among tequila/mezcal drinkers
Unique ingredients offer a way to stand out
Avoid artificiality or sweeteners
Blur the lines in white spirits
Provenance can add a new dimension to premium white spirits
Source local ingredients
BEHAVIOURS RELATED TO WHITE SPIRITS AND RTDS
Make more of naturalness in white spirits
Half of consumers are put off by artificial ingredients
Figure 41: Behaviours related to white spirits and RTDs, September 2019
Make more of ‘free from’ claims
Flavoured variants could raise added concerns about artificiality
Encourage experimentation in RTD mixers
UK drinkers are stuck in a rut with RTD mixers
Collaborate to create new but familiar combinations
Plug new flavours with strategic promotions
Target winter drinking occasions
Create clearer tiers in white spirits
Take inspiration from tiers in dark spirit brands
Draw distinctions with rare ingredients or number of filtrations
ATTITUDES TOWARDS WHITE SPIRITS AND RTDS
Low/no alcohol white spirits are attractive to those looking to cut back
Opportunity to position low/no alcohol white spirits as alternative to soft drinks
Figure 42: Attitudes towards white spirits and RTDs, 2019
…but perceptions persist that white spirits are high ABV
Demand for lower ABV options could complement RTD format
Avoid overly sweet RTD mixers
Half feel most RTDs are too sweet
Flag up low sugar in flavoured variants
Provide nutritional breakdowns on pack
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
Figure 43: Best- and worst-case forecast of total UK value sales of white spirits and RTDs, 2019-24
Figure 44: Best- and worst-case forecast of total UK volume sales of white spirits and RTDs, 2019-24
APPENDIX – MARKET SHARE
Figure 45: Leading distributors’ sales and shares in the UK retail vodka market, 2016/17-2018/19
Figure 46: Leading distributors’ sales and shares in the UK retail gin market, 2016/17-2018/19
Figure 47: Leading distributors’ sales and shares in the UK retail white rum market, 2016/17-2018/19
Figure 48: Leading distributors’ sales and shares in the UK retail tequila/mezcal market, 2016/17-2018/19
Figure 49: Leading distributors’ sales and shares in the UK retail RTDs market, 2016/17-2018/19
APPENDIX – LAUNCH ACTIVITY AND INNOVATION
Figure 50: Claims in new product launches in the UK retail white spirits and RTDs market*, 2015-19
Figure 51: Proportion of new launches in white spirits and RTDs* making ethical & environmental claims, 2015-19