Table of Contents
Executive Summary
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- Impact of COVID-19 on the Alcoholic Drinks Market
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- Figure 1: Forecast of UK value sales of alcoholic drinks (adjusted for COVID-19), 2014-24
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- Figure 2: Expected impact of COVID-19 on the alcoholic drinks market, short, medium and long-term, 27 April 2020
- The market
- Lager supports market volume growth
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- Figure 3: Total UK value sales of alcoholic drinks, by segment, 2014 and 2019
- Alcohol duties frozen in 2020 Budget
- Action on Sugar calls for the ‘sugar tax’ to be extended to RTDs
- Lower prices drive switch towards off-trade
- Companies and brands
- Many beer brands feel the absence of 2018 boost
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- Figure 4: UK retail value sales of the top alcoholic drink brands, 2018/19*
- Low-alcohol trend gains momentum in NPD
- Continued rise in vegan launches
- Diageo remains top spender
- Heritage and provenance are key themes in marketing
- The consumer
- Around one in five doesn’t drink alcohol
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- Figure 5: Types of alcoholic beverages drunk by category, November 2019
- Low price and familiar brand are top priorities for buyers
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- Figure 6: Important factors when buying alcoholic drinks in supermarkets, November 2019
- Strong concerns about healthiness of alcohol
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- Figure 7: Behaviours related to alcoholic beverages, November 2019
- Refreshment appeals across occasions
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- Figure 8: Interest in relaxing, refreshing, comforting and good for slow sipping drinks for selected occasions, November 2019
- Weak association with refreshment poses a challenge to spirits
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- Figure 9: Selected attributes associated with alcoholic beverages, November 2019
- What we think
The Impact of COVID-19 on the Alcoholic Drinks Market
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- Short, medium and long-term impact on the industry
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- Figure 10: Expected impact of COVID-19 on the alcoholic drinks market, short, medium and long-term, 27 April 2020
- Opportunities and Threats
- Lockdown will lead to a sharp fall in drinks volumes
- Health-focus prompted by COVID-19 will strengthen moderation trend
- Big conglomerates will weather the disruption, small players can tap community spirit
- Online channel will gain a lasting boost
- Impact on the alcoholic drinks market
- COVID-19 has created huge disruption to the drinks industry
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- Figure 11: Changes in spending habits on alcoholic drinks for drinking in the home, 26th March-23rd April 2020
- Overall volumes to be hit in 2020
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- Figure 12: Forecast of UK value sales of alcoholic drinks (adjusted for COVID-19), 2014-24
- Lockdown drives online sales
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- Figure 13: Selected behaviour changes since the COVID-19/coronavirus outbreak, 16th April-23rd April 2020
- Independent drinks makers are most exposed to closure of on-premise
- Shifts in consumer behaviour
- Moderation trend will continue, but there are opportunities for drinks brands
- Support for local producers holds potential
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- Figure 14: Selected behaviour changes since the COVID-19/coronavirus outbreak, 16th April-23rd April 2020
- Impact on key consumer segments
- 18-24s emerge as a moderate drinkers
- Over-55s offer a safe haven for brands
- How a COVID-19 recession will reshape the alcoholic drinks market
- Alcoholic drinks as discretionary are in the line of fire in downturn
- ‘Savvy luxuries’ will steal a march
- Impact on the marketing mix
- Online channel will enjoy a lasting boost
- Big players scrutinise ad spend in lockdown, innovative brands inform and entertain
- COVID-19: Market context
Issues and Insights
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- Strong concerns about alcohol and health
- The facts
- The implications
- Potential for stalwarts to explore low/no-alcohol variants
- The facts
- The implications
The Market – What You Need to Know
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- Lager supports market volume growth
- Significant volume loss expected in 2020
- Alcohol duties frozen in 2020 Budget
- Action on Sugar calls for the ‘sugar tax’ to be extended to RTDs
- Lower prices drive switch towards off-trade
Market Size and Forecast
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- 2019 sees sales growth ebb
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- Figure 15: Total UK value and volume sales of alcoholic drinks, 2014-19
- Outlook in light of COVID-19
- COVID-19 has created huge disruption to the drinks industry
- Significant volume loss expected in 2020
- Modest volume growth predicted from 2022
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- Figure 16: Forecast of UK value sales of alcoholic drinks (adjusted for COVID-19), 2014-24
- Figure 17: Forecast of UK volume sales of alcoholic drinks (adjusted for COVID-19), 2014-24
- Figure 18: Total UK value and volume sales of alcoholic drinks (adjusted for COVID-19), 2014-24
- Pre-COVID-19 forecast highlights the impact that the crisis will have on sales
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- Figure 19: Total UK value and volume sales of alcoholic drinks (pre-COVID-19 forecast), 2014-24
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- Figure 20: Forecast of UK value sales of alcoholic drinks (pre-COVID-19 forecast), 2014-24
- Figure 21: Forecast of UK volume sales of alcoholic drinks (pre-COVID-19 forecast), 2014-24
- Forecast methodology
Market Segmentation
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- Cider sales ebb following 2018 boost
- Beer sales bolstered by lager
- Dark spirits sales continue to fall
- White spirits growth to slow
- Wine vulnerable to exchange rate fluctuations
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- Figure 22: Total UK value sales of alcoholic drinks, by segment, 2014-19
- Figure 23: Total UK volume sales of alcoholic drinks, by segment, 2014-19
Channels to Market
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- Lower prices continued to boost the appeal of off-trade in 2019
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- Figure 24: UK value sales of alcoholic drinks, by channel, 2017-19
- Figure 25: UK volume sales of alcoholic drinks, by channel, 2017-19
Market Drivers
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- Alcohol duty cuts linked to increase in alcohol related deaths
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- Figure 26: UK excise duty rates for alcoholic drinks, 2009-19
- Minimum unit price introduced in Wales in March 2020
- Rising real incomes fail to bring good news for on-trade
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- Figure 27: CPI vs average weekly earnings, 2016-19
- Aging population will benefit wine and ale/stout
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- Figure 28: Trends in the age structure of the UK population, 2014-19 and 2019-24
- Number of pubs rises in 2019 for the first time in over a decade
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- Figure 29: Number of public houses and bars in the UK, by size, 2015-19
- BBPA encourages ingredient and calorie labelling in beer
- Action on Sugar calls for the ‘sugar tax’ to be extended to RTDs
- Sector Deal for Tourism to boost pubs
Companies and Brands – What You Need to Know
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- Many beer brands feel the absence of 2018 boost
- Low-alcohol trend gains momentum in NPD
- Continued rise in vegan launches
- Diageo remains top spender
- Heritage and provenance are key themes; sport sponsorships continue
Market Share
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- Mixed fortunes for leading beer brands
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- Figure 30: UK retail value sales of the top alcoholic drink brands, 2016/17-2018/19
Launch Activity and Innovation
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- Low-alcohol trend gains momentum
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- Figure 31: Share of launches with an ABV less than 1.21% of all wine, beer and cider launches in the UK, 2015-19
- Beer and wine fuel much of 2019 activity
- Low-alcohol drinks build additional health cues
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- Figure 32: Examples of low-alcohol launches with additional health claims, 20119
- Gluten-free claims grow
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- Figure 33: Share of launches making gluten-free claims of all UK alcoholic drinks launches, 2015-19
- Continued rise in vegan launches
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- Figure 34: Share of launches making vegetarian and vegan/no animal ingredient claims of all UK alcoholic drinks launches, 2015-19
- Can trend drives increase in aluminium packaging
- Slimline format drives can launches in RTDs and wine
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- Figure 35: Alcoholic drinks launches by packaging material, 2015-19
- Environmental credentials of cans warrant spelling out
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- Figure 36: Examples of drinks packaging highlighting environmental credentials, 2019
- Highlighting eco credentials of production remains rare
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- Figure 37: Share of launches with an environmental claim in alcoholic drinks, by type, 2015-19
- Sustainability initiatives range from waste food to edible straws
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- Figure 38: Examples of drinks with sustainability claims, 2019
- Better-for-you drinks attract limited launches
- ‘Diet’ alcoholic beverage launches are niche but growing
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- Figure 39: Share of launches with a diet/light claim in alcoholic beverages, 2015-19
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- Figure 40: Examples of drinks calling out lower-calorie proposition, 2019
- Hard seltzer makes inroads into the UK
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- Figure 41: Examples of hard seltzer and spritz pre-mixed drinks, 2019
- Alcoholic kombucha comes to market
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- Figure 42: Examples of kombucha drinks containing alcohol, 2019
- Have your cake and drink it
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- Figure 43: Examples of bakery inspired alcoholic drinks, 2018-20
Advertising and Marketing Activity
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- Diageo remains top spender
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- Figure 44: Total above-the-line, online display and direct mail advertising expenditure on alcoholic drinks, by advertiser, 2019
- Guinness champions women’s rugby
- Bombay Sapphire pushes creativity
- Smirnoff releases first global campaign in 25 years
- Tanqueray continues to emphasise unchanging quality in global campaign
- Thatchers leads spending in cider
- Football remains Budweiser’s focus
- Heineken brings attention to low- or no-alcohol portfolio
- Amstel releases second UK TV ad
- Birra Moretti spotlights Italian heritage
- Strongbow partners with new ad agency
- Carling promotes local production
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- Figure 45: Total advertising expenditure on alcoholic drinks, by media type, 2015-19 (sorted by 2019)
- BrewDog opens first alcohol-free beer bar
- Michelob pushes associations with running
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Around one in five doesn’t drink alcohol
- Low price and familiar brand are top priorities for buyers
- Added value can win over half of drinks buyers
- Strong concerns about healthiness of alcohol
- Potential for low-/non-alcoholic versions
- Refreshment appeals across occasions
- Weak association with refreshment poses a challenge to spirits
Types of Alcoholic Beverages Drunk
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- Four in five adults drink alcohol
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- Figure 46: Types of alcoholic beverages drunk by category, November 2019
- 17% of drinkers only drink once a month or less
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- Figure 47: Frequency of drinking alcoholic drinks, November 2019
- Still wine most consumed alcoholic beverage
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- Figure 48: Types of alcoholic beverages drunk, November 2019
- One in five sticks to one drink
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- Figure 49: Repertoire of alcoholic beverages drunk, November 2019
Important Factors When Buying Alcoholic Drinks in Supermarkets
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- Top factors demonstrate risk aversion among consumers
- Low price is joint top priority
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- Figure 50: Important factors when buying alcoholic drinks in supermarkets, November 2019
- Added value can win over half of drinks buyers
- Half of drinks buyers seek tried and tested brands
- Flavour profiles influence purchase behaviour for 27%
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- Figure 51: Examples of alcoholic drinks with unusual on-pack flavour descriptions, December2018
Behaviours Related to Alcoholic Beverages
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- Strong concerns about alcohol and health
- Need for better-for-you variants to ensure engagement
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- Figure 52: Behaviours related to alcoholic beverages, November 2019
- Potential for brand extension…
- …or encouraging moderation
Qualities Sought for in Alcoholic Beverages by Occasion
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- Refreshment appeals across occasions
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- Figure 53: Desired qualities of alcoholic beverages for different occasions, November 2019
- Drinks for enjoying with time appeal to one in four
- Presentation matters more to younger drinkers
Qualities Associated with Alcoholic Beverages
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- Sipping in an age of moderation
- Beer and cider struggle to associate with slow sipping
- Wine takes the lead as a sipping drink
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- Figure 54: Attributes associated with alcoholic beverages, November 2019
- Spirits need a refresh…
- … while beer and cider keep their cool
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Advertising and Marketing Activity
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- Spirits & liqueurs drive adspend
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- Figure 55: Total above-the line, online display and direct mail advertising expenditure on alcoholic drinks, by product category, 2019
Appendix – Market Size and Forecast
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- Forecast methodology
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- Figure 56: UK value sales of alcoholic drinks, best- and worst-case forecast (pre COVID-19), 2019-24
- Figure 57: UK volume sales of alcoholic drinks, best- and worst-case forecast (pre COVID-19), 2019-24
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