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Dark Rum, Cognac and Brandy - UK - April 2009
Drink: UK Price: £1500 / $2310 / €1793
Contents
Issues in the Market
Market in Brief
Internal market environment
Broader Market Environment
Competitive Context
Strengths and Weaknesses in the Market
Market Size and Forecast
Segment Performance
Channels to market
Market Share
Companies and Products
Brand Communication and Promotion
The Consumer – Frequency and Usage of Rum
The Consumer – Frequency and Usage of Brandy
Appendix
Appendix – Internal Market Environment
Appendix – The Consumer: Frequency and Usage of Rum
Appendix – The Consumer: Frequency and Usage of Brandy
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About this report

On the face of it, dark spirits (as defined by this report ie not including whisky) is a declining market populated by old-fashioned brands with a traditional image. However, if one looks beneath the surface, there are some signs of renewal, with golden rums showing the way to the rest of the industry and giving a good pointer as to how it should be done. Currently, golden rum is the only sector of the market growing sales in the on- and off-trade channels but the inspiration it has given brand owners is starting to filter down into other sectors of the market.

More exciting is the fact that golden rums have taken dark spirits outside its traditional 45+ male customer base and are appealing to younger consumers. This is a strategy that other dark spirit products need to embrace if they are to ensure their long-term survival.

Key themes

  • How can suppliers broaden the customer base for dark spirits?

  • Has the recession impacted on the market, if so, how?

  • How is the changing pattern of distribution impacting on the different market sectors?

  • How do people perceive and consume dark spirits?

If you want more details about this particular report, please contact the Mintel information team on  +1 312-932-0400 in the U.S.,  +44 028-90-241-849 in Northern Ireland,  +353 048-90-241-849 in the Republic of Ireland or  +44 (0)20-7606-6000 in the UK and the rest of the world, or email info@mintel.com.
Contents

Issues in the Market

Key themes

Definitions

Market in Brief

Mojito momentum

Sales fall in real terms

Brandy/Cognac takes bulk of sales

An ageing customer base

Recent growth in off-trade sales driven by deals and duties

Price rises to hit European brandies

Major spirits players fight it out

Off-trade growth reflects general trends in market

Key to future is increasing ways that dark spirits are used

Internal market environment

Key points

Easy on the sauce

Figure 1: Trends for alcohol consumption, by frequency and in and out of home, 2004-08

‘Vodka fatigue’ setting in?

Figure 2: Drinking trends, by alcohol type, 2004-08

A drop of the good stuff

Figure 3: Trends for agreement with drink lifestyle statements, 2004-08
Figure 4: Lifestyle statements on expensive tastes, by social grade, 2008

Consumers watching their waistlines

Figure 5: Trends in health lifestyle statements, 2004-08

Heavy discounting in the off-trade

Pubs going out of business

Link between brandy, gin and vodka drinkers

Figure 6: Cross-drinking of alcoholic drinks, November 2008

Cocktail crowd prime target market for dark spirits

Figure 7: Vodka attitudinal groups, by what spirits they drink, November 2008

Shaken not stirred

Spirit of the Caribbean

Never show your true age

Shrouded in mystery

Broader Market Environment

Key points

Here come the boys

Figure 8: Structure of the 18+ UK population, by age and gender, 2004-14

‘Haves’ and ‘have nots’ up and down

Figure 9: Forecast 15+ adult population trends, by socio-economic group, 2004-14

Alcohol excessively dutiful

Figure 10: UK excise duty on spirits for every 1% of strength per 100 litres, 1998-2009

Failing harvests squeeze producers

Phylloxera subsidies phased out

Competitive Context

Key points

Dark spirits in context

Figure 11: UK value sales of alcoholic drinks, by sector, 2004-08

A fluid market

Cider points the way?

Connecting to food

The vodka juggernaut

Flavoured possibilities?

Cocktail base

Potential for premium power in rum and brandy

Strengths and Weaknesses in the Market

Strengths

Playing the heritage card
Boost from gifting and special occasions
Financial muscle counts
Colour gives possibilities
Aspirational element to products
Tremendous latent potential

Weaknesses

At the mercy of the elements
New money threatens low yield markets
Brandy becomes less competitive on price
Vulnerable to competition?
An old-fashioned image…
…and reliance on older consumers
Ad budgets need a boost

Market Size and Forecast

Key points

Engine of growth loses momentum

Figure 14: UK volume and value sales of brandy, Cognac and dark/golden rum market, 2004-14
Figure 15: Value of dark spirits market, by sector, 2004-14

Future of the market

Factors used in the forecast

Segment Performance

Key points

Rum stars as Cognac misses out on seasonal boost

Figure 16: UK volume sales of dark spirits, by type, 2006-08
Figure 17: UK value sales of dark spirits, by type, 2006-08

Brandy (excluding Cognac and Armagnac)

Figure 18: UK retail sales of brandy, by volume and value, 2004-14

Subsidies withdrawal to push up prices

Recession prompts launch of budget products and downtrading

Cognac and Armagnac

Figure 19: UK retail sales of Cognac and Armagnac, by volume and value, 2004-14

Cognac misses out on traditional festive bonanza

Discounting prevalent

Own label gets in on the act

VS Cognacs dominate

Figure 20: UK volume and value share of Cognac/armagnac sales, by type, 2007-08

Brand owners try to encourage wider use

Manufacturers try to build pub business

Dark rum (excluding golden rum)

Figure 21: UK retail sales of dark rum, by volume and value, 2004-14

A shift in attitudes

Still plenty of scope for growth

Golden rum

Figure 22: UK retail sales of golden rum, by volume and value, 2004-14

Cocktail culture and provenance driving sales

Own-label penetration to grow?

Channels to market

Key points

Off-trade grows as on-trade fades

Figure 23: UK volume and value distribution of dark spirits, by trade sector and outlet type, 2004-08

Brandy

Figure 24: UK volume and value distribution of brandy, by trade sector, 2004-08

Cognac/Armagnac

Figure 25: UK volume and value of Cognac/armagnac, by trade sector, 2004-08

Dark rum

Figure 26: UK volume and value of dark rum, by trade sector, 2004-08

Golden rum

Figure 27: Retail distribution of golden rum, by trade sector, 2004-08

On-trade issues

Off-trade issues

Market Share

Key points

Key brand analysis

Three Barrels outperforms brandy sector

Figure 28: Estimated UK off-trade brand shares in brandy, by volume, 2007-08
Three Barrels (First Drinks)
Other brands
Own label
On-trade market shares

Fortunes of Cognac/Armagnac sector dictated by major VS brands

Figure 29: Estimated UK off-trade brand shares in Cognac/armagnac, by volume, 2007-08

Courvoisier (Beam Global)

Martell (Pernod Ricard)

Remy Martin (First Drinks)

Own-label

On-trade market shares

Golden variants driving rum market growth

Figure 30: Estimated UK brand off-trade shares in rum, by volume, 2007-08

Morgan’s Spiced (Diageo)

Captain Morgan (Diageo)

Lamb’s Navy Rum (Halewood International)

Morton’s OVD (First Drinks)

Mount Gay (First Drinks)

Other brands

Own-label

Companies and Products

Brand map

Figure 31: Brand map, UK dark spirits market (exclusing whisky), 2009

Bacardi-Martini

Beam Global

CL World Brands

Diageo

First Drinks Brands

Halewood International

LMVH

Pernod Ricard

J Wray and Nephew

Others

Brand Communication and Promotion

Key points

Education leaves rum stranded

Figure 43: Main monitored media advertising spend on dark and golden rum, 2004-08

Morgan’s spices up the seasons

Figure 44: Main monitored media advertising spend on rum, by top ten advertising brands, 2004-08

Shaking up Christmas cocktails

Waving the West Indies flag

Cognac tops the ad bill

Figure 45: Main monitored media advertising spend on brandy and Cognac, 2004-08
Figure 46: Main monitored media advertising spend on brandy and Cognac, by leading brands, 2004-08

Remy goes for the heart

Modern Martell for loyalists

Hennessey for the luxury lifestyle

Rum and brandy are good sports

The Consumer – Frequency and Usage of Rum

Key points

Rum holding its own

Figure 47: Trends in dark and golden rum consumption, 2004-08
Figure 48: Trends in dark and golden rum usage, 2006-08

Rum must beware migration towards less frequent drinking

Figure 49: Dark and golden rum usage frequency, by demographics, 2008

There go the girls

The Consumer – Frequency and Usage of Brandy

Key points

Brandy in danger of being abandoned

Figure 50: Trends in brandy usage, 2004-08

Luxury with traditional northern roots

Figure 51: Trends in brandy usage frequency, 2004-08
Figure 52: Brandy usage frequency, by gender, age and socio-economic group, 2008

Brandy champions for women

Appendix

Consumer research

ACORN

Advertising data

Abbreviations

Appendix – Internal Market Environment

Figure 57: Drinking lifestyle statements, by detailed demographics, 2008
Figure 58: Health lifestyle statements, by detailed demographics, 2008
Figure 59: Lifestyle statements on expensive tastes, by detailed demographics, 2008

Appendix – The Consumer: Frequency and Usage of Rum

Figure 62: Dark and golden rum usage, by detailed demographics, 2008
Figure 63: Trends in branded versus own-label dark and golden rum usage, 2004-08
Figure 64: Dark and golden rum usage frequency, by detailed demographics, 2008
Figure 65: Trends in in-home and out-of-home dark and golden rum usage, 2004-08
Figure 66: In-home dark and golden rum usage frequency, by detailed demographics, 2008
Figure 67: Out-of-home dark and golden rum usage frequency, by detailed demographics, 2008

Appendix – The Consumer: Frequency and Usage of Brandy

Figure 68: Brandy usage, by detailed demographics, 2008
Figure 69: Trends in branded versus own-label brandy usage, 2006-08
Figure 70: Brandy usage frequency, by detailed demographics, 2008
Figure 71: Trends for in-home and out-of-home brandy usage, 2004-08
Figure 72: In-home brandy usage frequency, by detailed demographics, 2008
Figure 73: Out-of-home brandy usage frequency, by detailed demographics, 2008