Press Release Summary = After some decline in the mid-1990s, the off-trade spirits sector has performed well in recent years, seeing growth of 15.1% by volume and 11.2% by value between 1999 and 2003.
Press Release Body = Off-Trade Spirits
After some decline in the mid-1990s, the off-trade spirits sector has performed well in recent years, seeing growth of 15.1% by volume and 11.2% by value between 1999 and 2003. This contrasts with a decline of around 11% by volume in global spirits sales over the same period.
During 2003, the off-trade spirits market in the UK increased by 3.7% and 3.4% by volume and value, respectively, compared with the previous year. Growth continues to be driven by those products which have a strong appeal to younger drinkers. Vodka sales grew substantially by volume between 1999 and 2003, while bourbon sales also sustained healthy growth, due to the popularity of Jack Daniel\'s. Sales of cream liqueurs also grew strongly, albeit from a small base, primarily due to the launch by Allied Domecq of its Tia Lusso brand in 2002. Traditional products, such as scotch whisky variants, continued to decline due to the perception of them as being old fashioned. Nevertheless, overall growth within the take-home alcoholic drinks sector is being driven, to some extent, by other off-trade products, such as beer and wine.
The higher rate of volume than value growth has been attributed to high-street price wars, a problem compounded for spirits producers by the low frequency of repeat purchases. Christmas has traditionally been a period of heavy discounting, a time that is particularly important for sales of certain types of spirits, such as liqueurs. As much as three-quarters of all brands of blended scotch sold in the UK are sold on promotion; the figure is slightly less for white spirits. This reflects the power of a small number of grocery multiples within the off-trade.
At present, however, there are three basic strata of spirits in the UK off-trade. At the bottom are the tertiary brands or \'cheapest-on-display\' lines, followed by own label and, above that, the more premium, mainstream brands. Cheaper brands have pushed up the image of own label, which has become a huge market in spirits. In the premium sector, however - where buying for gifts is important, especially with single malts - people are reluctant to purchase own-label brands.
Growing consolidation has also occurred as a result of mergers and acquisitions, such as the merger of Grand Metropolitan and Guinness in 1997, ultimately resulting in the creation of Diageo and that company\'s subsequent purchase of certain Seagrams brands in 2000, as well as the creation of major marketing and distribution companies such as Maxxium Worldwide and First Drinks Brands. Companies such as Allied Domecq have become more focused on wines and spirits, thereby increasing their influence in these areas.
A relatively small number of brands account for a significant proportion of sales. In 2003, the top ten brands made up nearly a third of total off-trade sales in value terms. Private label is also an important player - especially in gin, vodka and French grape brandy.
These companies have managed to maintain their significant presence by huge marketing support for their brands, as well as promoting wider usage occasions for them. Some suppliers have sought to capitalise on what they see as the untapped opportunity of ready-to-drink (RTD) cocktails. Targeting certain key audiences, such as youngsters and upwardly mobile women in their mid- to late-20s, has increasingly been seen as vital in securing a higher rate of market growth. This has been particularly successful in promoting sales growth of vodka.
Whisky is the largest sector, amounting to 59.8 million litres in 2003, a 1.5% drop on the previous year due to lower sales of blended whiskies. Single malts and imported whiskies continue to experience some growth. Independent whisky distillers in Scotland have had to reassess their strategies in light of the power of the multinationals - which account for between 65% and 70% of the global scotch market in volume terms.
Increased demand for premium products has been responsible for some growth in certain spirits categories, notably vodka.
Greater segmentation between premium and standard brands has injected some growth into off-trade gin sales following several years of business being static at best. The wider selection of gin brands in the on-trade has gradually made its impact felt in the take-home sector.
The impact of on-trade outlets has also influenced sales growth for a number of other white spirits and tequila. In the rum segment, although premium products have become more popular, there has been little overall growth. White rum accounts for two-thirds of off-trade rum sales and has been the main source of any growth that has occurred.
Liqueurs and specialities represent the single largest source of growth in the UK off-trade spirits market. Sales of other brown spirits, such as brandy and cognac, have remained static. This has been partly due to their old-fashioned image and to the increased popularity of wine as an aperitif drink.
2025
