Dark Spirits and Liqueurs - UK - September 2017

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Inflation and success of certain segments drive market growth in 2012-17
Weakened household incomes to erode volume sales over 2017-22
Figure 1: Total value sales of dark spirits and liqueurs, 2012-22
Volume sales declines for whisky, while rum’s momentum to stall
Inflation expected for all parts of the market
Health organisations urge measures to reduce alcohol consumption
Companies and brands
The Famous Grouse regains ground as other blended whiskies struggle
Figure 2: Leading brands’ shares in the UK retail whisky market, by value, 2016/17*
Captain Morgan strengthens its hold over the rum market
Further growth in limited editions and premium variants in 2016-17
Glenfiddich innovates with barrel type
Advertising spend falls in 2016
Lifestyle focus in both spirit and liqueur advertising in 2016/17
Baileys is the most trusted brand, while Jack Daniel’s is the most widely seen as cool
The consumer
Half of UK adults drink dark spirits
Figure 3: Usage of dark spirits, by type, July 2017
Ageing UK population to hinder growth
Dark spirits’ high price underpins brand loyalty
Figure 4: Dark spirits buying factors, July 2017
Promotions are more compelling than low price for dark spirits buyers
Drinking with mixers is a key entry point for dark spirits
Figure 5: Behaviours relating to dark spirits/liqueurs, July 2017
Gifting provides another key entry point
Ethical aspects have strong appeal
Figure 6: Attitudes towards dark spirits/liqueurs, July 2017
Sugar concerns limit the appeal of liqueurs
What we think
ISSUES AND INSIGHTS
Recipe suggestions can help companies to harness the power of mixers
The facts
The implications
Brands need to make flavour differences more tangible to shoppers
The facts
The implications
Consumer interest in products with ethical aspects suggests untapped opportunities
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Inflation and success of certain segments drive market growth 2012-17
Weakened household incomes to erode volume sales over 2017-22
Volume sales declines for whisky, while rum’s momentum to stall
Inflation expected for all parts of the market
Health organisations urge measures to reduce alcohol consumption
MARKET SIZE AND FORECAST
Inflation and success of certain segments drive market growth 2012-17
Weakened household incomes to erode volume sales over 2017-22
Inflation expected for the market
Figure 7: Total value and volume sales of dark spirits and liqueurs, 2012-22
Figure 8: Total value sales of dark spirits and liqueurs, 2012-22
MARKET SEGMENTATION
Whisky grows value and volume sales 2012-17
Consumer spending cutbacks to erode whisky volume sales
Dominance of UK-sourced products to curb the effects of inflation
… but Scotch whisky export boost could lead to higher domestic prices
Figure 9: Total value and volume sales of whisky, 2012-22
Figure 10: Total value sales of whisky, 2012-22
Rum to struggle to sustain its earlier momentum
Import-led inflation to continue to push up values
Figure 11: Total value and volume sales of dark/golden/spiced rum, 2012-22
Figure 12: Total value sales of dark/golden/spiced rum, 2012-22
Brandy’s 2016 bounce is the exception to otherwise weak performance
Rising prices to drive up brandy values on flat volumes
Figure 13: Total value and volume sales of brandy/Cognac/Armagnac, 2012-22
Figure 14: Total value sales of brandy/Cognac/Armagnac, 2012-22
Liqueurs see mainly flat volume sales 2012-17
Liqueurs to see rising prices on flat volumes
Figure 15: Total value and volume sales of liqueurs, 2012-22
Forecast methodology
CHANNELS TO MARKET
Higher prices in the on-trade allows it to lead on values but not volumes
Inflation rises faster in the on-trade 2017
Figure 16: Value and volume sales of dark spirits and liqueurs, by channel, 2015-17
Retail sales of imported whisky and dark rum continue to rise
Malt whisky’s sales growth stalled as reduced supply drives up prices
Figure 17: Value and volume sales of dark spirits and liqueurs in the off-trade, by segment, 2015-17
Figure 18: Value and volume sales of dark spirits and liqueurs in the on-trade, by segment, 2015-17
MARKET DRIVERS
Wider economic and political issues impact the market
Exchange rate-led inflation affects some segments more strongly than others
Other factors push up costs
Income squeeze leaves the category vulnerable to cutbacks and switching
A third of adults have reduced alcohol intake
Health organisations urge measures to reduce alcohol consumption
Ageing population to impede both dark spirits and liqueurs
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
The Famous Grouse regains ground as other blended whiskies struggle
Captain Morgan strengthens its hold over the rum market
Further growth in limited editions and premium variants in 2016-17
Glenfiddich innovates with barrel type
Advertising spend falls in 2016
Lifestyle focus in both spirit and liqueur advertising in 2016/17
Baileys is the most trusted brand, while Jack Daniel’s is the most widely seen as cool
MARKET SHARE
The Famous Grouse regains ground as other blended whiskies struggle
Jack Daniel’s continues to benefit from the Americana trend
Trend also gives a leg-up to Jim Beam
Figure 19: Leading brands’ sales and shares in the UK retail whisky market, 2014/15-2016/17
Figure 20: Leading distributors’ sales and shares in the UK retail whisky market, 2014/15-2016/17
Captain Morgan strengthens its hold in buoyant rum market
NPD helps own-label to grow in rum
Figure 21: Leading brands’ sales and shares in the UK retail dark/golden/spiced rum market, 2014/15-2016/17
Figure 22: Leading distributors’ sales and shares in the UK retail dark/golden/spiced rum market, 2014/15-2016/17
Own-label loses ground in brandy
Three Barrels piggybacks on the tonic trend
Figure 23: Leading brands’ sales and shares in the UK retail brandy/cognac market, 2014/15-2016/17
Figure 24: Leading distributors’ sales and shares in the UK brandy/cognac market, 2014/15-2016/17
Baileys’ focus on its treat aspects helps it to retain its lead
Pimm’s loses out from lacklustre summer of 2016
Southern Comfort rebrands under new owners
Figure 25: Leading brands’ sales and shares in the UK retail liqueur market, 2014/15-2016/17
Figure 26: Leading distributors’ sales and shares in the UK retail liqueur market, 2014/15-2016/17
LAUNCH ACTIVITY AND INNOVATION
Companies continue to release limited editions
Major and niche brands add new editions
Premium launches continue
Jägermeister looks to refresh brand image with new premium variant
Diageo expands the Haig Club range to go more mainstream
Historical references used to give an authentic image
Glenfiddich innovates with barrel type
Whisky launches turn to iceberg water to imply purity
Liqueurs turn to on-trend flavours
Baileys adds a new seasonal variant
ADVERTISING AND MARKETING ACTIVITY
Advertising spend falls in 2016
Figure 27: Total above-the line, online display and direct mail advertising expenditure on dark spirits and liqueurs, by leading advertisers (sorted by 2016), 2013-2017
Diageo remains the leading advertiser despite reduced spending
Baileys pushes treat aspects in female-orientated campaign
Baileys highlights different usage occasions to create a versatile image
Captain Morgan continues to urge fans to ‘live like the Captain’
Jack Daniel’s puts the spotlight on its hometown’s residents
Events used to drive home associations with American lifestyles
Famous Grouse focuses on taste and balance
Personalised bottles used to tap into gifting occasions
Explaining the maturation process
Whisky brands praise unconventionality
Haig Club aims to widen whisky’s appeal
Glenfiddich celebrates creativity
Chambord puts the focus on fun
Sampling opportunities used to further promote cocktail use
Nielsen Ad Intel coverage
BRAND RESEARCH
Brand map
Figure 28: Attitudes towards and usage of selected brands, August 2017
Key brand metrics
Figure 29: Key metrics for selected brands, August 2017
Brand attitudes: Baileys and Jack Daniel’s are the brands people are most proud to be associated with
Figure 30: Attitudes, by brand, August 2017
Brand personality: Jack Daniel’s is most widely seen as fun and vibrant
Figure 31: Brand personality – Macro image, August 2017
Glenfiddich and Famous Grouse are the most widely seen as traditional
Figure 32: Brand personality – Micro image, August 2017
Brand analysis
Jack Daniel’s scores well on the fun factor
Figure 33: User profile of Jack Daniel’s, August 2017
Courvoisier enjoys the most sophisticated image
Figure 34: User profile of Courvoisier, August 2017
Baileys is the most trusted brand
Figure 35: User profile of Baileys, August 2017
Glenfiddich has strong associations with tradition and quality
Figure 36: User profile of Glenfiddich, August 2017
The Famous Grouse is widely seen as traditional
Figure 37: User profile of The Famous Grouse, August 2017
Captain Morgan favoured by under-35s
Figure 38: User profile of Captain Morgan, August 2017
THE CONSUMER – WHAT YOU NEED TO KNOW
Half of UK adults drink dark spirits
Ageing UK population to hinder growth
Dark spirits’ high price underpins brand loyalty
Promotions are more compelling than low price for dark spirits buyers
Drinking with mixers is a key entry point for dark spirits
Gifting provides another key entry point
Ethical aspects have strong appeal
Sugar concerns limit the appeal of liqueurs
USAGE OF DARK SPIRITS AND LIQUEURS
Half of adults drink dark spirits
Considerable overlap in whisky drinking habits
Gender bias prevails for dark spirits
Promoting cocktail use could help to tempt women in
Figure 39: Usage of dark spirits, by type, July 2017
Dark spirits are likely to lose out from ageing UK population
Figure 40: Repertoire of dark spirit types drunk, July 2017
Blended whisky is as likely as Bourbon to be drunk with a mixer
Drinking with mixers is higher among under-25s
Figure 41: Ways of drinking dark spirits, by type, July 2017
Ageing population also has implications for liqueurs
Figure 42: Usage of liqueurs and flavoured dark spirits, by type, July 2017
DARK SPIRIT BUYING FACTORS
Dark spirits’ high price props up brand loyalty
Introductory offers and ‘trial-size’ bottles offer means to encourage experimentation
Figure 43: Dark spirits buying factors, July 2017
Flavour is neck-and-neck with brand as purchase influencer
Making flavour differences more tangible would help to address consumer uncertainty
Dark spirits’ treat status makes promotions more compelling than price
Need to explain the importance of ageing and small batch production
BEHAVIOURS RELATING TO DARK SPIRITS AND LIQUEURS 
Drinking with mixers serves as a key entry point for dark spirits
Cocktail recipes in on-trade and retail offer a platform for promoting mixability
One in three people have moved on from the drinks of their youth
Figure 44: Behaviours relating to dark spirits/liqueurs, July 2017
Gifting is another key entry point into dark spirits
Companies must pitch their marketing both to drinkers and non-drinkers
Important to ensure that drinkers let others know of their preferences
A third of drinkers/buyers research dark spirits before buying
ATTITUDES TOWARDS DARK SPIRITS AND LIQUEURS
Ethical aspects have strong appeal
Figure 45: Attitudes towards dark spirits/liqueurs, July 2017
Consumers’ researching tendencies boost socially responsible companies
Charity tie-ups rare within dark spirits
On-pack calorie labelling per serving could appeal to health-conscious drinkers
QUALITIES ASSOCIATED WITH SELECTED TYPES OF LIQUEURS
On-pack recipe suggestions and cross-promotion could help liqueurs to forge a more versatile image
Figure 46: Qualities associated with selected types of liqueurs, July 2017
Cream-based liqueurs are the most widely seen as a treat
Consumer health concerns around sugar limit the appeal of certain types
Scope to explore use of sugar alternatives
Bitters could be promoted as a less sweet form of fruit liqueur
Opportunities for expansion in vegetable-based products
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 47: Forecast of UK sales of dark spirits and liqueurs, by value, best- and worst-case, 2017-22
Figure 48: Forecast of UK sales of dark spirits and liqueurs, by volume, best- and worst-case, 2017-22
Figure 49: Forecast of UK sales of whisky, by value, best- and worst-case, 2017-22
Figure 50: Forecast of UK sales of whisky, by volume, best- and worst-case, 2017-22
Figure 51: Forecast of UK sales of dark/golden/spiced rum, by value, best- and worst-case, 2017-22
Figure 52: Forecast of UK sales of dark/golden/spiced rum, by volume, best- and worst-case, 2017-22
Figure 53: Forecast of UK sales of brandy/Cognac/Armagnac, by value, best- and worst-case, 2017-22
Figure 54: Forecast of UK sales of brandy/Cognac/Armagnac, by volume, best- and worst-case, 2017-22
Figure 55: Forecast of UK sales of liqueurs, by value, best- and worst-case, 2017-22
Figure 56: Forecast of UK sales of liqueurs, by volume, best- and worst-case, 2017-22
Figure 57: Total volume sales of dark spirits and liqueurs, 2012-22
Figure 58: Total volume sales of whisky, 2012-22
Figure 59: Total volume sales of dark/golden/spiced rum, 2012-22
Figure 60: Total volume sales of brandy/Cognac/Armagnac, 2012-22
Figure 61: Total volume sales of liqueurs, 2012-22
Forecast methodology
APPENDIX – ADVERTISING AND MARKETING ACTIVITY
Figure 62: Above-the-line, online display and direct mail advertising on dark spirits and liqueurs, by parent company and brand (sorted by top four advertisers in 2016), 2013-17
APPENDIX – USAGE OF DARK SPIRITS AND LIQUEURS
Figure 63: Ways of drinking liqueurs/flavoured dark spirits, by type, July 2017