Presented to journalists in London yesterday, the report outlined the rising importance of premium spirits.
MD of the William Grant & Sons subsidiary, Chris Mason, said despite a prolonged recession in the UK, a consumer culture of indulgence has emerged.
The report found that the Beer, Wine and Spirit category is up 3% year on year and worth £38bn, of which the on-trade accounts for £23bn, up 3%, and the off-trade is worth £15bn, up 2%.
Spirits are the growth category, up 6% to £8.7bn, with premium spirits up 18%.
The report identified the following key trends:
Changed values and perceptions as a result of austerity – A prolonged recession has forced a change in spending habits. People are placing more importance on experiences rather than possessions and premium brands are well placed to deliver the kind of high quality experiences people are looking for.
Greater desire and search for quality brands – Consumers have become hugely skilled at hunting out quality brands and experiences at affordable prices. This has been helped by discount voucher websites with an estimated two thirds of people using them in the last 12 months when eating out.
The spirit for nostalgia - In times of recession, people tend to look back with a sense of nostalgia. The trend for rediscovering old skills and craftsmanship continues to grow with particular emphasis on recreating drinks from the early 1900s and Prohibition Era. Speakeasy style dive bars serving classic cocktails that have stood the test of time are also becoming popular across the country.
Impact of e-commerce and social media - Mobile technology has opened up new opportunities for brands to engage with their consumers. 78% now share their experiences via social media so brands need to understand how this disrupts the traditional path to recommendation and harness the power of word of mouth. Similarly, BWS brands need to embrace online shopping as the category significantly lags behind other sectors of e-commerce
The changing retail environment (on-trade) - Going out is one of the biggest cut back areas. However, when people do go out they want a quality experience with 51% looking for new products and services. 47% also look for novelty and fun with many bars now appreciating the need to be innovative with their serves and menus
The growth of the café bar - Café bars continue to grow in popularity due to their chameleon offering which appeals to a wide consumer base. This sector of the on-trade market is showcasing how effectively connecting with consumers can build profitable, dynamic businesses
The perfect serve - The continued growth in cocktails has created a thirst for unique serves, creative innovation and consumer experimentation. As a result, drinkers have increasingly high expectations and quality has never been more important. This has given rise to the importance of the ‘perfect serve’ - a real profit driver for the on-trade with more than two thirds of consumers willing to pay more for a unique serve.
The changing retail environment (off-trade) - With the multiples all price matching and being increasingly competitive, more emphasis has had to be placed on the in-store shopping experience. The duty escalator also continues to encourage brand owners to introduce smaller formats to deliver spirits at an affordable price point.
Gifting - is a key focus for the spirits category with one in three purchases being a gift. Gifting also encourages trial of spirits and brings new shoppers into the category. Alcohol gifting presents a great opportunity, estimated to be worth £572m and they are not just seasonal purchases with 60% taking place all year round e.g. for birthdays.
Prestige - an influx of foreign wealth, particularly in London, has presented a tremendous boost to the high end off-trade market. These shoppers appear to have a seemingly insatiable demand for aged whiskies and Cognacs with specialist shops reporting significant sales growth.
Convenience - With £10bn predicted growth over the next five years, convenience continues to grow as an important trading channel. Spirits penetration within convenience is low, so the opportunity for growth is significant. Fractionals, seasonal events, versatility, gifting solutions and premium growth are identified as the key drivers in convenience.
Multi-Channel Retailing - Traditional big store retailing is evolving to meet the changing needs of shoppers. Convenience stores, discounters, online and mobile have all been added to the repertoire of today’s shopper and this move is known as multi-channel retailing. The winning retailers will be those that take the multi-channel approach connecting with their shoppers across multiple touch points.
Mason said: “As the recession continues to play out, it is important to have an in-depth understanding of consumers and shoppers, their changing habits and how they are adapting. As such, premium suppliers like ourselves need to work hand in hand with on and off-trade retailers to ensure we are delivering tailor-made, creative solutions to satisfy consumers.”