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Dark Spirits - UK - August 2011

INTRODUCTION
Definition
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 1: UK value sales and forecast for dark spirits, 2006-16
Companies, brands and innovation
Figure 2: Market share of the dark spirit’s brands, by value sales in the off-trade, 2010
The consumer
Figure 3: Perceptions of drinkers of malt whisky, bourbon/Tennessee whiskey and Armagnac/Cognac, June 2011
What we think
ISSUES IN THE MARKET
Given its many advantages why isn’t malt whisky performing better than it is?
How can bourbon/Tennessee whiskey grow in the UK market?
Is it worthwhile Cognac/Armagnac investing further in the UK market given the opportunities in developing economies?
How can dark spirits leverage the trend for mixing drinks?
FUTURE OPPORTUNITIES
Experience is all
Premiumisation and Indulgence
INTERNAL MARKET ENVIRONMENT
Key points
Increasing importance of the off-trade to spirits
Figure 4: Trends in drinking alcohol, by venue, 2006-10
Younger people more likely to party at home
Figure 5: Occasions for drinking alcohol at home, 18-24-year-olds versus all drinkers, May 2011
More generally, targeting in-home is about mealtimes and relaxation
The challenge of de-seasonalisation
Figure 6: Weekly value sales of dark spirits and total spirits in the UK off-trade, May 2010-April 2011
Premiumisation is key for spirits
Provenance and ensuring quality is key for older consumers…
Figure 7: Index of agreement with lifestyle statements about paying extra for quality and British provenance, by gender, age group and social grade, 2010
… while more overt status motivates younger consumers
Figure 8: Index of agreement with lifestyle statements about status/quality, by gender, age group and social grade, 2010
Taxation creates an uneven playing field for spirits
Figure 9: Latest excise duty, by major alcohol category, August 2011
BROADER MARKET ENVIRONMENT
Key points
Consumer incomes become increasingly squeezed…
Figure 10: Change in average weekly earnings compared to inflation in the UK, January 2005-April 2011*
Baby boomers are a key source of income
Figure 11: How respondents would describe their financial situation, by age group, May 2011
Figure 12: Forecast of adult population trends, by age group, 2006-16
ABC1 population is on the rise
Figure 13: Forecast adult population trends, by socio-economic group, 2006-16
COMPETITIVE CONTEXT
Key points
Hard times for the UK alcohol market
Spirits fare reasonably well compared to wine and lager
Figure 14: Trends in drink types consumed in the past 12 months, 2006-10
Only vodka outdoes dark and golden rum within the spirits category
Figure 15: Changes in penetration of different spirits, 2006-10
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
US import introduces flavoured variant to the UK whiskies market
Kraken aims to take dark rum upmarket
MARKET SIZE AND FORECAST
Key points
Dark spirits market continues its slow decline
Figure 16: Volume and value sales and forecast for total dark spirits, 2006-16
Whiskies will suffer a tough 2011 but things will improve thereafter
Figure 17: Volume and value sales and forecast for whiskies, 2006-16
Figure 18: UK value sales/forecast for whiskies, 2006-16
Brandy goes into a steep decline
Figure 19: Volume and value sales and forecast for brandy, 2006-16
Figure 20: Value sales/forecast for brandy, 2006-16
Cognac and Armagnac increasingly eye profitable overseas markets
Figure 21: Volume and value sales and forecast for Cognac/Armagnac, 2006-16
Figure 22: Value sales/forecast for Cognac/Armagnac, 2006-16
Rum hits gold
Figure 23: Volume and value sales and forecast for dark and golden rum, 2006-16
Figure 24: Value sales/forecast for dark and golden rum, 2006-16
Forecast methodology
MARKET SEGMENTATION
Key points
Rum sees double-digit growth in the on-trade
Whiskies become more reliant on declining off-trade volume sales
Figure 25: Volume sales in the on- and off-trade, by dark spirits category, 2009-11
Figure 26: Value sales in the on- and off-trade, by dark spirits category, 2009-11
A disappointing performance for malt as imports grows share
Figure 27: Whisky volume and value sales within the off-trade, by sub-category, 2010-11
MARKET SHARE
Key points
Price dictates success of whisky brands
Figure 28: Market share of the top ten dark spirit’s value sales within the off-trade, 2008-10
Figure 29: Prices of top selling 70 cl whiskies* in the off-trade, August 2011
Morgan’s Spiced helps grow the rum category
COMPANIES AND PRODUCTS
Key points
Beam Global
Brown-Forman
Diageo
First Drinks Brands
Gruppo Campari
LVMH
Maxxium
Pernod Ricard
BRAND RESEARCH
Brand map
Figure 30: Attitudes towards and usage of dark spirits brands, June 2011
Brand attitudes
Figure 31: Attitudes by dark spirits brand, June 2011
Brand personality
Figure 32: Dark spirits brand personality – macro image, June 2011
Figure 33: Dark spirits brand personality – micro image, June 2011
Correspondence analysis
Brand experience
Figure 34: Dark spirit brand usage, June 2011
Figure 35: % Satisfaction with various dark spirits brands, June 2011
Figure 36: Consideration of dark spirits brands, June 2011
Figure 37: Consumer perceptions of current dark spirit brand performance, June 2011
Figure 38: Dark spirit brand recommendation – Net Promoter Score, June 2011
Brand index
Figure 39: dark spirit brand index, June 2011
Figure 40: dark spirit brand index vs. recommendation, June 2011
Target group analysis
Figure 41: Target groups, June 2011
Figure 42: Dark spirit brand usage, by target groups, June 2011
Group One – The Conformists
Group Two – Simply the Best
Group Three – Shelf Stalkers
Group Four – Habitual Shoppers
Group Five – The Individualists
CHANNELS TO MARKET
Key points
Pubs/bars still account for more revenue than multiples – just
Figure 43: Value sales within the off- and on-trade channels for the total dark spirits market, 2009-11
Multiples go from strength to strength
The rise of online alcohol purchasing
BRAND COMMUNICATION AND PROMOTION
Key points
Low spend is a sign of lack of brand investment
Figure 44: Topline advertising spend for total dark spirits, 2006-11*
Jack Daniel’s drives above-the-line spend in the sector
Figure 45: Share of above the line advertising spend by the top spending dark spirits brands between 2008-11*
CONSUMER USAGE OF DARK SPIRITS
Key points
A nation divided on the merits of dark spirits
Figure 46: Consumption of dark spirits in the past year, June 2011
Mixing means attracting younger drinkers and women…
Figure 47: Drinkers of dark spirits as part of a mixed drink (ie cocktail, long-serve or RTD), by gender and age group, June 2011
… explaining why some dark spirits are succeeding – and others are not
Figure 48: How dark spirits are consumed, June 2011
Jack Daniel’s is driving whisky usage among younger age groups
Figure 49: Whiskies usage in the past year, by gender, age and socio-economic group, June 2011
Malt is for men
US whiskey’s appeal to new, younger drinkers is benefiting total sector
Figure 50: Crossover of usage of whiskies, June 2011
US whiskey attracts the most loyalty
Figure 51: Index of solus usage of whiskies, June 2011
Blended whisky relies on high volume consumption of the over-55s
Figure 52: measures consumed per month for different dark spirits, by age group, 2010
Young drinkers are drinking rum in much greater volume than US whiskey
Cognac and brandy are relying too much on the over-55s
Figure 53: Index of usage of rum, brandy and Cognac, by gender, age and socio-economic group, June 2011
CONSUMER – ATTITUDES TOWARDS DRINKING DARK SPIRITS
Key points
Dark spirits are drunk by half the nation…
Figure 54: Attitudes towards drinkers’ favourite dark spirits, June 2011
… but lack obvious regular drinking occasions
Encouraging mixing among the young and the female
Figure 55: Agreement with attitude ‘I can only drink my favourite dark spirits with a mixer’, by gender and age group, June 2011
Peers are the key influencers for 18-24-year-old dark spirit drinkers
Figure 56: Index of who introduced drinkers to their favourite dark spirits, by age group, June 2011
CONSUMER – PERCEPTIONS OF DARK SPIRITS
Key points
With its many strengths, why is malt whisky not performing better?
Figure 57: Personality traits used to describe drinkers of whiskies and Armagnac/Cognac, June 2011
Malt whisky needs to inject more personality in its brands
Figure 58: Perceptions of drinkers of malt whisky, bourbon/Tennessee whiskey and Armagnac/Cognac, June 2011
Accessibility is the watchword
Cognac/Armagnac can capitalise on younger people’s status anxiety
Figure 59: Index of perceptions of Armagnac/Cognac drinkers being stylish and sophisticated, by age group, June 2011
APPENDIX – INTERNAL MARKET ENVIRONMENT
Figure 60: Agreement with selected lifestyle statements, by demographics, 2010
APPENDIX – BRAND COMMUNICATION
Figure 61: Ad spend on dark spirits by highest spending advertisers, 2008-11
Figure 62: Ad spend on dark spirits by highest spending brands, 2008-11
APPENDIX – BRAND RESEARCH
Figure 63: Brand usage, June 2011
Figure 64: Brand commitment, June 2011
Figure 65: Brand momentum, June 2011
Figure 66: Brand diversity, June 2011
Figure 67: Brand satisfaction, June 2011
Figure 68: Brand recommendation, June 2011
Figure 69: Brand attitude, June 2011
Figure 70: Brand image – macro image, June 2011
Figure 71: Brand image – micro image, June 2011
Figure 72: Profile target groups, by demographics, June 2011
Figure 73: Psychographic segmentation, by target group, June 2011
Figure 74: Brand usage, by target group, June 2011
Figure 75: Brand index, June 2011
APPENDIX – CONSUMER USAGE
Figure 76: Most popular types of dark spirits consumed in the past year, by demographics, June 2011
Figure 77: Next most popular types of dark spirits consumed in the past year, by demographics, June 2011
Figure 78: Other types of dark spirits consumed in the past year, by demographics, June 2011
Figure 79: Consumption of malt, blended and bourbon/Tennessee whisky in the past year, by demographics, June 2011
Figure 80: Most popular ways in which dark spirits are consumed, by demographics, June 2011
Figure 81: Next most popular ways in which dark spirits are consumed, by demographics, June 2011
Figure 82: Type of mix (neat), by demographics, June 2011
Figure 83: Type of mix (cola), by demographics, June 2011
Figure 84: Type of mix (with any other mixer), by demographics, June 2011
APPENDIX – CONSUMER ATTITUDES TOWARDS DARK SPIRITS
Figure 85: Statements about dark spirits, June 2011
APPENDIX – CONSUMER PERCEPTIONS OF DARK SPIRITS
Figure 86: Most popular personality traits used to describe drinkers of Bourbon/Tennessee whiskey, by demographics, June 2011
Figure 87: Next most popular personality traits used to describe drinkers of Bourbon/Tennessee whiskey, by demographics, June 2011
Figure 88: Other personality traits used to describe drinkers of Bourbon/Tennessee whiskey, by demographics, June 2011
Figure 89: Most popular personality traits used to describe drinkers of malt whisky, by demographics, June 2011
Figure 90: Next most popular personality traits used to describe drinkers of malt whisky, by demographics, June 2011
Figure 91: Other personality traits used to describe drinkers of malt whisky, by demographics, June 2011
Figure 92: Most popular personality traits used to describe drinkers of Armagnac/Cognac, by demographics, June 2011
Figure 93: Next most popular personality traits used to describe drinkers of Armagnac/Cognac, by demographics, June 2011
Figure 94: Other personality traits used to describe drinkers of Armagnac/Cognac, by demographics, June 2011

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