White Spirits and RTDs - UK - December 2017

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Inflation and growth in vodka and gin boost the market 2012-17
Further inflation and mixed volume sales expected 2017-22
Figure 1: Total value sales of white spirits and RTDs, 2012-22
Growth for vodka and gin in 2017, while white rum sales remain flat
White spirits’ on-trade performances mirror those of retail in 2017
Various factors raise costs for spirits companies
Health organisations urge cutbacks on alcohol
Companies and brands
Smirnoff remains ahead on vodka, while Gordon’s loses share despite sales growth
Figure 2: Leading brands’ sales in the UK retail vodka market, by value, 2016/17*
Leading and smaller brands continue to release limited editions
Crossover brands enter the market
Advertising spend falls to a four-year low in 2016
Brands continue to project desirable lifestyle image in their 2017 advertising
Smirnoff, Absolut and Bacardi all score well on fun
The consumer
Six in ten UK adults drink white spirits, while a third drink RTDs
Figure 3: Usage of white spirits, by type, October 2017
Ageing UK population to impede growth for both segments
Vodka enjoys varied usage, while gin is associated with relaxing at home
Price and promotions are key influences on white spirits buying
Figure 4: White spirits buying factors, when buying for themselves and as a gift, October 2017
Recommendations and gifting are key to recruiting new users
Figure 5: Behaviours relating to white spirits and RTDs, October 2017
Calorie labelling per serving on-pack and on menus could appeal to health-conscious drinkers
Figure 6: Attitudes towards white spirits and RTDs, October 2017
What we think
ISSUES AND INSIGHTS
Friend and family recommendations are key to recruiting new users
The facts
The implications
Good opportunities for premium and less sugary RTDs
The facts
The implications
Tangible ethical claims have strong appeal
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Inflation and growth in vodka and gin boost the market 2012-17
Further inflation and mixed volume sales expected 2017-22
Growth for vodka and gin in 2017, while white rum sales remain flat
White spirits’ on-trade performances mirror those of retail in 2017
Various factors raise costs for spirits companies
Health organisations urge cutbacks on alcohol
MARKET SIZE AND FORECAST
Inflation and growth in vodka and gin lifts the market 2012-17
Further inflation and mixed volume sales results expected for 2017-22
Figure 7: Total value and volume sales of white spirits and RTDs, 2012-22
Figure 8: Total value sales of white spirits and RTDs, 2012-22
Forecast methodology
MARKET SEGMENTATION
Vodka sales remain in modest growth throughout 2012-17
Consumer spending cutbacks to erode vodka volume sales
Figure 9: Total value and volume sales of vodka, 2012-22
Figure 10: Total value sales of vodka, 2012-22
Further strong volume sales growth for gin in 2017
Premiumisation helps to push prices up in 2017
Gin’s growth to slow 2017-22
Figure 11: Total value and volume sales of gin, 2012-22
Figure 12: Total value sales of gin, 2012-22
White rum volume sales remain flat in 2017
White rum sales to remain flat 2017-22
Figure 13: Total value and volume sales of white rum, 2012-22
Figure 14: Total value sales of white rum, 2012-22
Tequila/Mezcal grows but remain niche 2012-17
Fall in number of young adults to impede growth for tequila/Mezcal
Figure 15: Total value and volume sales of tequila/mezcal, 2012-22
Figure 16: Total value sales of tequila/mezcal, 2012-22
Strong NPD activity powers revival in RTDs
Prices fall in 2017
Ageing population and sugar concerns to hinder RTDs growth 2017-22
Figure 17: Total value and volume sales of RTDs, 2012-22
Figure 18: Total value sales of RTDs, 2012-22
CHANNELS TO MARKET
Higher prices in the on-trade allow it to lead on values but not volumes
Figure 19: UK value and volume sales of white spirits and RTDs in the on- and off-trade, by type, 2015-17
White spirits’ on-trade performances mirror those of retail in 2017
MARKET DRIVERS
Inflation and increased alcohol duties raise costs for spirits companies
UK Supreme Court approves alcohol minimum unit price
Income squeeze threatens category growth
Premium RTDs can benefit from an income squeeze
A third of adults have reduced alcohol intake
Health organisations advise measures to reduce alcohol consumption
Ageing UK population to impede both white spirits and RTDs
Further growth in distilleries in 2016
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Smirnoff remains ahead on vodka, while Gordon’s loses share despite sales growth
Leading and smaller brands continue to release limited editions
Crossover brands enter the market
Advertising spend falls to a four-year low in 2016
Brands continue to project desirable lifestyle image in their 2017 advertising
Smirnoff, Absolut and Bacardi all score well on fun
MARKET SHARE
Smirnoff retains its position as the leading vodka brand in retail
Figure 20: Leading brands’ sales and shares in the UK retail vodka market, 2014/15-2016/17
Figure 21: Leading distributors’ sales and shares in the UK retail vodka market, 2014/15-2016/17
On-trade promotions boost Russian Standard
Gordon’s remains the leading gin brand in retail
Figure 22: Leading brands’ sales and shares in the UK retail gin market, 2014/15-2016/17
Figure 23: Leading distributors’ sales and shares in the UK retail gin market, 2014/15-2016/17
…but its lead narrows as competition heats up
Tanqueray pushes forward
Increased distribution helps smaller gin brands to grow
NPD boosts own-label gin
Bacardi’s sales slip as white rum’s lacklustre performance continues
Figure 24: Leading brands’ sales and share in the UK retail white rum market, 2014/15-2016/17
Figure 25: Leading distributors’ sales and share in the UK retail white rum market, 2014/15-2016/17
Sierra displaces Jose Cuervo as the leading tequila brand in retail
Figure 26: Leading brands’ sales and share in the UK retail tequila/mezcal market, 2014/15-2016/17
Figure 27: Leading distributors’ sales and share in the UK retail tequila/mezcal market, 2014/15-2016/17
WKD fails to benefit from the RTDs’ resurgence
Figure 28: Leading brands’ sales and shares in the UK retail RTDs market, 2014/15-2016/17
Diageo RTDs do not always mirror performance of the main brands
LAUNCH ACTIVITY AND INNOVATION
Major and smaller brands continue to release limited editions
Leading players and niche brands add seasonal flavours
Smaller brands refer to historical events to spark consumer interest
Limited-edition packaging used to add visual appeal and showcase ethical credentials
Craft spirits brand unveils cask-aged gin
Flavoured gins appear in an array of colours
Diageo targets Millennials with pink gin
Unusual colours provide strong differentiation
Growth in premium own-label NPD
Botanicals detailed to enhance premium positioning
Crossover brands enter the market
Beer companies expand into white spirits
…as do wine producers
Condiments brand unveils garlic vodka
References to terroir used to make significance of ingredient provenance more tangible
Belvedere unveils terroir-focused Single Estate range
Craft distillers emphasize their unique ingredients
Waitrose launches first gin created by customer
Leading players build up their RTD ranges
Craft brewers launch their own pre-mixed G&Ts
Smaller brands and retailers release premium RTDs
Fruit and tea flavoured RTDs flag up their quality ingredients
Drawing inspiration from the on-trade
ADVERTISING AND MARKETING ACTIVITY
Advertising spend falls to a four-year low in 2016
Figure 29: Total above-the line, online display and direct mail advertising expenditure on white spirits^ and RTDs (sorted by 2016), 2013-17
Diageo continues two-pronged focus on inclusivity and enjoyment
Smirnoff airs its latest ‘we’re open’ advert
‘Choose Love’ campaign supports the LGBT community
Gordon’s continues to push the treat aspects
Gordon’s Facebook competition lays clues for followers
Multiple brands promoted in link-up with Amazon
Bacardi positions Grey Goose as ideal gift in Christmas advert
New Bacardi campaign celebrates the carnival
Pernod Ricard supports its rum brands
Malibu projects aspirational ‘perfect summer’ image
Havana Club looks to drive associations with Cuban lifestyles
Smaller brands highlight their differences from the mainstream on social media
Hendrick’s focuses on cucumbers and praises unconventionality
Chase Distillery highlights its family-owned credentials and in-house production
Nielsen Ad Intel coverage
BRAND RESEARCH
Brand map
Figure 30: Attitudes towards and usage of selected brands, November 2017
Key brand metrics
Figure 31: Key metrics for selected brands, November 2017
Brand attitudes: Smirnoff and Gordon’s have the strongest quality associations
Figure 32: Attitudes, by brand, November 2017
Brand personality: Smirnoff and Bacardi are the most widely seen as accessible
Figure 33: Brand personality – Macro image, November 2017
Gordon’s is the most widely seen as traditional
Figure 34: Brand personality – Micro image, November 2017
Brand analysis
Absolut is widely seen as fun, and has something of a cool image
Figure 35: User profile of Absolut, November 2017
Smirnoff is the most trusted brand
Figure 36: User profile of Smirnoff, November 2017
Gordon’s is associated with tradition and quality
Figure 37: User profile of Gordon’s, November 2017
Russian Standard performs well on purity and authenticity compared with other brands
Figure 38: User profile of Russian Standard, November 2017
Sipsmith’s craft positioning boosts sophisticated image
Figure 39: User profile of Sipsmith, November 2017
Bacardi scores well on fun
Figure 40: User profile of Bacardi, November 2017
Over-45s are most inclined to recommend Greenall’s
Figure 41: User profile of Greenall’s, November 2017
THE CONSUMER – WHAT YOU NEED TO KNOW
Six in ten UK adults drink white spirits, while a third drink RTDs
Ageing UK population to impede growth for both segments
Vodka enjoys varied usage, while gin is associated with relaxing at home
Price and promotions are key influences on white spirits buying
Recommendations and gifting are key to recruiting new users
Calorie labelling per serving on-pack and on menus could appeal to health-conscious drinkers
USAGE OF WHITE SPIRITS AND RTDS
Six in ten UK adults drink white spirits
No gender bias in white spirits
Figure 42: Usage of white spirits, by type, October 2017
Ageing UK population is a threat to white spirits
Younger drinkers have the most varied repertoires
Figure 43: Repertoire of white spirit types drunk, October 2017
Few people drink white spirits neat
Figure 44: Drinking of different serves of white spirits, (nets), October 2017
Drinking with a mixer leads for all types except tequila/Mezcal
Figure 45: Drinking of different serves of white spirits, by type, October 2017
A third of adults drink pre-mixed drinks
Figure 46: Usage of RTDs, by format, October 2017
Ageing population will also affect RTDs
USAGE OCCASIONS FOR SELECTED TYPES OF WHITE SPIRITS
Vodka enjoys varied usage both at home and out-of-home
Figure 47: Usage occasions for selected types of white spirits, October 2017
Gin tends to be chosen for relaxing at home
Focus on cocktails could open up more a more varied range of occasions
Tequila/Mezcal does better for out-of-home than at-home occasions
On-trade recommendations should prove powerful in recruiting new users
Few drink any type of white spirit with a meal
Link-ups with retailers are a means to promote meal pairings
WHITE SPIRITS BUYING FACTORS
Price and promotions exert a significant influence
Price is less compelling for the gifting occasion
Figure 48: White spirits buying factors, when buying for themselves and as a gift, October 2017
White spirits’ high price underpins brand loyalty
Brand loyalty is lower for white spirits than dark spirits
Gin should be best-placed to tap into consumer interest in flavour
Going well with mixers influences a quarter of buyers
Recipe suggestions and in-store positioning can showcase mixability
Combined packs with mixers could enhance the appeal of mixability when gifting
BEHAVIOURS RELATING TO WHITE SPIRITS AND RTDS
Recommendations are key to recruiting new users
Discounts and ‘shared wisdom’ messages could act as incentives
Figure 49: Behaviours relating to white spirits and RTDs, October 2017
Influence of bartenders offers scope for trading users up
Spirits companies look to unlock the power of professional recommendations
Gifting is a key entry point for white spirits
Gin producers could push the ‘shared moment’ angle
Visual appeal enhances the gifting potential
Consumer concerns around sugar in RTDs pose a challenge and an opportunity
Smaller brands launch lower-sugar RTDs in 2017
On-pack charity pledges have wide appeal
Smaller players lead the way on charity link-ups
ATTITUDES TOWARDS WHITE SPIRITS AND RTDS
On-pack calorie labelling per serving could appeal to health-conscious drinkers
Calorie labels on drinks menus can boost white spirits’ appeal in the on-trade
Figure 50: Attitudes towards white spirits and RTDs, October 2017
Strong interest in premium RTDs
Cocktails have a weak image for convenience
Subscription schemes could speak to consumer desire for convenience
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 51: Total volume sales of white spirits and RTDs, 2012-22
Figure 52: Forecast of UK sales of white spirits and RTDs, by value, best- and worst-case, 2017-22
Figure 53: Forecast of UK sales of white spirits and RTDs, by volume, best- and worst-case, 2017-22
Figure 54: Total volume sales of vodka, 2012-22
Figure 55: Forecast of UK sales of vodka, by value, best- and worst-case, 2017-22
Figure 56: Forecast of UK sales of vodka, by volume, best- and worst-case, 2017-22
Figure 57: Total volume sales of gin, 2012-22
Figure 58: Forecast of UK sales of gin, by value, best- and worst-case, 2017-22
Figure 59: Forecast of UK sales of gin, by volume, best- and worst-case, 2017-22
Figure 60: Total volume sales of white rum, 2012-22
Figure 61: Forecast of UK sales of white rum, by value, best- and worst-case, 2017-22
Figure 62: Forecast of UK sales of white rum, by volume, best- and worst-case, 2017-22
Figure 63: Total volume sales of tequila/Mezcal, 2012-22
Figure 64: Forecast of UK sales of tequila/Mezcal, by value, best- and worst-case, 2017-22
Figure 65: Forecast of UK sales of tequila/Mezcal, by volume, best- and worst-case, 2017-22
Figure 66: Total volume sales of RTDs, 2012-22
Figure 67: Forecast of UK sales of RTDs, by value, best- and worst-case, 2017-22
Figure 68: Forecast of UK sales of RTDs, by volume, best- and worst-case, 2017-22
Forecast methodology
APPENDIX – ADVERTISING AND MARKETING ACTIVITY
Figure 69: Total above-the line, online display and direct mail advertising expenditure on white spirits^ and RTDs, by top 3 advertisers (sorted by 2016), 2013-17
APPENDIX – USAGE OF WHITE SPIRITS AND RTDS
Figure 70: Usage of flavoured white spirits, by type, October 2017