Attitudes towards Premium Alcoholic Drinks - UK - March 2015

INTRODUCTION
Definition
Abbreviations
EXECUTIVE SUMMARY
Market factors
Drink prices continue to rise
Financial health remains rocky for many
Population changes pose threats and opportunities
Companies and brands: Innovation
The consumer
Premium and standard drinks are equally popular in most categories
Figure 1: Purchase of alcoholic drinks, December 2014
Perceptions of premium drinks are mixed
Figure 2: Alcoholic drinks’ premium associations, by category, December 2014
Consumers have rational expectations of spend on premium drinks
Flavour leads the way when defining premium alcoholic drinks
Figure 3: Qualities seen to define premium alcoholic drinks (any ranking 1-5), December 2014
Widespread distrust of premium drinks’ credentials
Figure 4: Attitudes towards premium alcoholic drinks, December 2014
What we think
ISSUES AND INSIGHTS
Moving beyond generic ‘premium’ claims
The facts
The implications
Boosting premium associations in lighter drink categories
The facts
The implications
Utilising promotions to drive volume sales
The facts
The implications
Encouraging trading up in financially challenging times
The facts
The implications
TREND APPLICATION
Make it Mine
Minimize Me
Collective Intelligence
MARKET DRIVERS
Key points
Alcoholic drink prices continue to rise
Figure 5: RPI indexed annual change for alcoholic drink prices versus all items except housing, 2000-14
Figure 6: UK excise duty rates for selected alcoholic drinks, 2003-14
Financial health recovers but remains fragile
Figure 7: Trends in how consumers describe their financial situation, December 2009-December 2014
Figure 8: Trends in consumer sentiment for the coming year, December 2014
UK consumers have continued to cut back on alcohol
Figure 9: Trends in UK per capita consumption of 100% alcohol, 2007-13
Figure 10: HM Treasury estimated changes in volume consumption of alcohol over 2014/15-2018/19 following changes to alcohol duty in Budget 2014, April 2014
An ageing population could pose a threat to premium drinks
Figure 11: Projected trends in the age structure of the UK population, 2014-19
STRENGTHS AND WEAKNESSES
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
Selected premium NPD activity
Beer
Cider
Wines
Spirits/Liqueurs
THE CONSUMER – PURCHASE OF ALCOHOLIC DRINKS
Key points
Premium and standard drinks are equally popular in most categories
Figure 12: Purchase of alcoholic drinks, by category, December 2014
Figure 13: Purchase of premium alcoholic drinks, by category, by gender, December 2014
Still/fortified wines fare poorly at the premium tier
Figure 14: Purchase of premium alcoholic drinks in the past year as a share of overall purchase within category, December 2014
Figure 15: Purchase of premium alcoholic drinks as a proportion of category purchases, by gender, December 2014
Dark spirits perform strongly at the premium tier
57% of adults buy premium drinks
Figure 16: Repertoire for purchase of standard/economy and premium alcoholic drinks, December 2014
THE CONSUMER – PERCEPTIONS OF PREMIUM ALCOHOLIC DRINKS
Key points
Summary of perceptions of premium alcoholic drinks
Figure 17: Alcoholic drinks’ premium associations, by category, December 2014
Lager is seen most widely as the most premium type of beer
Figure 18: Beer types seen as most premium, December 2014
Fruit-flavoured is seen most widely as premium cider
Figure 19: Cider types seen as most premium, December 2014
Still wine falls behind sparkling on premium image
Figure 20: Wine types seen as most premium, December 2014
Red leaves white and rosé behind on premium image in still wine…
Figure 21: Still wine types seen as most premium, December 2014
…while Champagne still dominates in sparkling
Figure 22: Sparkling wine types seen as most premium, December 2014
Prosecco enjoys a premium image within the sparkling segment
Figure 23: Sparkling wine types seen as most premium, December 2014
White spirits have an image problem
Figure 24: Spirit and liqueur types seen as most premium, December 2014
Figure 25: White spirits types seen as most premium, December 2014
Cream liqueurs edge out non-cream ones in premium connotations
Figure 26: Liqueur types seen as most premium, December 2014
Brandy/Cognac leads the way in perceptions of dark spirits
Figure 27: Dark spirits types seen as most premium, December 2014
THE CONSUMER – SPENDING ON PREMIUM ALCOHOLIC DRINKS
Key points
Consumers have realistic expectations of premium prices
Users are prepared to spend almost £2.50 on premium beer and cider
Figure 28: Amount consumers are prepared to spend on premium beer and cider (500ml bottle), December 2014
A third of still wine buyers are prepared to spend more than £10
Figure 29: Amount consumers are prepared to spend on premium still wine (750ml bottle), December 2014
Figure 30: Estimated share of the price of bottles of wine which is accountable to ‘wine quality’
36% of sparkling wine/Champagne buyers are prepared to break the £25 mark
Figure 31: Amount consumers are prepared to spend on premium sparkling wine/Champagne (750ml bottle), December 2014
A quarter of spirit buyers prepared to spend £25 or more
Figure 32: Amount consumers are prepared to spend on premium spirits (700ml bottle), December 2014
THE CONSUMER – QUALITIES ASSOCIATED WITH PREMIUM ALCOHOLIC DRINKS
Key points
Flavour leads the way when defining premium alcoholic drinks
Figure 33: Qualities seen to define premium alcoholic drinks (any ranking 1-5), December 2014
Figure 34: Qualities seen to define premium alcoholic drinks (ranking 1), December 2014
Heritage and ageing are additional levers for premiumisation
Other cues only garner limited response
THE CONSUMER – ATTITUDES TOWARDS PREMIUM ALCOHOLIC DRINKS
Key points
Widespread distrust of premium drinks’ credentials
Figure 35: Attitudes towards premium alcoholic drinks, December 2014
Gifting and special occasions are important for premium drinks
Cost and premium alcoholic drinks
Encouraging consumers to pay more
THE CONSUMER – TARGET GROUPS
Key points
Four target groups
Figure 36: Target groups, December 2014
Traditionalists (26%)
Disengaged (30%)
Connoisseurs (23%)
Enthusiasts (21%)