Alcoholic Drinks Review - UK - July 2016

OVERVIEW
What you need to know
Covered in this report
EXECUTIVE SUMMARY
The market
Tentative value growth expected in 2016
Figure 1: Best- and worst-case forecast value sales of the alcoholic drinks market, at current prices, 2011-21
UK consumers cutting back on alcohol
Alcoholic drink prices have risen dramatically
An ageing population could pose a threat to the market
Companies and brands
The continued rise of craft
Flavoured NPD strong
Adspend on alcoholic drinks is relatively flat
The consumer
Beer and still wine are the most popular alcoholic drinks
Figure 2: Usage of alcoholic drinks, by location, May 2016
A quarter of 18-24 drinkers worry about images on social media
Beer enjoys the most frequent usage
Sparkling wines as popular as Champagne for special occasions
Figure 3: Choice of alcoholic drinks for different occasions, May 2016
37% of in-home drinkers spend under £10 weekly
Only 13% of Brits use online drinks retailers
Figure 4: Enticements to use online retailers for buying alcoholic drinks, May 2016
What we think
ISSUES AND INSIGHTS
Craft looks set to continue to dominate the industry’s headlines
The facts
The implications
Online drinks retailing has marked potential
The facts
The implications
Beer and cider challenge wine as meal accompaniments
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Tentative value growth expected in 2016
UK consumers cutting back on alcohol
Alcoholic drink prices have risen dramatically
An ageing population could pose a threat to the market
Changes to the socio-economic make-up set to benefit the off-trade
MARKET SIZE AND SEGMENTATION
Tentative value growth expected in 2016
Forecast
Figure 5: Value and volume sales of alcoholic drinks, 2011-21
Figure 6: Best- and worst-case forecast value sales of the alcoholic drinks market, at current prices, 2011-21
Figure 7: Best- and worst-case forecast volume sales of the alcoholic drinks market, 2011-21
The impact of the EU referendum vote
Figure 8: Alternative scenarios for the alcoholic drinks market, 2016-2021
No immediate impact on consumers’ finances
The risk of an economic slowdown
On-premise to feel the heat if consumers hesitate to spend
MARKET DRIVERS
UK consumers cutting back on alcohol
New guidelines on alcohol intake
Alcoholic drink prices have risen dramatically
Figure 9: UK excise duty rates for selected alcoholic drinks, 2004-16
Pub closures remain commonplace
An ageing population could pose a threat to the market
KEY PLAYERS – WHAT YOU NEED TO KNOW
The continued rise of craft
Flavoured NPD strong
Online wine growing in popularity
Adspend on alcoholic drinks is relatively flat
LAUNCH ACTIVITY AND INNOVATION
Selected innovation in beer
The continued rise of craft
Innovation in spirit beers (‘speers’)
Selected innovation in cider
A return to cloudy cider…
…but flavour innovation remains popular
Selected innovation in wine
High hopes for fruit-flavoured wines
Online wine growing in popularity
Sparkling wine also sees NPD activity
Selected innovation in spirits and liqueurs
Packaging is a common way of innovating
Flavoured drinks are hitting the sweet spot
BRAND COMMUNICATION AND PROMOTION
Adspend on alcoholic drinks is relatively flat
Figure 10: Total above-the line, online display and direct mail advertising expenditure on alcoholic drinks, 2012-15
Figure 11: Above-the line, online display and direct mail advertising spend on alcoholic drinks, by category, 2012-15
Heineken and Molson Coors slash adspending…
…while Diageo ramps it up
Figure 12: Leading advertisers of alcoholic drinks, by above-the line, online display and direct mail advertising spend, by company, 2012-15
Figure 13: Leading advertisers of alcoholic drinks, by above-the line, online display and direct mail advertising spend, by brand, 2012-15
TV still leads the way but appears to be falling out of favour
Figure 14: Above-the line, online display and direct mail advertising spend on alcoholic drinks, by channel, 2012-15
Nielsen Media Research coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Beer and still wine are the most popular alcoholic drinks
A quarter of 18-24 drinkers worry about images on social media
Beer enjoys the most frequent usage
Sparkling wines as popular as Champagne for special occasions
37% of in-home drinkers spend under £10 weekly
Only 13% of Brits use online drinks retailers
USAGE OF ALCOHOLIC DRINKS
Beer and still wine are the most popular types of alcoholic drink
Figure 15: Usage of alcoholic drinks, May 2016 and May 2015
Cider’s high penetration belies a category with issues
Sparkling wine’s popularity bubbling up
In-home consumption is more popular for most categories
Figure 16: Usage of alcoholic drinks, by location, May 2016
Consumers have wider repertoires when drinking at home
Figure 17: Repertoire of usage of alcoholic drinks, by location, May 2016
ALCOHOLIC DRINKS AND SOCIAL MEDIA
20% of under-35s are worried about pictures of them drinking on social media
Figure 18: Concern about being pictured with alcoholic drinks on social media websites, May 2016
FREQUENCY OF USAGE
Beer enjoys the most regular usage
Figure 19: Frequency of usage of alcoholic drinks among users, by type, May 2016
Only 53% of cider users drink it weekly
Weekend and post-6 pm are the most popular times to drink alcohol
CHOICE OF ALCOHOLIC DRINKS FOR DIFFERENT OCCASIONS
Sparkling wines as popular as Champagne for special occasions
Figure 20: Favoured choice of alcoholic drink for selected occasions, May 2016
Figure 21: Most popular choice of alcoholic drinks for different occasions among men and women, May 2016
Wine dominates food-led occasions…
…while beer also dominates several drinking occasions
Spirits are particularly popular as late-night drinks
SPENDING ON ALCOHOLIC DRINKS
In-home drinkers are most likely to spend under £10 weekly
Figure 22: In-home spend on alcoholic drinks per week and out of home spend on alcoholic drinks per occasion, May 2016
£10-20 is the spend per occasion for 39% of out-of-home drinkers
ALCOHOLIC DRINKS AND THE ONLINE CHANNEL
Only 13% of Brits buy drinks online
Figure 23: Usage of online retailers of alcoholic drinks, May 2016
Half of adults could be wooed by online drinks retailers
Figure 24: Enticements to use online retailers for buying alcoholic drinks, May 2016
Free delivery key to boosting the use of online drinks retailers
Craft drinks can tap into demand for a wider range online
Other factors only garner limited interest
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 25: Best- and worst-case forecasts for the total alcoholic drinks market, by value, 2016-21
Figure 26: Best- and worst-case forecasts for the total alcoholic drinks market, by volume, 2016-21
Forecast methodology
Market segmentation
Figure 27: Value sales of alcoholic drinks, by category, 2011-16
Figure 28: Volume sales of alcoholic drinks, by category, 2011-16