Given the uplift in interest in at-home cocktail making sparked by lockdown, brands should engage with drinkers by providing expert advice and inspiration on cocktail making. Underlining the opportunities here, 32% of dark spirits/liqueur drinkers are interested in knowing more about making cocktails using dark spirits. Recipes need to be both made more compelling and put directly into the path of consumers to effectively inspire people.

Echoing the devastating impact of COVID-19 on the on-trade across the entire alcoholic-drinks industry, the value of the dark spirits and liqueurs market is expected to slump by a fifth in 2020 due to significant loss of high value sales through this channel. Volume sales have been much more resilient thanks to the low share held by the on-trade. Consumers’ spending power and financial confidence has been hit hard and wariness around visiting pubs/restaurants – especially as the UK enters a second wave of the virus - will linger for some time to come. Therefore, while the market’s value will rebound in 2021, volume sales are expected to continue to fall over the next five years.

The sharpened focus on health, which is anticipated to be a lasting legacy of the pandemic, will further fuel the burgeoning alcohol moderation trend. This presents a major threat to the market, with half of dark spirits/liqueur drinkers noting that health concerns would make them cut back on the amount of these products they consume.

Companies should react to this by exploring the low-/no-alcohol space in this category, given the substantial unmet demand for these options. Lower sugar/calorie liqueurs are also ripe for development in light of consumer interest uncovered by the research for this report.

• The impact of COVID-19 on the dark spirits and liqueurs market.

• The outlook for the market in the recession and the following years.

• The latest new product development (NPD) trends and key concepts of interest to consumers.

• Consumer behaviour surrounding and attitudes towards dark spirits and liqueurs.

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. The government focused on the ‘contain’ stage of its strategy, with the country continuing to operate much as normal. As the case level rose, the government ordered the closure of non-essential stores and foodservice and on-trade drinks venues on 20th March. Off-licences and ‘licensed shops selling alcohol, including those within breweries’ were included to the list of businesses allowed to stay open on 25th March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. The Health Protections Regulations 2020 came into effect on 15 June allowing the reopening of all non-essential stores in England as well as the mandatory use of face coverings on public transport. Pubs, restaurants, hotels and hairdressers were able to reopen on 4 July.

In Scotland pubs were allowed to open beer gardens from 6 July, and could welcome indoor trade from 15 July, when the two-metre rule was reduced to ‘one metre-plus’ for public transport, hospitality and retail. In Wales pubs and restaurants were allowed to open outdoors only from 13 July and indoors from 3 August, with exemptions made to the two-metre rule for businesses that cannot adhere to this as long as other precautions are taken.

From 24 July, it became mandatory to wear face coverings in shops and supermarkets. On 9 September, new guidelines were announced in England as a reaction to rising numbers of COVID-19 cases. The major change was a tightening of restrictions on social contact, with people only allowed to socialise with groups of up to six people who they don’t live with.

This was followed by a new wave of nationwide restrictions announced on 22 September, including limits on opening hours for pubs, bars and foodservice outlets, a recommendation that people work at home if possible, and stricter regulations on when face coverings must be worn.

Mintel’s economic assumptions are based on the Office for Budget Responsibility (OBR)’s central scenario included in its July 2020 Fiscal Sustainability Report. The scenario suggests that UK gross domestic product (GDP) could fall by 12.4% in 2020, recovering by 8.7% in 2021, and that unemployment will reach 11.9% by the end of 2020, falling to 8.8% by the end of 2021.

The current uncertainty means that there is wide variation on the range of forecasts however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q1 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

For the purpose of this Report, the following definitions have been used throughout:

Whisky is a spirit distilled from malted barley or other grain and typically aged in oak casks, which is produced in many parts of the world. The spelling ‘whisky’ (rather than ‘whiskey’) is sometimes restricted to Scotch, whether blended or single malt, but is used in this Report as a generic term for the category as a whole.

The most common types of US whisky are bourbon whisky (made from at least 51% corn [maize]), rye whisky (made from at least 51% rye) and corn whisky (made from a mash made up of at least 80% corn [maize]). In this Report the term ‘bourbon’ is used to refer to all whisky made in the US.

To carry the name ‘Scotch’ on a label, whisky must be distilled and matured in Scotland and conform to various regulations under The Scotch Whisky Regulations 2009 legislation.

Brandy is defined for the purposes of this Report to include only spirit produced from grape wine, but not products such as Calvados and Eau de Vie produced from apples, pears or other fruits. Grape brandy which has been flavoured, such as cherry brandy, is classified as a liqueur. Cognac and Armagnac are prestigious brandies, produced in strictly delimited areas of France. Other grape brandies, which mostly also come from France, as well as brandies from Germany, Greece, South Africa, Spain, Italy, Australia and the US, are also included as brandies.

Dark/Golden/Spiced Rum. Rum is distilled from molasses or sugar-cane juice, mainly in the Caribbean, although it is possible to produce it in almost any climate where sugar cane is planted. Official statistics make no distinction as to the colouring of rum, which may be achieved by the addition of caramel. Both the trade and consumers have, however, traditionally regarded dark and white rum as very distinct drinks. The latter is excluded from this Report. Golden rums have, again by tradition, been regarded as a sub-segment of the dark rum market by the trade, and Mintel has continued to follow this. Spiced golden rums are therefore included in this Report.

Liqueurs are an alcoholic beverage of a base spirit which has been flavoured with fruit, herbs, nuts, spices, flowers or cream. These must contain at least 2.5% sugar by weight, though in practice most have a considerably higher sugar content and many contain up to 35% of a sweetening agent. Most liqueurs contain 17-30% alcohol by volume (ABV) and some are as high as 50% ABV. This category includes cream-based liqueurs such as Baileys and Amarula and non-cream ones such as Southern Comfort, Pimm’s, Tia Maria and Jägermeister.

Most dark spirits now have a standard of 40% ABV. This has been set as a minimum strength to qualify as a whisky by the EU.

The market size includes both on-trade and off-trade sales. Duty-free and distillery whisky sales and visitor-centre entry fees are excluded from market data.