Alcoholic Drinks Review - UK - February 2018

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
2017 sees an uplift in alcoholic drink sales
Figure 1: Forecast of value sales of the alcoholic drinks market, at current prices, 2012-22
Beer values forge ahead in 2017
The wine market also returned to growth in 2017
Figure 2: Total UK value sales of alcoholic drinks, by segment, 2012, 2017 and 2022
Many consumers are limiting alcohol intake
Alcohol duty has driven up drink prices
Companies and brands
Beer brands dominate the off-trade top five
Leading off-trade brands post mixed growth
Premiumisation prevalent across different categories
Fruit and flavoured launches continue to be explored
Low-alcohol/alcohol-free launches come to the fore in beer and wine
Advertising on alcoholic drinks has fallen but steadied in 2017
Heineken and Diageo are largest advertisers over 2013-17
The consumer
82% of adults drink alcoholic drinks
Figure 3: Usage of types of alcoholic drinks, November 2017
Many Brits moderate their drinking
Figure 4: Alcohol units consumed in a typical week, November 2017
In-store purchases remain key for alcoholic drinks
Figure 5: Locations for buying alcoholic drinks (overall nets), November 2017
Flavour is key for drinkers
Figure 6: Choice factors when buying alcoholic drinks, November 2017
A quality over quantity mindset prevails…
…while binge drinking is deemed uncool
Figure 7: Attitudes towards alcoholic drinks, November 2017
What we think
ISSUES AND INSIGHTS
Low- and non-alcoholic drinks can keep brands on the menu as people moderate drinking
The facts
The implications
Quality over quantity mindset continues to lend opportunities for premium proposition
The facts
The implications
Further scope to build social media interaction with drinkers
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
2017 sees an uplift in alcoholic drink sales
Beer volumes bounce back and values forge ahead in 2017
The wine market also returned to growth in 2017
Many consumers are limiting alcohol intake
Alcohol duty has driven up drink prices
MARKET SIZE AND CHANNELS TO MARKET
2017 sees an uplift in alcoholic drink sales
Figure 8: Total UK value and volume sales of alcoholic drinks, by segment, 2012-22
Figure 9: Forecast of value sales of the alcoholic drinks market, at current prices, 2012-22
Figure 10: Forecast of volume sales of the alcoholic drinks market, 2012-22
Forecast methodology
On-trade drink sales lag behind the off-trade
Online retailers growing in popularity to boost off-trade numbers
MARKET SEGMENTATION
Beer volumes bounce back and values forge ahead in 2017
Lager sales propped up by the off-trade
The wine market also returned to growth in 2017
Still wine volumes continue to slide
Cider volume sales enjoy modest growth in 2017
Vodka and gin drive white spirits growth
Inflation drives dark spirits and liqueurs growth
Value sales by segment
Figure 11: Total UK value sales of alcoholic drinks, by segment, 2012-22
Figure 12: Value sales of alcoholic drinks, by channel, 2015-17
Volume sales by segment
Figure 13: Total UK volume sales of alcoholic drinks, by segment, 2012-22
Figure 14: Volume sales of alcoholic drinks, by channel, 2015-17
MARKET DRIVERS
Many consumers are limiting alcohol intake
Income squeeze and price rises
Figure 15: Annual exchange rates for Sterling against key currencies, 2012-17
Reduced guidelines on alcohol intake in 2016
Minimum unit pricing gains Supreme Court backing
Alcohol duty has driven up drink prices
Figure 16: UK excise duty rates for alcoholic drinks, 2007-17
Pub closures remain commonplace
Weather shapes consumption trends
An ageing population could pose a threat to alcoholic drink sales
Figure 17: Change in age structure of the over-20 UK population, 2012-17 and 2017-22
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Beer brands dominate the off-trade top five
Leading off-trade brands post mixed growth
Premiumisation prevalent across different categories
Fruit and flavoured launches continue to be explored
Low-alcohol/alcohol-free launches come to the fore in beer and wine
Advertising on alcoholic drinks has fallen but steadied in 2017
Heineken and Diageo are largest advertisers over 2013-17
MARKET SHARE
Beer brands dominate the off-trade top five
Figure 18: UK retail value sales of the top 20 alcoholic drink brands, 2015-2017
Foster’s and Carlsberg face challenges from delistings
Fruit ciders continue to soar
Smirnoff and Gordon’s grow in white spirits
Famous Grouse returns to growth
Leading wine brands struggle
LAUNCH ACTIVITY AND INNOVATION
Alcohol brands continue to invest in NPD
Premiumisation prevalent across different categories
Craft drives premium beer NPD
Premium cider launches emphasise their heritage
Retailers push premiumisation in wine
Premium launches prevalent within dark spirits and liqueurs…
…while white spirit brands focus on ingredients such as botanicals
Fruit and flavoured launches continue to be explored
Further growth in flavoured ciders
Blossom Hill looks to tap into the growth of fruit wine
Diageo also targets Millennials with pink gin
Low-alcohol/alcohol-free launches come to the fore in beer and wine
Two high-profile beer launches in 2017
Lower-alcohol wine launches on the up
Crossover brands blur category boundaries
Packaging innovation focuses on smaller cans and pouches
ADVERTISING AND MARKETING ACTIVITY
Advertising on alcoholic drinks in decline in recent years
Figure 19: Total above-the-line, online display and mail advertising spend on alcoholic drinks, 2013-17
Figure 20: Total above-the-line, online display and mail advertising spend on alcoholic drinks, by category, 2013-17
TV still leads the way but appears to be falling out of favour
Figure 21: Total above-the-line, online display and mail advertising spend on alcoholic drinks, by media type, 2013-17
Heineken remains the largest advertiser over the 2013-17 period
AB InBev ups support for Budweiser, Carlsberg invests in San Miguel
Diageo maintains strong backing for Guinness and boosts spirit support
Figure 22: Total above-the-line, online display and mail advertising spend on alcoholic drinks, by company, 2013-17 (sorted by 2013-17 total)
Figure 23: Total above-the-line, online display and mail advertising spend on alcoholic drinks, by brand, 2013-17 (sorted by 2013-17)
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
82% of adults drink alcoholic drinks
Many Brits moderating their drinking
In-store channel still top for alcoholic drinks
Flavour is key for drinkers
A quality over quantity mindset prevails
61% of drink buyers agree that getting drunk is uncool
USAGE OF ALCOHOLIC DRINKS
82% of adults drink alcoholic drinks
Figure 24: Usage of alcoholic drinks (nets), November 2017
Figure 25: Repertoire of usage of types of alcoholic drinks, November 2017
Still wine and lager are the most popular drinks types
Figure 26: Usage of alcoholic drinks by type, November 2017
Cider’s high penetration belies a category with issues
Different spirits appeal to different groups
Prosecco continues to fizz
WEEKLY ALCOHOL INTAKE
Less than one in five drinkers exceeds recommended weekly intake
Figure 27: Alcohol units consumed in a typical week, November 2017
Women are less likely weekly drinkers than men
Figure 28: Alcohol units consumed in a typical week, by gender, November 2017
LOCATIONS FOR BUYING ALCOHOLIC DRINKS
In-store purchases are key for alcoholic drinks
Figure 29: Locations for buying alcoholic drinks (overall nets), November 2017
In-store purchases driven by supermarkets
Discounters do better on grocery than drinks
Leisure activities remain popular
Figure 30: Locations for buying alcoholic drinks (nets by type of drink), November 2017
Online buying still niche in drinks
25-34-year-olds drive online buying
Figure 31: Locations for buying alcoholic drinks, November 2017
CHOICE FACTORS
Flavour is key for drinkers, ABV matters to two in five
Figure 32: Choice factors when buying alcoholic drinks, November 2017
Brand size influences one in five, production method just 6%
Packaging factors are peripheral
Little reported interest in packaging materials
…and even less in packaging styles
Figure 33: Style of packaging as a choice factor, by age, November 2017
Country of production influences one in five over-55s
ATTITUDES TOWARDS ALCOHOLIC DRINKS
A quality over quantity mindset prevails
Figure 34: Attitudes towards the price/quality of alcoholic drinks, November 2017
Rising prices leading many to moderate pub visits
Supermarket multibuys appeal widely
Health factors are also contributing towards moderation
Calorie and alcohol unit details can help assuage health concerns
Figure 35: Attitudes towards health and alcoholic drinks, November 2017
Low- and non-alcoholic drinks on the rise
Collaboration drinks appeal to one in three
Figure 36: Attitudes towards alcoholic drink brands and producers, November 2017
British-made drinks appeal to one in four
Social media can resonate with 25-34s
FURTHER ATTITUDES TOWARDS ALCOHOLIC DRINKS
Three in five drinkers think than getting drunk is uncool
Figure 37: Agreement with the statement “Getting drunk is uncool”, November 2017
Confusion around craft continues
Figure 38: Agreement with the statement “It’s hard to tell which brands are craft”, November 2017
Streamlined drinks ranges could benefit retailers
Figure 39: Agreement with the statements “The amount of choice in supermarkets can make it hard to choose a drink” and “It’s difficult to find information on packaging about the calorie content”, November 2017
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
Best- and worst-case forecast data
Figure 40: Total UK value sales of alcoholic drinks, best- and worst-case forecast, 2017-22
Figure 41: Total UK volume sales of alcoholic drinks, best- and worst-case forecast, 2017-22