White Spirits and RTDs - UK - March 2012

INTRODUCTION
Definition
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 1: Market size and forecast for the total UK white spirits and RTD market, by value, 2006-16
Market factors
Figure 2: Factors influencing the decision to drink alcohol at home, May 2011
Companies, brands and innovation
Figure 3: Top five off-trade brands in the RTD/white spirits categories by value sales in 2011, and year-on-year growth
The consumer
Figure 4: Which occasions people drink vodka, gin and the new RTDs on, January 2012
Figure 5: Proportion of drinkers per spirit that drink it on its own, with a mixer or as part of a cocktail, January 2012
Figure 6: Attitudes towards vodka, January 2012
What we think
ISSUES IN THE MARKET
How can the market maintain value growth against declining volume sales?
What are the main obstacles to and opportunities for the new RTD market’s growth?
How can gin finally turn its potential into sales?
Are dark spirits becoming the new white spirits?
FUTURE OPPORTUNITIES
Patriot Games
Home of the Senses
INTERNAL MARKET ENVIRONMENT
Key points
Trend towards in-home drinking picks up pace…
Different consumer mindset
Figure 7: Factors influencing the decision to drink alcohol at home, May 2011
Different drinking occasions
Figure 8: Most popular occasions for drinking alcohol at home and out of home, May 2011
…fuelling a rise of premiumisation in spirits...
Figure 9: Attitudes towards premiumisation and alcohol, by gender and age, December 2010
…as well as the importance of discounting
Figure 10: Index of changing grocery shopping habits, by gender, age and socio-economic group, November 2011
The challenge of making a profit in a high-tax market
Figure 11: Current UK excise duty rates for spirits/RTDs in their standard retail format compared to beer, cider and wine, February 2012
Capitalising on the trend towards local, small, artisan brands
BROADER MARKET ENVIRONMENT
Consumer spend is under increasing pressure
Figure 12: Change in average weekly earnings compared to inflation and consumer confidence, January 2007-October 2011
2012 will be a challenging trading environment
Rise in ABC1s underpins the continued importance of premiumisation
Figure 13: Forecast adult population trends, by socio-economic group, 2006-16
Impact of an ageing population
Figure 14: Forecast adult population trends, by age, 2006-16
COMPETITIVE CONTEXT
Key points
A declining pool of drinkers…
Figure 15: Proportion of UK population who drink alcohol, 2007-11
…who demand more choice and variety than before
Figure 16: Penetration of major alcohol types in order of popularity, 2007-11
Are white spirits starting to go out of fashion?
Consumers are gaining a sweeter tooth
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
RTDs dominate innovation
Figure 17: Proportion of new product launches in the UK white spirits and RTDs market, by sub-category, 2007-11
Experimenting around RTD cocktail formats
Figure 18: Some examples of interesting innovation around RTD cocktail packaging, May 2011-January 2012
Vodka flavour innovation is moving beyond fruit
White spirits lead the way in stylish, standout packaging
MARKET SIZE AND SEGMENTATION
Key points
Total white spirits/RTDs market declines by 89 million litres in six years
Figure 19: Market size and forecast for the total UK white spirits and RTD market, by volume and value, 2006-16
Figure 20: Market size and forecast for the total UK white spirits and RTD market, by value, 2006-16
Premiumisation will help drive vodka sales to £2.6 million by 2016
Figure 21: Market size and forecast for the UK vodka market, by volume and value, 2006-16
Figure 22: Market size and forecast for the total UK vodka market, by value, 2006-16
The gin revival fails to materialise
Figure 23: Market size and forecast for the UK gin market, by volume and value, 2006-16
Figure 24: Market size and forecast for the total UK gin market, by value, 2006-16
White rum is performing steadily but tequila growth remains stunted
Figure 25: Market size and forecast for the UK other white spirits market, by volume and value, 2006-16
Figure 26: Market size and forecast for the total UK other white spirits market, by value, 2006-16
New RTDs stem continued decline of alcopops
Figure 27: Market size and forecast for the UK RTD market, by volume and value, 2006-16
Figure 28: Market size and forecast for the total UK RTD market, by value, 2006-16
Forecast methodology
MARKET SHARE
Key points
Smirnoff consolidates its position as number one vodka
Figure 29: Market value and share of top five vodka brands in the off-trade, 2010 and 2011
Gin’s modest growth is being boosted by premium brands
Figure 30: Market value and share of top five other white spirits brands in the off-trade, 2010 and 2011
New breed of RTDs leads to first annual growth in off-trade for years
Figure 31: Market value and share of top five RTD brands in the off-trade, 2010 and 2011
COMPANIES AND PRODUCTS
Key points
Brown-Forman
Bacardi-Martini
Diageo
First Drinks Brands
Pernod Ricard
Glen Catrine
Global Brands Limited
BRAND RESEARCH
Figure 32: Attitudes towards and usage of brands in the white spirits sector, January 2012
Figure 33: Attitudes, by white spirit brand, January 2012
Brand personality
Figure 34: White spirit brand personality – macro image, January 2012
Figure 35: White spirit brand personality – micro image, January 2012
Figure 36: White spirit brand usage, January 2012
Figure 37: Satisfaction with various white spirit brands, January 2012
Figure 38: Consideration of white spirit brands, January 2012
Figure 39: Consumer perceptions of current white spirits brand performance, January 2012
Figure 40: White spirits brand recommendation – Net Promoter Score, January 2012
Figure 41: White spirits brand index, January 2012
Figure 42: White spirits brand index vs. recommendation, January 2012
Figure 43: Target groups, January 2012
Figure 44: White spirits brand usage, by target groups, January 2012
Group One – Conformists
Group Two – Simply the Best
Group Four – Habitual Shoppers
Group Five – Individualists
BRAND COMMUNICATION AND PROMOTION
Key points
Above-the-line marketing support remains strong
Figure 45: Topline above-the-line advertising spend in the UK white spirits and RTDs market, 2009-11
Smirnoff’s investment is paying off
Figure 46: Highest-spending brands in the white spirits/RTD market in terms of advertising, January 2009-November 2011
Diageo is driving ad investment
Figure 47: Highest-spending advertisers in the white spirits/RTD market, January 2009-November 2011
CHANNELS TO MARKET
Key points
Off-trade revenue now accounts for 46% of the total market
Figure 48: Value sales and share of white spirits/RTDs, in the on- and off-trade, 2006-11
Multiples see revenues increase by a fifth in the past three years
Figure 49: Value sales of white spirits/RTDs, by channel, 2009-11
The rise of online alcohol purchasing
CONSUMER USAGE
Key points
Vodka remains comfortably the leading UK white spirit
Figure 50: Consumption of white spirits and RTDs, January 2012
New RTDs are continuing to attract new UK drinkers
Figure 51: Consumption of the new and RTDs, 2011 versus 2012
White spirits attract the young in droves
Figure 52: Indexed consumption of white spirits (in any format) by type, by gender and age, January 2012
Is there room for flavoured gin?
Figure 53: Proportion of drinkers per spirit that drink it on its own, with a mixer or as part of a cocktail, January 2012
A fifth of vodka drinkers drink it at least three times a week
Figure 54: Proportion of drinkers of each product who consume it at least three times a week, 2011
OCCASIONS FOR DRINKING WHITE SPIRITS AND THE NEW RTDS
Key points
About partying more than relaxing
Figure 55: Which occasions people drink vodka, gin or the new RTDs on, in order of popularity, January 2012
Seven in ten 18-34s drink them before they go out
Figure 56: Which occasions 18-34-year-olds drink vodka, gin or the new RTDs on, in order of popularity, January 2012
Gin struggles to compete with vodka as a sociable/party choice
Figure 57: Which occasions people drink vodka, gin and the new RTDs, January 2012
New RTDs seen as ideal for outdoor meal occasions
CONSUMER – ATTITUDES TOWARDS VODKA
Key points
Vodka’s mixability is its main strength
Premiumisation is a key driver for consumers…
Figure 58: Attitudes towards vodka, January 2012
…especially male drinkers
Figure 59: Net difference in attitudes towards vodka – women versus men, January 2012
Flavoured vodka appeals to 18-24s by offering convenience and variety
Figure 60: Indexed attitudes towards vodka – 18-24-year-olds versus all, January 2012
CONSUMER – ATTITUDES TOWARDS THE NEW TYPE OF RTDS
Key points
Two major barriers are holding back RTDs...
Figure 61: Attitudes towards the new type of RTDs, January 2012
…but convenience is much more valued among the younger cohort
Figure 62: Net difference in attitudes towards the new RTDs – under-35s versus over-35s, January 2012
The importance of maintaining their distance from alcopops
APPENDIX – INTERNAL MARKET ENVIRONMENT
Figure 63: Factors influencing the decision to drink alcohol at home, by demographics, May 2011
Figure 64: Next most popular factors influencing the decision to drink alcohol at home, by demographics, May 2011
Figure 65: Occasions when consumers have drunk alcohol at home, by demographics, May 2011
Figure 66: Changing grocery shopping habits, by gender, age and socio-economic group, November 2011
APPENDIX – MARKET SIZE AND FORECAST
Figure 67: Best- and worst-case forecast of total UK white spirits/RTD sales, by value, 2011-16
Figure 68: Best- and worst-case forecast of total UK white spirits/RTD sales, by volume, 2011-16
Figure 69: Best- and worst-case forecast of total UK vodka sales, by value, 2011-16
Figure 70: Best- and worst-case forecast of total UK vodka sales, by volume, 2011-16
Figure 71: Best- and worst-case forecast of total UK gin sales, by value, 2011-16
Figure 72: Best- and worst-case forecast of total UK gin sales, by volume, 2011-16
Figure 73: Best- and worst-case forecast of total UK other white spirits sales, by value, 2011-16
Figure 74: Best- and worst-case forecast of total UK other white spirits sales, by volume, 2011-16
Figure 75: Best- and worst-case forecast of total UK RTD sales, by value, 2011-16
Figure 76: Best- and worst-case forecast of total UK RTD sales, by volume, 2011-16
Figure 77: Market size and forecast for the total UK white spirits and RTD market, by volume (litres), 2006-16
Figure 78: Market size and forecast for the total UK vodka market, by volume (litres), 2006-16
Figure 79: Market size and forecast for the total UK gin market, by volume (litres), 2006-16
Figure 80: Market size and forecast for the total UK other white spirits market, by volume (litres), 2006-16
Figure 81: Market size and forecast for the total UK RTDs market, by volume (litres), 2006-16
APPENDIX – BRAND RESEARCH
Figure 82: Brand usage, January 2012
Figure 83: Brand commitment, January 2012
Figure 84: Brand momentum, January 2012
Figure 85: Brand diversity, January 2012
Figure 86: Brand satisfaction, January 2012
Figure 87: Brand recommendation, January 2012
Figure 88: Brand attitude, January 2012
Figure 89: Brand image – macro image, January 2012
Figure 90: Brand image – micro image, January 2012
Figure 91: Profile of target groups, by demographics, January 2012
Figure 92: Psychographic segmentation, by target group, January 2012
Figure 93: Brand usage, by target group, January 2012
Brand index
Figure 94: Brand index, January 2012
APPENDIX – CONSUMER USAGE
Figure 95: Consumption of vodka, and how it was consumed, by demographics, January 2012
Figure 96: Consumption of gin, and how it was consumed, by demographics, January 2012
Figure 97: Consumption of tequila, and how it was consumed, by demographics, January 2012
Figure 98: Consumption of white rum, and how it was consumed, by demographics, January 2012
Figure 99: Consumption of any of the new RTDs, by demographics, January 2012
Figure 100: Consumption of RTD spirits with mixer in a can, by demographics, January 2012
Figure 101: Consumption of RTD cocktails, by demographics, January 2012
APPENDIX – OCCASIONS FOR DRINKING WHITE SPIRITS AND THE NEW RTDS
Figure 102: Most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
Figure 103: Next most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
Figure 104: Most popular occasions for drinking vodka, by demographics, January 2012
Figure 105: Next most popular occasions for drinking vodka, by demographics, January 2012
Figure 106: Most popular occasions for drinking gin, by demographics, January 2012
Figure 107: Next most popular occasions for drinking gin, by demographics, January 2012
Figure 108: Most popular occasions for drinking ready-to-serves, by demographics, January 2012
Figure 109: Next most popular occasions for drinking ready-to-serves, by demographics, January 2012
Figure 110: Most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
Figure 111: Next most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
Figure 112: Most popular occasions for drinking vodka, by demographics, January 2012
Figure 113: Next most popular occasions for drinking vodka, by demographics, January 2012
Figure 114: Most popular occasions for drinking gin, by demographics, January 2012
Figure 115: Next most popular occasions for drinking gin, by demographics, January 2012
Figure 116: Occasions for drinking ready-to-serves, by demographics, January 2012
Figure 117: Most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
Figure 118: Next most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
Figure 119: Most popular occasions for drinking vodka, by demographics, January 2012
Figure 120: Next most popular occasions for drinking vodka, by demographics, January 2012
Figure 121: Occasions for drinking gin, by demographics, January 2012
Figure 122: Most popular occasions for drinking ready-to-serves, by demographics, January 2012
Figure 123: Next most popular occasions for drinking ready-to-serves, by demographics, January 2012
Figure 124: Most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
Figure 125: Next most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
Figure 126: Most popular occasions for drinking vodka, by demographics, January 2012
Figure 127: Next most popular occasions for drinking vodka, by demographics, January 2012
Figure 128: Most popular occasions for drinking gin, by demographics, January 2012
Figure 129: Next most popular occasions for drinking gin, by demographics, January 2012
Figure 130: Most popular occasions for drinking ready-to-serves, by demographics, January 2012
Figure 131: Next most popular occasions for drinking ready-to-serves, by demographics, January 2012
APPENDIX – ATTITUDES TOWARDS VODKA
Figure 132: Most popular attitudes to vodka, by demographics, January 2012
Figure 133: Next most popular attitudes towards vodka, by demographics, January 2012
APPENDIX – ATTITUDES TOWARDS THE NEW TYPE OF RTDS
Figure 134: Most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
Figure 135: Next most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
Figure 136: Most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
Figure 137: Next most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
Figure 138: Most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
Figure 139: Next most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012