Gin's in the pink

Premium brands are gaining ground while domestically produced ones

are in decline. Felicity Murray investigates what could be the next big thing
27 August, 2008
Page 36 
The messages coming out of the industry are quite contradictory in regard to the health of the gin sector. Volume sales statistics indicate a market that has been static or in slow decline for a number of years, with little change predicted for the future. But talk to global players and there is tremendous optimism, with premium brands seeing double-digit growth and a plethora of boutique-style products entering the market.

This is because it is mainly the standard mass-market local brands, which comprise nearly 80 per cent of all sales, that are suffering while premium brands are growing - by an impressive 46 per cent between 2001 and 2005.

According to the Gin & Vodka Association, global sales of gin are approximately 50 million cases per annum by volume, of which a massive 43.5 per cent is consumed in the Philippines. Here domestically produced spirits dominate (representing around 98 per cent) but, as the brand shares chart shows, volume sales of Ginebra San Miguel, by far the biggest Philippines gin brand, are falling year on year. Spain is the largest gin-drinking country in Europe but, like the Philippines, is dominated by domestic brands, such as Larios, which account for some 75 per cent of sales and, again, it is these sales which are suffering. Beefeater is the leading single imported white spirit in Spain and it is here that the brand is concentrating its advertising spend, with campaigns based on its London provenance paying dividends.

So while volumes may be slipping at the lower end of the market, value is increasing in countries where international premium and super-premium brands are driving growth - albeit not on quite the same scale as vodka.

In the EU, for example, gin sales were up 3.2 per cent in Italy last year but down by 6.8 per cent in France, 2.8 per cent in Germany and 2.2 per cent in Spain. But the latter typifies the market: local brands declined whil e the imported premiums flourished.

In the rest of the world, the message has been similar. The imported premium segment has increased in all the significant markets: by 455 per cent in China, 79 per cent in India, 29 per cent in Russia and 8.9 per cent in the US.

"It's a classic case of a sector that is premiumising," says Nick Blacknell, brand director for Pernod Ricard's Beefeater . "When a lot of the really top bartenders see it as the sexy new white spirit, I think inevitably that filters back through to the public - as it did with premium vodkas."

Blacknell believes the industry is starting to see gin as a n attractive sector and, judging by the number of recent launches, this does appear to be the case.

Among new brands in the States is Aviation , causing a stir with its unusual botanical balance which allows lavender to overpower the traditional juniper flavour.

By the very nature of the way it is produced, every gin is unique in flavour and aroma and this very characteristic is at the heart of a trend to use obscure ingredients as a point of brand differentiation.

The success of Hendrick's Gin, launched by William Grant & Sons in 2000, for example, has been built on the brand's quirky apothecary bottle and unique flavour, derived from the addition of essences of cucumber and rose petal to the distillation of 11 botanicals. Its recent Victorian Times advertising theme has a distinctly feminine feel, as has another gin from Scotland - Pink 47 London Dry Gin from Old St Andrews, launched in June last year.

"Consumers generally know very little about what's in gin, compared with Scotch, for example," says Blacknell. "The whisky distillers have done a better job than the gin sector in communicating this.

"Although most consumers are aware that juniper should be the dominant flavouring in a London gin, they get confused when you start talking about other ingredients and there's a danger that if gin plays too much to individual flavours it leaves the gin sector and enters the flavoured vodka sector. You risk ending up with products that are a bit of a hybrid. On the flip side, unusual botanicals, if used well as a marketing strategy, can really add interest to the sector. But overdone and over-emphasised they can be potentially confusing for consumers.

"Gin is a mixture of flavours from botanicals and the core proposition you're trying to achieve is that they are all in harmony and balance, A distiller will say it is fine to have a little accent or add an additional flavour for complexity, but when it starts to take over the entire flavour of the gin it is no longer a gin , more a flavoured spirit.

"However, it is innovation and nobody will deny the sector needs innovation." Some of the new gins may have broken some of the rules but in so doing they have picked up more younger drinkers than gin has historically had.

Provenance is a huge global trend for food and drink generally and gin is no exception. Organic produce is also fashionable and, perhaps a little ahead of its time, Juniper Green was launched in 1999 with the claim it was the world's first organic gin. Produced for The Organic Spirits Company by Thames Distillers in south London, it is distilled from organic grain and botanical s.

The way gin is drunk varies according to the country. In Spain, says Blacknell, most Beefeater drinkers are under 35 and drink it not as an aperitif but as a party drink late at night - a totally different perspective to the UK where a G&T still has a middle-class, slightly dowdy image. In the US it is drunk in a martini rather than with tonic.

Bacardi's premium gin brand Bombay Sapphire has also seen double-digit sales growth year on year. It has a distinctly different, light and crisp infusion of flavours achieved from "steaming rather than boiling" the botanicals. " An increasing number of discerning consumers seek out food and drink which has been created with care and attention - from the sourcing of the ingredients to the type of production process used," says Andrew Carter, global brand director. "The contemporary blue bottle and refined flavour helped regenerate the gin category by attracting this new, younger, more discerning audience looking to trade up to premium brands with a point of difference."

Gary Chau, global marketing director for Bacardi global travel retail division, adds: "Travel has allowed people to experience many more flavours and learn about different products. As with wine there are many different styles to experience and people enjoy discovering things and imparting their knowledge. Gin is an interesting category from many levels. In the 1700 s it was one of the most popular spirits in the world. Today, mixologists find it more interesting than vodka and I think a big resurgence will occur - it is starting already in key places where there's a leading cocktail culture (London, New York, Miami, San Francisco and LA). Fashion is cyclical - when consumers start to tire of a category they will look to something new."

Diageo is also very positive about the outlook for gin. Within the Diageo portfolio of gins, Tanqueray is at the premium end with Tanqueray London Dry Gin and Tanqueray No Ten, but Gordon's continues to be the world's best selling gin brand - outside the Philippines.

"Encouragingly, both brands are in growth in markets around the world ," says Charles Allen, global portfolio brand director at Diageo. "I think the whole trend in premiumisation in spirits is having an impact on the gin category and this is something we're taking full advantage of with Tanqueray No Ten."

Allen believes the emphasis on the ingredients in gin is important, but not so much as its English or London heritage, which is heavily played upon by Beefeater . "Gin is a white spirit and there is huge competition in this market segment - most notably vodka. The great point of differentiation that gin can deliver is this subtlety of taste, the range of flavours and the nuances that consumers can pick out within the gin flavour profile," he says.

Diageo has a lot of experience in how to communicate what the various aromas and flavours in a spirit bring to the drinking experience through its work in Scotch whiskies.

"If we look at what's happened in the top-end vodka market with brands like Belvedere and Grey Goose, they are offering a n often luxurious or glamorous drinking experience. What they lack in that territory is the genuine aspects of flavour. Of course, vodka producers will always talk about purity and smoothness - that is OK, but at the end of the day vodka is an odourless, flavourless product," says Allen.

"Premium gin can overlay some amazing flavours on top of this purity and smoothness, and put the taste back into that drinking experience - and that is something we are going to be driving extremely hard, particularly in the US but also through our Reserve Brands Organisation globally.

"To guarantee the longevity of a category and its brands we have to keep recruiting new generations of consumers . The trends towards premium white spirits and cocktails offer opportunities for gin, and it's encouraging that the category is becoming more competitive with new entrants, such as Hendrick's, and the continued competitiveness of Bombay Sapphire. This can only be good for the category."

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