With consumers keen to trade up over the festive season, there are plenty of opportunities to sell more premium spirits, wines, ciders and beers
A glass of bubbly, a cocktail, mulled wine… that’s right, the festive season is approaching fast and shoppers will soon move into impulsive, indulgent and unpredictable shopping modes, particularly in the drinks aisles.
For retailers the season is hugely important; last year alcohol was the joint number one performing category over Christmas, with the convenience sector playing a key role in its success.
James Wallwork, manager at G&E Murgatroyd Spar in Burnley, says that alcohol is “the most important category” for his store over Christmas. It’s a sentiment echoed by Mehmet Guzel, owner of Simply Fresh in London’s Bethnal Green, which won the Off Licence of the Year Award at this year’s Convenience Retail Awards. “It’s one of our key areas,” he says.
Debs Carter, marketing director for alcohol at SHS Drinks, notes that when it comes to alcohol sales, convenience stores were “once again the star performers last Christmas”.
She explains: “While off-trade total alcohol sales value was up by just 1.6%, convenience stores achieved growth of 5.1% - more than three times the market growth - bringing the value of Christmas alcohol sales through the convenience trading channel to £1.3bn and taking their share of festive alcohol sales to 30%, according to Nielsen data (12 weeks ending January 3, 2015).”
Another bit of good news for retailers is that consumer confidence is high this year, but suppliers note that while spending may be up shoppers still expect to get good value.
“At a time when customers may be willing to pay more, they expect a higher quality product for their hard-earned cash,” explains MD of Budge Brands and owner of Premier Estates Wine, Budge Dhariwal. He points to sparkling wines, such as prosecco, as a good example of a product that offers both good value, but also a touch of luxury.
Indeed, premium is one of the key trends at Christmas, particularly within alcohol. “We do have Christmas promotions on alcohol, but we are careful about prices; we focus on offering a more premium range than your average convenience store or supermarket because we don’t want to slash prices just to make a loss,” says Mehmet.
“We get a lot of top-up trade on alcohol, especially at Christmas. Planned purchases are done at the supermarket so we are for top-up purchases, which is why there is no point in reducing prices heavily.”
Julian Dyer, general manager UK/ Europe at Australian Vintage, says it’s also worth remembering that many people only really buy alcohol at Christmas, “so there is little point putting just your cheapest deals on your main promotional end. These customers want inspiration and are happy to spend a bit more to get it. There is no point over-discounting to a customer who won’t come back for another 12 months.”
Premium spirit options are certainly worth considering. According to Nielsen data, 39% of annual premium spirit sales are made in the 12 weeks leading up to Christmas (total impulse, week ending 3 January 2014).
Lucy Worrall, marketing manager for Warner’s Budgens, a chain of five stores in the Cotswolds, says the store finds it hard to sell spirits at Christmas because it’s hard to compete with the discounts offered by the big retailers.
“However, we do manage to sell well on gift packs and miniatures, so the gift market is an area we tend to focus on,” she says. “This year we have seen good sales on locally-produced gins. Cotswold Distillery gins are doing well and their branding is very strong.”
Mehmet also focuses on gifting and premium options within spirits in his Bethnal Green store. He says: “We rearrange the shelves and we bring whisky and premium options down from the top shelf,” he explains. “We have a second base on the shop floor on a wire rack where we can also highlight gifting options and premium spirits. We also did a tasting option on locally-made spirits last year to help engage shoppers.”
One supplier that is going big on gifting options this year is Pernod Ricard. Highlights from its gifting range for Christmas 2015 include seasonal presentation makeovers for The Glenlivet Founder’s Reserve, Chivas Regal and Jameson. It also has premium seasonal gifting offerings for Martell and Havana Club.
Natalie Briggs, business unit director for impulse and wholesale at Diageo GB, concurs that the opportunity for premium spirits is massive at Christmas. “It’s important for retailers to ensure that they have an extensive premium range, and also to ensure that they are highly visible within the store,” she explains.
Diageo predicts its Ciroc premium flavoured vodka drink will be a popular choice. “Our ultra-premium vodka brand Ciroc is up by 205% in the past year (Nielsen, off-trade, MAT to 15 August 2015).”
The Famous Grouse blended Scotch whisky, distributed by Maxxium UK, will also be hoping to cash in on demand for premium spirits. The firm recently relaunched The Black Grouse as The Famous Grouse Smoky Black, featuring premium packaging.
Another premium spirit launched in time for Christmas is Hi-Spirits’ Expresiones del Corazón, a range of tequilas aged in whiskey barrels from the Buffalo Trace Distillery, and the No.209 Gin Barrel Reserve range, aged in wine barrels.
The perfect pack size
Pack formats have a crucial role to play in enticing Christmas shoppers. Maxxium UK’s recently released Know Your Store guide advises retailers to “stock fractional sizes, especially for premium brands, to allow customers to choose a lower-priced option for more expensive spirits”.
Jonathan Dennys, Mast-Jägermeister UK customer marketing and insight controller, agrees that fractionals are vital to strong Christmas sales. Jaegermeister now comes in 2cl, 4cl, 20cl, 35cl and 70cl in the impulse channel.
Diageo GB’s Briggs also stresses the importance of stocking fractionals, claiming they are “the life blood of the impulse channel”. They are especially important when it comes to vodka, she claims. “Fractionals are key during the Christmas period, particularly in the vodka category as they contribute 53% of vodka growth, with 20cl driving over half of this increase.”
The firm also believes that the 20cl format will be a winner for Baileys this Christmas. “We are providing a new 20cl countertop unit to help retailers to tap into the 13% (Nielsen 13 September 2014) incremental sales opportunity through fractionals in convenience, with the smaller format decreasing the barriers to purchase,” she explains.
Another key trend this Christmas is the desire for consumers to seek out their favourite on-trade serves in the off-trade, according to Hi-Spirits. “The main thrust of our activity for the convenience sector is on our mainstream brands that will drive additional spirit sales for retailers,” says managing director Dan Bolton.
“Through various wholesalers, we’re offering promotional prices on brands including Antica Sambuca, Buffalo Trace Bourbon, and Fireball cinnamon liqueur during October and November.
“Popular serves include the Antica Sambuca Raspberry Spritzer, Monte Alban Mezcal with the iconic worm in the bottle, and Fireball chilled from the freezer can easily be replicated at home,” he says. “Hpnotiq, the distinctive blue liqueur which is often seen in celebrity photos in magazines and online, is also growing in popularity through convenience stores thanks to its party image.”
Dennys also points to the importance of the party season. “Products that lend themselves to the party season such as premium party spirits or speciality spirits including Jägermeister prove popular for celebratory occasions.” He states that 43% of the brand’s off-trade volume is sold through the festive period. Jägermeister Spice (70cl) is particularly suited to the festive period as it has vanilla and cinnamon notes.
The Big Night In occasion, where consumers look to replicate pub experiences at home, is expected to be even more popular this Christmas. Says Sourz marketing controller Janice McIntosh: “Young adult consumers will look to convenience stores as their go-to for their last-minute party supplies en route to house parties.”
She says prosecco or cava mixed with Sourz is a big hit at the moment, while the new flavour, Sourz Rainbow Ice, is also expected to be popular this Christmas. The brand has a wide range of POS material to help retailers create striking displays and has pricemarked packs for its 35cl and 70cl bottles of Sourz Apple.
Beer and cider
The approach of the party season also bodes well for beer and cider. The top 10 brands accounted for 62% of total beer and cider category sales in the 12 weeks of Christmas 2014 (Nielsen, 12 weeks to 3 January 2015). These brands are: Stella Artois, Foster’s; Carlsberg; Carling; Strongbow; Budweiser; Frosty Jacks; Kronenbourg 1664; Guinness; and Heineken.
Craig Clarkson, category & trade marketing director, off-trade at Heineken, stresses the importance of stocking best-sellers. “Poor brand choice is one of the top three deterrents to purchasing beer and cider in the convenience sector and more than one-third of shoppers will go elsewhere if the right product is not available,” he says.
Mehmet confirms that in his store sales of cases of beer go up, while craft beers also sell well over the festive period. “We try to sell craft beers in gifts packs or six or 12 beers as I can get a bigger margin on these. I also sell more lager in cases, with brands such as Stella, Budweiser and Beck’s usually on promotion.”
David Scott, director of brands and insight at Carlsberg UK, states that beer drives the greatest sales during the Christmas trading period, “with mainstream lager still being the largest segment in the beer category”.
Scott also notes that high levels of consumer confidence have led to an increase in spend per trip and frequency of beer and cider purchases in the off-trade.
He believes c-store retailers shouldn’t neglect World beers either, which he says should be “an important focus” for the convenience sector. He adds: “Consumer interest in food and drink pairing is at an all-time high, particularly with beer,” he says. “Try Spain’s number one beer, Mahou, or the number one world beer in the off-trade, San Miguel, for an ideal match.”
Pack sizes need some consideration, too. Last year the trend in beer was for top-up missions, according to Heineken.
“Some 80% of cider and beer sales in convenience last Christmas came from smaller packs (single bottles, two-, three- or four-packs), when consumers were topping up on the way home or en route to visit friends,” explains Clarkson.
Single bottles of Magners Original (4.5% ABV) were certainly a big hit last year. “The best-selling pack type during this season is the single glass bottle, which witnessed a 3% value increase over the Christmas 2014 period (Nielsen),” says C&C Brands customer marketing controller Angela Ham.
Sharing bottles also have an important role to play over Christmas, notes SHS Drinks.
“Consumers socialise more at this time of the year,” says Carter, which has Merrydown Cider in its portfolio. “That’s when sharing packs such as 750ml Merrydown Vintage bottles assume an even greater importance in the merchandising mix, and why Merrydown tends to sell so well during the festive season.”
Last year total sales for the brand through impulse stores increased by 4% in volume and 9% in value between October and December.
Flavoured cider is a sector which has been particularly strong in the convenience sector, with value up 16.7% in the past 12 months (IRI, August 2015 vs 2014).
“As a result retailers should ensure they offer a range of different fruit cider brands to ensure they meet consumer demand,” says Brothers joint MD Matthew Showering. The firm recently extended its range of fruit ciders with a Coconut & Lime variant, to tap into continued demand for premium fruit ciders.
Brothers Cider says it will be supporting multi-buy deals across the sector with selected retailers in the run up to Christmas.
For some stores, a focus on heritage and premium options may be the way to boost cider profits.
“As we approach Christmas the ‘treat mentality’ kicks in, prompting soaring sales of premium lines for cider-makers,” explains C&C Brands’ Angela Ham. The company recently added the 8.2% ABV Somerset Vintage to its premium craft range, Chaplin & Cork.
And traditional cider producer Thatchers Cider recommends that at Christmas stores stock some of its fuller and richer styles of cider, such as the 7.4% Thatchers Vintage and the medium dry Katy.
“This year we also released two of our premium ciders in cans - Thatchers Somerset Haze and Thatchers Old Rascal - alongside Thatchers Gold,” says MD Martin Thatcher. “Cans really help reach new shoppers, and in particular those younger demographic shoppers looking for an introduction to premium ciders.”
Westons notes that its premium ciders also provide a big opportunity for the colder months “when consumers are looking for ciders with a more robust flavour,” explains Geoff Bradman, head of sales. “For example, Henry Westons Vintage is the UK’s number one traditional premium cider in the off-trade. Our Old Rosie premium cloudy cider brand is also a must-stock for Christmas, with the brand growing by more than 50% year on year within the total off-trade.”
Heineken has also been investing in premium cloudy ciders; earlier this year it launched Strongbow Cloudy Apple into the off-trade.
The hot cider category is also set to get hotter. “One of the big things we have found at Christmas is a local mulled cider from one of our cider suppliers,” explains Lucy at Warner’s Budgens. “It sells well and we give samples, plus it smells nice around the store.”
Mehmet says he is also considering offering his customers “a welcome in from the cold” by putting on a hot cider.
SHS Drinks will be promoting ‘Mulled Merrydown’ this year as a contemporary alternative serving suggestion to mulled wine, while Brothers Cider will be promoting its Brothers Hot Toddy, which comprises a warm 250ml of Brothers Toffee Apple Cider, blended with a 25ml shot of Spiced Rum.
Says Showering: “Winter-orientated NPD is helping to bolster ‘off peak’ usage for cider, so mulled or warm ciders such as Brothers Hot Toffee Toddy are growing in popularity.”
Swedish cider brand Rekorderlig also plans to bring back its popular Winter Cider this year, supported by POS, digital and social media activity. Suitable for warming, the product is made from a blend of apples infused with vanilla and cinnamon.
Customer marketing director Linsey Adams says: “Rekorderlig is the pioneer of Winter Cider, innovating and de-seasonalising the category with the introduction of the brand’s winter variant six years ago. The SKU has gone from strength to strength during this time.”
Kopparberg also has a Spiced Apple variant, which can be served either hot or cold.
Another producer with high hopes for its hot variant is Westons, which launched Henry Westons Mulled Cider last year. “We know sales will be strong and the pre-season forecasts are already ahead of last year’s sales,” explains head of sales Geoff Bradman. “The bag-in-box format will keep for six weeks once opened, so single serves can be poured without consumer concern for waste.”
There is, of course, always plenty of demand for mulled wine at this time of year. Continental Wine & Food (CWF) recommends retailers consider its Winter Warmer Mulled Wine and Harvest Fruits Mulled Wine for the winter season. The drinks are ready to warm and pour, and no added ingredients are necessary.
It’s not just mulled wine that benefits from increased demand come the colder weather. Mehmet says he sees a general uplift in wine sales over Christmas, particularly for red and premium options. He uses clever merchandising to encourage gift purchases, such as placing gift bags and tags around the wine section to make buying easier and tempt shoppers.
Barefoot Wine channel director UK impulse and on trade David Mallory notes that in the run up to Christmas shoppers predominantly purchase wine when looking for a gift or for immediate consumption, so wine sales through convenience stores tend to increase.
Barefoot Wine, which recently introduced 187ml glass bottles of its top selling varietals to tap into the growth of this single-serve format, is confident of a good performance for its wine collection this season.
Budge Brands’ Dhariwal predicts rosé wines and Chardonnay, particularly those from the New World wine regions, will do well over Christmas.
“Rosé sales have seen a 35% rise year on year across the industry, and they should continue to do well through Christmas,” Dhariwal says. “Our sales also indicate a growing trend for a good bottle of Chardonnay, which appears to be making a concerted and strong comeback.”
CWF marketing manager Amy Ledger adds that the increased consumer confidence in the past year has led to more experimentation.
“There are very few bottles of wine available for less than £5, as a result consumers are more willing to try something different within their price range, and this is especially true around Christmas.”
She also notes that Sauvignon Blanc continues to steal volume from Pinot Grigio, not only with wine from New Zealand but also from Italy and France. “Fruli and the Veneto in Italy both produce very fresh and crisp examples of this increasingly popular variety,” she says.
Naturally, it is the richer varieties of wine that tend to appeal more over winter. Greg Wilkins, managing director at Brand Phoenix, says products such as its South African First Cape Limited Release Sauvignon Blanc and Cabernet Sauvignon are “perfectly placed to meet the needs of consumers through the winter season and therefore retailers can maximise their sales by ensuring their range reflects this”.
He also notes that consumers are willing to pay more for wines that they recognise and trust, therefore the branded wine section will perform strongly over the Christmas period.
Wine for all occasions
Australian Vintage’s Dyer points out that modern consumers are not always looking for complexity in wines. “They want accessible, well-made wines that suit many occasions and food styles. This is one of the reasons behind the success of our McGuigan Black Label range of wines, which we sell in the convenience sector.”
The firm’s festive activity includes a collarette campaign, with recipes from celebrity chef John Torode matching each individual wine. The producer is also running a cinema and radio advertising campaign to engage with consumers and raise awareness of the McGuigan wine brand.
Over on the sparkling side of the market, the star performer over the past year has been prosecco, and sales of this Italian wine continue to grow, drawing more consumers into the category.
Dennis Guler, manager at Simply Fresh in Bethnal Green, London, says prosecco sales have been exceptional throughout the year. “We now have 12 different types of prosecco and have squeezed eight of these into the chiller cabinets. Sales are particularly good around special occasions, such as Easter. We expect sales to be good this Christmas.”
Dhariwal says retailers need to make sure they are stocked up with sparkling wines. “Value sales are growing 14.8% and volume sales were up 5.1% last Christmas, driven by prosecco (Kantar Worldpanel),” he says. “Retailers need to make it easy for consumers to obtain the decadence that most will crave during December with good supplies of sparkling wines readily available,” he adds.
Budge Brands plans to launch a 20cl bottle of its award-winning prosecco this month. “We’re certain that this dainty miniature bottle will be a big hit with consumers over the festive period,” he explains.
Dhariwal notes that demand for its Premier Estates Wine’s prosecco increased dramatically following the drink’s bronze medal win at this year’s International Wine Challenge, with sales up by 380% over the past six months.
The company expects further increases in demand over Christmas and consequently will be opening a new 73,000sq ft distribution centre in time for the festive season. “This will enable us to have excess stock close at hand, for what we envisage will be a better festive period for retailers with demand for prosecco potentially reaching record levels,” he says.
To tap into the popularity of prosecco, CWF recently added a rosé variant - Rosé Cuvee Brut - to its Casa Gheller Prosecco range, along with Casa Gheller Treviso Spumante, while producer Australian Vintage released its own version earlier this year, which it hopes will be a popular option for Christmas. The sparkling Semillon, called McGuigan Frizzante (rrp £7.99), claims to have a similar alcohol and sugar level to prosecco.
Pernod Ricard will be hoping demand for Champagne will not lose any fizz this Christmas and has a range of gift boxes for its bubbly range, including for Mumm Cordon Rouge and Perrier Jouet.
Be it those on a gifting mission, young partygoers, or those looking to stock up ahead of a festive family get-together, make sure that you have something to offer everyone this Christmas. A strong selection of best-sellers and premium products, a range of pack sizes combined with a few unusual flavours to add interest, and your Christmas alcohol will be flying off the shelves faster than Santa on a turbo sleigh.
Merchandising tips for the festive season
Managing director of Budge Brands and owner of Premier Estates Wine, Budge Dhariwal, says the first thing retailers should do is get out the Christmas decorations.
“Bring as much Christmas spirit into the store as possible to create the right shopping environment. The feel-good factor of Christmas has a way of putting people into just the right mood to shop.”
C&C Brands customer marketing controller Angela Ham agrees: “Creativity with merchandising and decorations can go a long way towards creating that festive feel.”
Taking products outside of their usual display space can also help to make an impact on Christmas shoppers, Warner’s Budgens marketing manager Lucy Worrall says. The group merchandises its alcohol around its stores to maximise sales. “We have wine and beer off-shelf throughout the store at Christmas. We also have tonics and mixers near to the alcohol area.”
David Mallory, channel director at E&J Gallo, agrees that placing complementary products alongside each other can work well. “Display wines and spirits that are ideally suited to the festive season out of section and alongside other products, such as mixers or snack foods,” he adds.
He recommends that retailers keep their in-store chilled sections well stocked with white and rosé wines.
WKD predicts strong RTD sales this Christmas
If last year’s success is anything to go by, ready to drinks (RTDs) look set for a sparkling performance again this season.
Debs Carter, marketing director for alcohol at SHS Drinks, believes c-stores are well placed to benefit. “The RTD market returned to growth in the impulse sector last Christmas with sales up by £200,000 and that growth was driven by independent impulse retailers rather than multiple impulse stores.
“The convenience and impulse sectors really do come into their own over the festive season and last Christmas they accounted for well over a third (36%) of the £57m-worth of take-home RTD sales during the Christmas period, while multiple grocers saw their RTD sales fall by -4%.”
She notes that WKD Blue and WKD Iron Brew 275ml four-packs were the star performers in the WKD portfolio last Christmas.
WKD has a big festive marketing spend. This year it is revealing ‘Ladvent’ calendars and festive-themed headwear as part of its Xmas Rules campaign. It will also be posting content for its 282,000 social media fans.
What’s hot in spirit beers
Christmas party-goers will have plenty of exciting new spirit beers to sample this year.
Heineken created the UK’s first tequila-flavoured beer with guarana and cachaça in April. The introduction of the 5.8% ABV Desperados Red was supported by a multi-million pound marketing spend including POS and in-store activity.
This was closely followed by the launch of Foster’s Rocks, a flavoured lager range available in Spiced Rum and Classic Rum variants.
“Foster’s Rocks taps into the growing consumer interest in new and exotic flavours, as well as the trend for flavoured lager,” says Ifeoma Dozie, beer brand director at Heineken.
The products are targeted at 18- to 24-year-olds and are available in 440ml cans in packs of four (rrp £4.50) and 10 (rrp £11). Says off-trade managing director Martin Porter: “We lead the market with spirit-flavoured beer, and with Foster’s Rocks we anticipate expanding this category with a beer consumers want to be seen with.”
The producer also has a cider and spirit brand called Blind Pig, in bourbon & blueberry, whisky, honey & apple, and rum & poached pear variants.
Pre-mixed classic combinations ready for success
Pre-mixed drinks are likely to be strong sellers through impulse channels this season, as they can work well for casual get-togethers and parties.
Diageo business unit director for impulse and wholesale Natalie Briggs says that classic combinations are proving popular. The firm has a range of Smirnoff mixer cans, including Smirnoff with Cola or Cranberry, as well as Moscow Mule. Other classic combinations offered by Diageo include: Gordon’s Gin & Tonic (250ml) and Pimm’s & Lemonade, or Captain Morgan & Cola.
Pernod Ricard recently added to its Malibu pre-mixed range with a Diet Cola flavour.
Also new to the pre-mixed category this year is a new variant from Bacardi Brown-Forman Brands. The company added a Jack Daniel’s Tennessee Honey & Lemonade variant to join its existing Jack Daniel’s & Cola and Jack Daniel’s & Ginger.