White Spirits and RTDs - UK - December 2018

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Inflation and growth in certain segments drive category growth 2013-18
Further inflation and slowing volume sales predicted for 2018-23
Figure 1: Total value sales of white spirits and RTDs, 2013-23
Vodka sales slip as gin boom continues
Mixed results for white spirits in the off- and on-trade in 2018
Freeze in spirits duty offers relief to manufacturers
Health body declares there to be no safe limit of alcohol consumption
Companies and brands
Smirnoff grows sales but feels pressure from rivals
Figure 2: Leading brands’ shares in the UK retail vodka market, by value, 2017/18^
Gordon’s enjoys strong sales growth but faces increased competition
Colourful gin trend continues
Further crossover brands enter the category
Advertising spend rises in 2017
Diageo focuses on Smirnoff and Gordon’s
Smirnoff leads on value, while Malibu is the most widely seen as fun
The consumer
Six in ten adults drink white spirits, while over a third drink RTDs
Figure 3: Usage of white spirits, by type, September 2018
Pre-mixed versions of trendy cocktails appeal to three in ten
Figure 4: Usage of RTDs, by format, September 2018
Trial in the on-trade is a major driver of retail purchase
Product details are important to many
Figure 5: Behaviours relating to white spirits, September 2018
Concerns about artificial ingredients are a barrier for RTDs
Figure 6: Attitudes towards white spirits and RTDs, September 2018
Few see any type of white spirit as sophisticated
What we think
ISSUES AND INSIGHTS
Product details are important to many
The facts
The implications
Trial in the on-trade is a major driver of retail purchase
The facts
The implications
Pre-mixed cocktails in trendy flavours have strong potential
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Inflation and growth in certain segments drive category growth 2013-18
Further inflation and slowing volume sales predicted for 2018-23
Vodka sales slip as gin boom continues
Mixed results for white spirits in the off- and on-trade in 2018
Freeze in spirits duty offers relief to manufacturers
Health body declares there to be no safe limit of alcohol consumption
MARKET SIZE AND FORECAST
Inflation and growth in certain segments drive category growth 2013-18
Further inflation predicted for 2018-23
Ageing UK population and alcohol moderation trend to impede volume sales growth
Figure 7: Total value and volume sales of white spirits and RTDs, 2013-23
Figure 8: Total value sales of white spirits and RTDs, 2013-23
Forecast methodology
MARKET SEGMENTATION
Vodka volume sales slip in 2018
Inflation and slight volume sales decline projected for 2018-23
Figure 9: Total value and volume sales of vodka, 2013-23
Figure 10: Total value sales of vodka, 2013-23
Gin boom continues in 2018
Slowing volume sales growth predicted for 2018-23
Figure 11: Total value and volume sales of gin, 2013-23
Figure 12: Total value sales of gin, 2013-23
White rum’s lacklustre sales performance continues in 2018
Further inflation plus some volume sales decline anticipated for 2018-23
Figure 13: Total value and volume sales of white rum, 2013-23
Figure 14: Total value sales of white rum, 2013-23
Tequila/mezcal sees rapid sales growth over 2013-18
Tequila/mezcal’s stark youth bias to limit volume sales growth 2018-23
Figure 15: Total value and volume sales of tequila/mezcal, 2013-23
Figure 16: Total value sales of tequila/mezcal, 2013-23
RTDs revival continues in 2018
RTDs growth to slow over 2018-23
Figure 17: Total value and volume sales of RTDs, 2013-23
Figure 18: Total value and volume sales of RTDs, 2013-23
CHANNELS TO MARKET
Higher prices in the on-trade allow it to lead on values but not on volumes
Figure 19: UK value and volume sales of white spirits and RTDs in the on- and off-trade, by type, 2016-18
Vodka retail sales gain at the expense of on-trade in 2018
Gin performs well in both the off- and on-trade…
…while white rum performs better in the on-trade
RTDs perform strongly in the off-trade
MARKET DRIVERS
Multiple factors affect spirits prices
Freeze on spirits duties offers relief to manufacturers
Uncertainty continues to surround post-Brexit situation
Wage growth pulls ahead of inflation but remains subdued
Figure 20: CPI vs average weekly earnings, 2012-18
Minimum unit pricing comes into effect in Scotland
Industry submits proposal for more detailed alcohol labelling
Health organisation calls for health warnings on alcoholic drinks packaging
A third of buyers have cut back on alcohol for health reasons
No safe level of alcohol consumption, declares health research institute
Companies look to tap the alcohol moderation trend with spirits alternatives
Ageing UK population offers little support for white spirits or RTDs
Figure 21: Usage of white spirits and RTDs, by age group, September 2018
Competition heats up in white spirits
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Smirnoff grows sales but feels pressure from rivals
Gordon’s enjoys strong sales growth but faces increased competition
Colourful gin trend continues
Further crossover brands enter the category
Advertising spend rises in 2017
Diageo focuses on Smirnoff and Gordon’s
Smirnoff leads on value, while Malibu is the most widely seen as fun
MARKET SHARE
Smirnoff grows sales but feels pressure from rivals
Figure 22: Leading brands’ sales and shares in the UK retail vodka market, 2015/16-2017/18
Figure 23: Leading distributors’ sales and shares in the UK retail vodka market, 2015/16-2017/18
Gordon’s sees strong growth as gin boom continues
Figure 24: Leading brands’ sales and shares in the UK retail gin market, 2015/16-2017/18
Figure 25: Leading distributors’ sales and shares in the UK retail gin market, 2015/16-2017/18
Increased distribution helps Whitley Neill to fly
…and boosts smaller brands
NPD helps own-label to grow sales, albeit losing share
Bacardi sees sales slip in weak white rum market
Figure 26: Leading brands’ sales and shares in the UK retail white rum market, 2015/16-2017/18
Figure 27: Leading distributors’ sales and shares in the UK retail white rum market, 2015/16-2017/18
Smaller brands push forward in tequila/mezcal
Figure 28: Leading brands’ sales and shares in the UK retail tequila/mezcal market, 2015/16-2017/18
Figure 29: Leading distributors’ sales and shares in the UK retail tequila/mezcal market, 2015/16-2017/18
WKD sees further volume sales decline in 2017/2018
Figure 30: Leading brands’ sales and shares in the UK retail RTDs market, 2015/16-2016/17
Gordon’s RTDs rise along with the main brand
NPD helps smaller brands and own-label to grow
LAUNCH ACTIVITY AND INNOVATION
Colourful gin trend continues
Pernod Ricard unveils Beefeater Pink
A raft of pink gins arrives from smaller brands…
…and from own-label
Figure 31: Examples of pink gins, 2018
Craft brands release violet gins
Orange gins emphasize taste and mixability
Figure 32: Gins in other colours, 2018
Absolut highlights the juice content of its flavoured vodka drinks
Figure 33: Example of Absolut Juice Edition range, 2018
Retailers explore colour changing gins…
…picking up craft cues
Figure 34: Example of colour-changing gin, 2018
Bombay Sapphire launches edible paint for gin & tonic in the on-trade
Further activity in non-alcoholic spirit alternatives
Pernod Ricard picks up craft cues with Ceder’s Alt Gin
Figure 35: Examples of non-alcoholic spirits alternatives, 2018
Smaller brands focus on enjoyment
Independent shop and craft distiller co-operate on organic ‘amber’ gin alternative
Seedlip expands its portfolio
Gordon’s adds low-alcohol premixes
Figure 36: Example of Gordon’s Ultra Low Alcohol range, 2018
Further cross-over brands enter the market
Craft breweries continue to extend into white spirits
Figure 37: Tiny Rebel’s gin range, 2018
Fortified wine brand launches ginger-flavoured gin
Alcohol brands extend into RTDs
Restaurant chains launch pre-mixed cocktails
Figure 38: Example of TGI Fridays RTDs range, 2018
Premium RTDs launches rise in 2018
Taking inspiration from the on-trade
References to juice content used to project a natural image
Figure 39: Examples of premium RTDs, 2018
M&S unveils small batch pre-mixed G&Ts
Hybrid drinks blur the boundaries within the alcohol category
Aldi unveils wine/gin hybrid
Craft distillery aims for the Christmas festivities with mulled gin
Leading RTD brands add new flavours
WKD makes its debut in canned pre-mixes
Competition heats up in RTDs
Craft spirit brands extend into RTDs
Figure 40: Increased competition in canned G&Ts
Smaller gin brands mark historical events
Oxford and Cambridge universities continue their rivalry with gins
Leading brands revive historic recipes
Diversification of origins for white spirits
Figure 41: Examples of white spirits from unusual countries, 2018
Film director brings Bolivian spirit to the UK
Waitrose targets the cocktail trend with Mezcal launch
Spanish brand launches ‘first’ vodka designed to mix with plain water
Companies explore environmentally-friendly packaging
Diageo introduces edible straws for its RTDs
ADVERTISING AND MARKETING ACTIVITY
Advertising spend rises substantially in 2017
Figure 42: Total above-the line, online display and direct mail advertising expenditure on white spirits^ and RTDs, 2014-18 (sorted by 2017)
Diageo remains the leading advertiser in 2017
Smirnoff continues its focus on inclusivity
Smirnoff’s ‘Soda Smash’ cocktail campaign focuses on vibrant ingredients
Other cocktail recommendations imply versatility
Gordon’s focuses on relaxing after setbacks…
…including offering free G&Ts to commuters experiencing train delays
Gordon’s Pink advert targets social media lovers
Bacardi remains the second largest advertiser in 2017
Bacardi’s ‘Do what moves you’ campaign encourages people to follow their passions
Bombay Sapphire celebrates creativity…
…including allowing people to customise their drinks’ flavours and colours
Pernod Ricard ups advertising spend over 2017/18
Malibu encourages people to ‘unleash their summer selves’
Absolut uses nudity to reinforce transparency message
New global campaign for Olmeca focuses on memorable experiences
Lidl Christmas advert highlights quality as well as price
Leading and niche brands adopt feminist message
RTD brands continue to target young adults
Hooch links with music and movies
VK targets Fresher’s Week
Other selected campaigns
Pinkster emphasizes its natural credentials
Silent Pool creates garden for Chelsea Flower Show
Opihr exhibits its RTDs at the Cowes regatta
Chastity promotes its non-alcoholic gin alternative as improving nights out
Nielsen Ad Intel coverage
BRAND RESEARCH
Brand map
Figure 43: Attitudes towards and usage of selected brands, October 2018
Key brand metrics
Figure 44: Key metrics for selected brands, October 2018
Brand attitudes: Gordon’s and Smirnoff are the most trusted brands
Figure 45: Attitudes, by brand, October 2018
Brand personality: Malibu scores highest on the fun factor
Figure 46: Brand personality – Macro image, October 2018
Beefeater and Smirnoff are the most widely seen as traditional
Figure 47: Brand personality – Micro image, October 2018
Brand analysis
Grey Goose is the most widely recommended brand
Figure 48: User profile of Grey Goose, October 2018
Gordon’s scores well on both good value and high quality
Figure 49: User profile of Gordon’s, October 2018
Bombay Sapphire has something of a premium image
Figure 50: User profile of Bombay Sapphire, October 2018
Smirnoff is the most widely seen as good value
Figure 51: User profile of Smirnoff, October 2018
Malibu scores highest on the fun factor
Figure 52: User profile of Malibu, October 2018
Beefeater is widely seen as traditional
Figure 53: User profile of Beefeater, October 2018
WKD scores well on the fun factor
Figure 54: User profile of WKD, October 2018
THE CONSUMER – WHAT YOU NEED TO KNOW
Six in ten adults drink white spirits, while over a third drink RTDs
Pre-mixed versions of trendy cocktails appeal to three in ten
Trial in the on-trade is a major driver of retail purchase
Product details are important to many
Concerns about artificial ingredients are a barrier for RTDs
Few see any type of white spirit as sophisticated
USAGE OF WHITE SPIRITS AND RTDS
Six in ten adults drink white spirits
Figure 55: Usage of white spirits, by type, September 2018
Ageing UK population offers little support to white spirits
Nearly seven in ten have moved on from the brands of their youth
No gender bias in white spirits
Over a third of users drink just one or two white spirits types
Figure 56: Repertoire of white spirit types drunk, September 2018
Few people drink white spirits neat
Younger consumers’ preferred serves pose an issue for brands seeking a premium positioning
Figure 57: Drinking of different serves of white spirits (nets), September 2018
Drinking with a single mixer leads for all white spirits apart from tequila
Figure 58: Drinking of different serves of white spirits, by type, September 2018
Over a third drink RTDs
Figure 59: Usage of RTDs, by format, September 2018
Concerns around artificial ingredients are a barrier
Ageing population will also hinder RTDs
INTEREST IN INNOVATION IN WHITE SPIRITS AND RTDS
Pre-mixed versions of trendy cocktails appeal to three in ten
Premium products should be particularly well-placed to benefit
Figure 60: Interest in innovation in white spirits and RTDs, September 2018
A new flavour remains a significant enticement
Companies must promote flavoured versions’ special qualities to avoid flavour fatigue
A quarter are interested in spirits from different countries than usual
Focus on terroir would help to boost the appeal of spirits from different countries
Figure 61: Example of white spirit with a focus on terroir, 2017
Colour changing drinks appeal to a third of under-35s
Colour-changing products would work well for parties and on social media
Pre-mixed cocktails with graduating colours would help to tap the colourful trend
BEHAVIOURS RELATING TO WHITE SPIRITS 
Trial in the on-trade is a major driver of retail purchase
Various methods to promote white spirits in the on-trade
Figure 62: Behaviours relating to white spirits, September 2018
Product details are important to half of white spirits drinkers/buyers
Giving more background information could help to revive interest in white rum
Consumer interest in product details helps to drive growth in smaller gin brands
Regionality is important to many
Meal pairing suggestions appeal to four in ten
Recipe cards and in-store positioning can help to promote dish-matching suggestions
ATTITUDES TOWARDS WHITE SPIRITS AND RTDS
Concerns about artificial ingredients put four in ten users off RTDs
Figure 63: Attitudes towards white spirits and RTDs, September 2018
Smaller brands promote their all-natural ingredients
Figure 64: Examples of RTD launches with all-natural product claims, 2018
Consumers are divided on white spirits’ sugar content
Promoting serves with unsweetened mixers should appeal to the sugar-concerned
PERCEPTIONS OF SELECTED TYPES OF WHITE SPIRITS AND RTDS
Few people see any type of white spirit as sophisticated
White spirits’ serves and youth bias weaken associations with sophistication
Figure 65: Perceptions of selected types of white spirits and RTDs
Actively negative views of white spirits are in the minority
Should be few barriers to reviving white rum’s fortunes
Few people see any type of white spirit as versatile
Recipe cards on bottles and in-store could help to enhance image for versatility
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
Figure 66: Total volume sales of white spirits and RTDs, 2013-23
Figure 67: Forecast of UK sales of white spirits and RTDs, by value, best- and worst-case, 2018-23
Figure 68: Forecast of UK sales of white spirits and RTDs, by volume, best- and worst-case, 2018-23
Figure 69: Total volume sales of vodka, 2013-23
Figure 70: Forecast of UK sales of vodka, by value, best- and worst-case, 2018-23
Figure 71: Forecast of UK sales of vodka, by volume, best- and worst-case, 2018-23
Figure 72: Total volume sales of gin, 2013-23
Figure 73: Forecast of UK sales of gin, by value, best- and worst-case, 2018-23
Figure 74: Forecast of UK sales of gin, by volume, best- and worst-case, 2018-23
Figure 75: Total volume sales of white rum, 2013-23
Figure 76: Forecast of UK sales of white rum, by value, best- and worst-case, 2018-23
Figure 77: Forecast of UK sales of white rum, by volume, best- and worst-case, 2018-23
Figure 78: Total volume sales of tequila/mezcal, 2013-23
Figure 79: Forecast of UK sales of tequila/mezcal, by value, best- and worst-case, 2018-23
Figure 80: Forecast of UK sales of tequila/mezcal, by volume, best- and worst-case, 2018-23
Figure 81: Total volume sales of RTDs, 2013-23
Figure 82: Forecast of UK sales of RTDs, by value, best- and worst-case, 2018-23
Figure 83: Forecast of UK sales of RTDs, by volume, best- and worst-case, 2018-23
APPENDIX – ADVERTISING AND MARKETING ACTIVITY
Figure 84: Total above-the line, online display and direct mail advertising expenditure on white spirits^ and RTDs, by top three advertisers, 2014-18 (sorted by 2017)
APPENDIX – USAGE OF WHITE SPIRITS
Figure 85: Usage of flavoured white spirits, by type^, September 2018