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William Grant & Sons UK has launched its annual Market Report, a comprehensive appraisal of consumer behaviour and trends affecting the drinks industry. The report highlights that while alcohol consumption may be in long-term decline, quality is winning over quantity. Premium spirits are in growth – driven by rich experiences, authenticity and satisfying the consumer need of discernment, treat and social status.

drinks industry

The report identifies a series of key trends that are affecting consumer choices, and how brands are responding. From the rise of ‘healthonism’ – the juxtaposition between a healthy lifestyle and hedonism – and brands using Virtual Reality technology to create an immersive brand world; to the expectation for authentic storytelling of purposeful brands; to the endless quest for brand experiences that equate to social currency.

Gary Keogh, Marketing Director of William Grant & Sons UK, comments:

“Consumers are continuously filtering through the noise and uncertainty of everyday life, and with more brands and experiences available to them ‘on demand’, it is no surprise that consumers are appraising their choices with more scrutiny than ever before.

“From the war on sugar, to the rise of abstinence or monitored intake as a lifestyle choice, we are also seeing the health rhetoric dial up in 2016 and brands are responding in force.

“As the expectation of brands reaches a new level, it is those who are able to communicate with real authenticity and involve the consumer in a unique, personalised brand experience that will win in the category.”

Key 2016 findings
  • In both the on-trade and the off-trade, spirits is the second largest sector seeing value growth across both channels.
  • Premium spirits are now worth £1.1bn up +18.6% year on year, and equating to 39% of total spirits growth.
  • Trading up to more premium choices can be seen across all aspects of the consumer journey, and while consumers may not be going out as often, when they do, they are looking for more memorable experiences.
  • The prestige sector is performing well. Champagne, is in its second year of consecutive growth with forecasts predicting acceleration over 2016, and prestige spirits in the UK grew by almost +15% in value in the last 12 months.
  • Volume performance has begun to stabilise in the on-trade, although premiumisation is still in full effect, with value sales continuing to grow well ahead of volume.
  • Over the last year we have seen food-led outlets grow by +1.6% compared to drink-led outlets which have declined at -2.3%.

Rita Greenwood, Managing Director of William Grant & Sons UK and Ireland, adds:

“As attitudes towards drinking continue to evolve, and premium spirits become a part of a wider set of experiences and sociable occasions, it is essential that brands adapt if they are to remain relevant with today’s discerning consumers.

“However, despite the noise and uncertainty surrounding us, it is an exciting time for the drinks industry. Technology is breeding new innovation and ways for us to create more meaningful experiences to engage consumers with our brands.

“As a family owned and run business, we’re in the privileged position of being able to take the long term view, to create brands that endure and build relationships that last, with consumers, our business customers and partners. This approach will enable us to deliver successful business solutions to our customers, to the benefit of their consumers.”

Facts, figures and trends

The on-trade

  • Key spirit categories are vodka (32.4%), liqueurs & specialities (23.1%), gin (9.9%) and blended whisky (6.8%). Together, these categories account for 70% of sales.
  • Despite the resurgence of vodka over the last year, smaller niche categories such as gin, spiced rum and tequila are growing at the fastest rate.
  • Premium spirits are growing at +19.7% in value sales, well ahead of mainstream, which is up +6.3%, as consumers continue to trade up to get the most out of each of their on-trade experiences.
  • Cocktails are becoming more prevalent within the pubs arena with a quarter of pubs now serving cocktails, compared to one in five a year ago.
  • Growth in the number of on-trade outlets is largely made up of food-led openings (660 new openings), with casual dining outlets particularly gaining popularity amongst Millennials who are attracted by the experiential and convenient nature of these outlets, which are built around the social occasion.

The off-trade

  • The spirits sector is the second largest within BWS in the off-trade, worth almost £4bn, with 25% share of market.
  • The spirits sector is seeing value growth of +2.6%, ahead of both wine and beer, with volume also growing up +2.7%. The category has added £100m in incremental value sales in the last year.
  • The largest categories within the spirits sector continue to be blended whisky and vodka, accounting for almost half of value sales.
  • The fastest growing categories within spirits are flavoured/spiced rum (+13.1%) and gin (+9.9%).
  • Premium spirits accounts for £308.4m in the off-trade, up +15.8% and growing ahead of the total market.

Innovation and trends:

  • Products with a story: with a new product launch almost every week – it is brands who engage in authentic storytelling with the bartending community that win at outlet. For example, The Balvenie, which uniquely preserves the five rare crafts of whisky making, recently partnered with two-Michelin-star chef Michel Roux Jr, to launch The Craftsmen’s Dinner, a series of six short films celebrating excellent craftsmanship in the UK.
  • Playful drinks and elaborate garnishes: following on from the molecular trend, which brought back fun to drinking, bartenders from five star hotels to your local pub are focusing on ‘Instagrammable’ serves. Just one such example is the Hendrick’s Artillery Punch at London’s Nightjar; a theatrical sharing punch that is served in a smoking artillery style vessel.
  • All things whisk(e)y: whisk(e)y is going through an exciting change. With a surge in outlets specialising in the spirit and new global launches in the category continuing to broaden appeal with a new generation of drinkers – welcome to the new era of whisk(e)y. Renowned for pushing the boundaries of whisky convention, Glenfiddich recently launched a virtual reality distillery tour “Journey into the Mind of the Malt Master” that immerses whisky lovers into the heart and soul of the Glenfiddich distillery, highlighting the mastery and craft of single malt whisky production.
  • Bar food to write home about: pubs and bars are now serving food, which tastes as good as their drinks look. Be it burgers, BBQ or tapas, bars are becoming known for their food just as much as for their signature serve.

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