A combination of the burgeoning Ready To Serve market and thirst for conveniently-sized bottles are driving forward the category, says Robin Mannering
Spirits are high in the convenience channel, with c-stores a primary recipient of spontaneous shopping trips, especially among young people. Growth of the spirits category in impulse is outperforming total off-trade growth, with volume sales up 1.9% against total decrease of 1.3% (Nielsen). Premium brands, flavoured products, small pack sizes and innovation are the main reasons for this success, while pre-mix is the fastest growing segment (up 51% in value and 52% in volume, Nielsen).
Diageo GB says premium spirits is growing at 5% across the off trade. Premium vodka is growing at 8.4%, while premium gin and blended Scotch are also seeing growth in the convenience channel at 7.6% and 13% respectively. Spiced Rum is also on an upward trend, driven by Sailor Jerry (up 48%, according to First Drinks). Warwickshire retailer Jimmy Dhaliwal says: “For some reason there’s been a big increase in golden rum, especially Sailor Jerry and Bacardi Oakheart. Maybe it’s down to advertising.”
Roz Nash, senior category development manager convenience at Diageo GB, says the growth in premium brands is also ahead of non-premium brands and “shows that consumers are still choosing to ‘drink better’ and treat themselves to premium products when it comes to alcohol.
“To tap into this trend, retailers should ensure they are providing a range of premium spirits to capitalise on opportunities to up-sell brands to their customers.”
Chris Ellis, channel director for off-trade spirits, Pernod Ricard UK, says two-thirds of spirits consumers are drinking premium, and almost half of premium spirits are consumed on everyday occasions rather than just special occasions (Pernod Ricard UK research). “Retailers should therefore place a strong emphasis on premium brands and ensure that they stock a premium option across all major spirit categories to encourage shoppers to trade up from standard spirits and tap into this profit opportunity.”
“Whatever’s on promotion sells at the moment - there isn’t much brand loyalty where we are. We’ll run with Spar offers, and when the three weeks is up people will move on to the next offer. I couldn’t say that whisky is out-performing vodka. Having said that, RTDs are very up and coming, especially in cans. Gin & Tonic and Jack Daniels & Coke are selling really well, while vodka and cranberry seems to be very trendy.”
Heather Stothard, Spar Maltby, Rotherham
Recent research from Diageo GB found that 93% of shopping trips in convenience are for ‘something for tonight’, as opposed to a routine shop. “It is therefore imperative that retailers bear this in mind when selecting the right range to stock, as well as how to merchandise it in store, to make the most of each shopper entering their store.”
One factor to consider is pack size - specifically 35cl bottles. Says Nash: “Research (Nielsen) shows that 35cl is growing seven times faster than the average for spirits in convenience. This is because it is ideally suited to ‘something for tonight’ occasions and can be purchased more impulsively than a 70cl or litre-size bottle.”
Smaller bottles are also more relevant for budget-conscious shoppers and offer convenience stores a point of difference from supermarkets, she adds.
Ellis points out that Pernod Ricard’s 35cl sales have increased by 35% year on year, while its own research shows that 37% of shoppers would try premium spirits if a smaller format was available. It says that as a result it has expanded its portfolio of 35cl spirits by 60%, with seven of its premium spirits now available in the smaller format: Beefeater, The Glenlivet, Absolut, Jameson, Malibu, Chivas Regal and Martell.
E&J Gallo, meanwhile, has launched 35cl bottles of E&J Brandy, joining the existing 70cl and 20cl sizes.
First Drinks is also working on fractional bottles in the convenience sector, for tax reasons. First Drinks business unit director John Moore says: “We’re focusing on 50cl bottles because the duty escalator has made the price of a litre bottle unattractive to consumers in the channel.”
Its 50cl portfolio includes Grant’s Family Reserve, Green Mark vodka and Three Barrels brandy.
Flavour and innovation
The best performing products in terms of volume growth are those with flavour and innovation, says Maxxium UK off trade sales director Mark Riley, as consumers are looking for new tastes and to increase their drinking repertoires, influenced by cocktail culture. “Just look at what flavour has done in categories like cider, and the same is happening in spirits,” he adds.
Non-cream liqueurs and flavoured vodkas are up 19% and 15% respectively year on year across the off-trade (Nielsen), while the latter is growing even faster in the convenience channel, at 25%. Smirnoff Green Apple, Smirnoff Lime and Smirnoff Blueberry are the top three flavoured vodkas in convenience (Nielsen), while among non-cream liqueurs in impulse, Sourz is the number one brand by volume. Says Riley: “We are seeing growth through flavour innovation across white and brown spirits brands, such as Stolichnaya Sourz and also Jim Beam with Red Stag and our latest launch, Jim Beam Honey.” Italian brands Disaronno and Tia Maria are also driving the non-cream liqueurs category, says First Drinks
“Spirits have always sold well here, but at the moment sales of RTDs and liqueurs and tequilas have really picked up. There’s also a demand for real high-end liqueurs and vodkas, and people are experimenting a lot. Maybe it’s down to advertising and celebrity endorsements.
“For some reason there’s also been a big increase in golden rum, especially Sailor Jerry and Bacardi Oakheart. With summer coming up the festival season will drive growth. Sponsors of festivals often dictate what alcohol sells well. But I think the health trend is also driving the category forward, as people perceive spirits to be less bloating than beer and wine.”
Jimmy Dhaliwal, Thorougoods, Atherstone, Warwickshire
Jim Beam Honey is made with four-year-old bourbon whiskey, slowly infused with natural honey. Maxxium UK says it can be served on its own, chilled or mixed in long serves.
Pernod Ricard is responding to the demand for DIY long drinks with the release of the latest version of its Drinkspiration app that offers more than 3,000 inspiring cocktail ideas, as well as a premium drinks guide on the web, www.thepremiumselection.co.uk, that aims to inspire consumers to make refreshing long mixed drinks this summer. It is also continuing to invest in its Flavour range, which has been driven by the success of Absolut Mango and Raspberri.
Elsewhere in vodka, First Drinks has recently launched Green Mark, the biggest selling vodka in Russia, which will be backed with “substantial investment”.
Meanwhile, Diageo urges retailers to consider store layout in order to overcome barriers to purchase. “Physical and psychological barriers remain an issue for many shoppers, such as displaying spirits behind the counter,” says Nash. Diageo trials have shown that removing spirits from behind the counter and giving them two metres of shelf space on the main shop floor can deliver up to 38% category growth. In addition, displaying the right range and layout can increase total spirits sales by up to 18%. Pricemarked packs also address those barriers, with 86% of consumers saying they would trust the price on a pricemarked pack over the price on the shelf (HIM, Diageo Shopper Understanding Research 2011).
“Pricemarked packs work particularly well in the convenience channel because they not only make consumers feel that they are getting value, they improve the price image of a store in the eye of the shopper,” says Nash.
Pre-mix is the fastest growing category in beers, wines and spirits, as premium pre-mixed products such as Gin & Tonic cans - known in the industry as ready to serve drinks (RTS) - exert their grip on the market. Indeed, RTS cans are now worth £51.3m, up 30% compared with last year. Retailers contacted by C-Store testified to the surge in popularity for such products, regardless of consumers’ overall spending habits. Spar retailer Heather Stothard, who operates within difficult economic conditions near Rotherham, says her customers eschew their tendency to buy value alcohol when it comes to pre-mix. “RTS drinks are very up and coming, especially in cans. Gin & Tonic and Jack Daniels & Coke are selling really well,” she says.
Last year Diageo added five new RTS variants - Smirnoff & Diet Cola, Archers & Lemonade, Bell’s & Ginger Ale, Smirnoff Lime & Cola and Gordon’s & Bitter Lemon. This summer Diageo is including its RTS cans of Gordon’s and Pimm’s in its ‘Celebratory British Summer’ campaign, which aims to tap into consumers’ feelings of patriotism and excitement around events such as the Queen’s Diamond Jubilee. As part of the campaign, a series of limited-edition cans will feature iconic Union Flag designs.
“As we are in a neighbourhood environment with a large elderly population, flavoured spirits and pre-mixes aren’t growth drivers. Instead, own brand Spar spirits dominate sales across the spirits category, reflecting the current economic situation. While shoppers remains very much brand loyal when it comes to beer and to an extent wine, customers tend to seek value in spirits due to their high value.
“Smirnoff, Bell’s and Captain Morgan rum were the branded spirits which entered the top 20 sales for the week. Promotion of branded spirits really drives sales, as would be expected.”
Paul Hudson, Spar Seasalter, Kent
Meanwhile, Malibu is building on the success of last year’s launch of its pouches and cans with its latest RTS can - Malibu & Cloudy Lemonade. In the first six months since launch, Malibu cocktail pouches have added more than £1m category value sales (Nielsen) and attracted new shoppers to the spirits category, with 18.5% of pouches shoppers new to spirits, according to Pernod Ricard. Malibu research also shows that 77% of purchases of its pre-mix cans (including Malibu & Cola and Malibu & Cranberry) are from new shoppers and are unplanned.
Maxxium’s Riley says the category is fuelled by innovation and it is therefore essential for retailers to carry the best range possible to maximise sales. “The category needs to be easily accessible to customers and served chilled from the fridge as the majority of convenience consumers will be buying the product for consumption within a few hours of purchase,” he adds.
Maxxium UK recently introduced Sourz Fusionz, following last year’s launch of Sourz Raspberry. Sourz Fusionz is backed by a £10m advertising and promotional campaign.
While a large part of NPD is focused around RTS drinks, established RTDs are also innovating, with VK and WKD leading the way. “Innovation has always been critical,” says Debs Carter, marketing director for Beverage Brands. “WKD purple is fifth biggest in impulse in RTD, from a standing start last year.” With all the innovation occurring in the market, retailers need to keep abreast of the changes and keep on top of the category, she adds.
Carter says the majority of growth is coming from cans, which is why WKD has expanded its offering in the burgeoning sub-category with the launch of WKD Remix. Packaged in 250ml cans and with a 5% abv, WKD Remix is available in two flavour variants - Citrus Cut and Apple Cut. It follows the recent launch of the Joe’s Cocktail range, which is aimed at 30- to 44-year-old ABC females.
WKD is also reaching out to digitally savvy 18- to 30-year-olds with its Bring It On! campaign, which uses augmented reality advertising. Using new smartphone technology, consumers can view hidden interactive content by pointing their phones at a printed image. The technology is activated via a free app. Beverage Brands, which distributes WKD, says nearly nine out of 10 WKD consumers own a smartphone and that this latest media development would “appeal to their instant gratification” approach to life.
Traditional RTDs remain hugely valuable, with growth of 7% (Nielsen), says Global Brands marketing director Simon Green. He attributes this to the rise of the Big Night In, with more than half of all young consumers drinking at home for a special occasion.
VK mixed packs are experiencing growth of 35% as the brand continues to innovate. “Flavours are driving consumer interest in the category, and VK offers the largest choice of fruit flavours, including the newest addition, mixed berry flavoured VK Cheeky,” says Green.
Global Brands recently launched the ‘What’s Your Flavour?’ campaign, inviting the public to choose the next VK flavour. Ideas were entered via VK’s Facebook fan page, ranging from strawberry to black coffee flavour. The top three are now being trialled. •
Wine joins the RTS party
Accolade Wines has jumped on the RTS bandwagon with four new offerings from the Hardys, Banrock Station and Stone’s brand stables. The company is looking to capitalise on the potential for wine cocktails in the off-trade, and believes the market for wine-based RTS drinks could be one-third the size of the spirits RTS market. It bases its predictions on the fact that 2.7% of drinks in on trade are wine cocktail and spritzers (WineNation research).
As such, Hardys has developed two RTS wine cocktails based on the classic bellini: Sparking White Peach Bellini and the Sparkling Strawberry Bellini, both in 250ml cans at 5.5% abv. Banrock Station has rolled out Banrock Infusions, a pre-mixed blend of sparkling wine with added flavours of summer berries (also 250ml, 5.5% abv), and Stone’s has developed a limited-edition Ginger Punch, a blend of Stone’s Ginger Wine with lime and lemonade (250ml can, 5.4% abv).
The four new variants build on last year’s launch of Echo Falls Spritz in a can, which is a blend of fine wine and sparkling water.
Accolade Wines European marketing director Clare Griffiths says: “With the launch of these new RTS cans from some of our most recognisable brands, we are spearheading the creation of a new category which will open up to new consumers, with new occasions. The cans offer a level of convenience that currently hasn’t existed with recognisable brands.”
The Sparking Collection will be supported through print, social media and in-store displays to drive interest throughout the summer.
ONES TO WATCH
Diageo Reserve Brands has made two new additions to the Johnnie Walker range, out this month. New Johnnie Walker Platinum Label and Johnnie Walker Gold Label Reserve aim to tap into the growing trend of trading up to premium whisky blends. Both brands have been available in Asia for some time.
rrp: Platinum Label, £69.99 Gold Label Reserve £39.99, both 70cl
tel: 0845 7515101
Hive of activity
Maxxium UK has introduced the UK’s first honey-infused bourbon, designed to widen its appeal. The introduction of Jim Beam Honey follows the launch in April last year of Red Stag by Jim Beam, the first cherry-infused bourbon. Jim Beam Honey is made with four-year-old Jim Beam bourbon whiskey. It has an abv of 35%.
tel: 01786 430 50
Get into the groove
Diageo GB has created an exclusive Smirnoff limited-edition pack offering the chance to win VIP passes to Madonna’s 2012 world tour, MDNA. Some 245,000 glossy red packs are available to the trade, each featuring a unique code. Once entered into a dedicated Facebook page, the code unlocks a host of exclusive content to experience Madonna’s world.
tel: 0845 7515101
Mix and match
Maxxium UK is launching an initiative to promote the mixability of cognac. ‘Courvoisier Cocktails on a Grand Scale’ is part of a £15m investment which aims to challenge the conventions of cognac drinking, pioneering cognac as a mixable spirit. The campaign promotes four signature serves and includes a competition to win trips to the world’s most exotic locations.
tel: 01786 430500