The spirits category is a big cash- margin provider, not least because of its cross-merchandising opportunities. Here’s how to maximise sales
In this society of time-poor consumers looking for a quick solution to their needs, the convenience sector comes into its own, and today this even extends to spirits.
“This is the age of the ultimate lazy person,” explains Sid Sidhu, of Sukhi’s Simply Fresh in Warwickshire. “To put a piece of lemon or lime in a vodka drink is too much like hard work. People want that lemon already squeezed in when they buy the drink.
“You didn’t have this range of flavoured vodkas a few years ago. There are so many now. We have two different toffee lines, pineapple, red berry, mango and even a marshmallow flavour. These sweet flavours do tend to be more popular with females, but I’ve tried them and they are really lovely!”
Adam Boita, head of marketing at Pernod Ricard UK, says a spirits range isn’t complete without a selection of flavoured vodkas.
“A massive trend is the consumer interest in citrus cocktails. We know that more than 82% of consumers regularly drink citrus cocktails (CGA Mixed Drinks Report April 2016), which is why we launched Absolut Lime. With lime drinks showing strong traction with drinkers, Absolut Lime has been developed in response to evolving consumer demand for a fresh-tasting, flavoured vodka.
Bonita points out that the vodka market has evolved and there are three key indicators operators should bear in mind in the vodka category. He explains: “First, its quality. Vodka is currently categorised as standard, premium and super premium. Absolut is a great option for operators looking for a premium upsell. Second, vodka can either be classed as ‘new’ or ‘old world’. As a rule, new world vodkas are more neutral, whereas old world vodkas are more sophisticated with a textured feel in the mouth.
“Finally, a range wouldn’t be complete without a selection of flavoured vodkas to create a plethora of interesting cocktails for all types of occasion.”
Paresh Vyas, of JND Stores, in Droylsden, Manchester, says the premium bottles such as Cîroc only really sell as gifts at his store. He says: “The more expensive lines such as the Cîroc are important to have for special occasions. They are very trendy and look good on the shelf. I stock three lines and the apple flavour is the best seller.”
Sid carries several bottles retailing at between £100 and £200, which usually sell as gifts. He says having them increases the perception that his store is a destination for alcohol.
Gifting is an important occasion to cater for in the spirits category. According to HIM Research & Consulting, 55% of consumers say they buy spirits as a gift (spirits category focus 2016).
For Paresh, his spirits category is generally promotion driven. “I would say my customers are very price conscious. We sell a lot of pricemarked packs and put our spirits on offer regularly. At the moment we are selling our Gordon’s Gin, Captain Morgan and Smirnoff vodka on offer at £6.99, whereas it’s usually pricemarked at £7.99. I am also giving free own-brand mixers with the litre bottles of these brands. These all sell really well when on these promotions.
Valerie Aston, of Proudfoots Newby Store, in Scarborough, agrees that pricemarked packs and promotions are important to shoppers of this category. “I have seen growth in 35cl and 20cl bottle sales with 1ltr sales growing, but they are promotional driven. Suppliers now seem to be launching more pricemarked packs to guarantee value to the end user.”
The other benefit of this time-poor society is the increase in sales of mixer cans. RTD cans are showing continual growth and popularity in the category (+14%, Nielsen, Grocery Multiples, MAT to 31 December 2016) currently outperforming total RTD bottle sales (-12%).
Tips to increase spirits sales
Valerie Ashton of Proudfoots Newby Store in Scarborough has this advice for retailers:
A wall bay location is best suited for the spirits category
Allocate at least one full bay to enable clear identification of the section
Block products vertically
Locate this section late in the traffic flow, close to till point
Stock a focused range of spirits and liqueurs
Position de luxe/exclusive lines on the top shelf, premium brands at eye level and price-fighting/own label on lower shelves.
Allow for promotional space at eye level
Keep the fixture full and bottles dusted regularly.
Ready to go
Sid says his freestanding fridge full of pre-mixed cans is big business. “This is a huge area of growth. In a nation of cash-rich and time-poor consumers (certainly that’s the case in my area) people don’t want to buy two bottles and mix them at home, they would rather spend a lot more and buy it ready mixed in a can.”
Sid adds that his best-seller by far is the slimline gin and tonic mixer in a can. “We sell about five cases a week and there’s 12 in a case. In the summer, especially at the weekends, we might even sell a couple of cases in a day!”
According to Sid, people are also happy to be inspired and to spend more in order to improve the drinking experience.
He says: “People come into the store looking for inspiration and aren’t just looking for something that will get them drunk. These days they want the drink to form a large part of the experience of the evening. They want something interesting and enjoyable to drink which will add something special to the night.”
Val agrees that there is a new generation of shoppers who want far more from their alcohol than they used to, and she has particularly noticed an increased interest in premium brands within the gin category.
She adds: “Our biggest success in this category continues to be in gin, with our local Yorkshire gin Masons performing well alongside the other popular brands such as Sipsmith. I think the change is being driven by millennials who like niche brands, provenance and an interesting story.”
Sid has a very wide and impressively merchandised range of spirits, which is all back lit. Sid’s aim has always been to become a destination store for alcohol and he has achieved this by making the category enjoyable to browse. One of the most important aspects has been taking spirits out from behind the counter and on to the shop floor, which sent sales soaring 19% – about £500 a week.
He acknowledges this course of action can lead to an increase risk of theft, but the extra sales usually offset the losses from shoplifting.
“We had three bottles stolen last week which would have had a value of about £60 altogether, but in turn I’m netting an extra £500 a week on the category.”
To prevent theft Sid has upped the security in that section. “We have two cameras facing that aisle, which is a big deterrent, and it means we know exactly who has stolen those bottles in the past.”
Alongside extra sales, Sid reports that bringing the bottles out from behind the counter allows people to spend time looking at all the products and making a decision at a leisurely pace, “unlike when it’s behind the counter and they have to make a real knee-jerk decision”.
Paresh agrees that bringing spirits out from behind the counter is a great idea and not as risky as people think. “I brought my spirits out from behind the counter just after Christmas this year and the sales went up straight away. At first we put the security locks on the lids, but we decided these weren’t necessary and they were taking too long to put on and take off. We haven’t had any stolen so far.”
2. Gordon’s gin
3. Jack Daniel’s
5. Bacardi white rum
6. Glen’s vodka
7. Bombay Sapphire gin
8. Malibu rum
9. Absolut vodka
10. Captain Morgan spiced rum
Source: HIM spirits category focus 2016
The other great business benefit of getting the spirits category noticed is its cross-category merchandising opportunities.
Sid says: “There’s a lot of opportunity for increasing basket spend within this category. Whether it’s from mixers, ice, garnishes, snacks, boxes of chocolates or even medicine for headaches! I have a great stand which has bottles of Coke and Diet Coke and Red Bull, lemons and limes, and packets of Nurofen. The Nurofen is £3.50 so it’s a nice little basket addition, and it’s a thoughtful bit of merchandising that consumers appreciate.”
Another simple but effective method to increase basket spend is bottle holders, traditionally used for wine but just as effective for spirits. Sid’s store provides boxes for six or four bottles, and people are much more likely to pick up a box for four and then fill it up.
“It’s surprising how many people will purposefully buy more just to fill it as it’s much easier to carry when its full,” Sid reveals.
He also encourages cross-category spend with signage throughout the category with messages such as ‘Don’t forget your bag of ice for £1’.
Sid adds: “Spirits is a huge cash margin provider and consumers are conducive to buying spirits in a c-store setting so it’s important to me to have both the breadth and depth of the range as well as the theatre around the category.
“C-store retailers need to make sure they are doing their best to make us a genuine alternative to the multiples for the spirits buying mission.”
Absolut goes over the rainbow
Absolut, the UK’s number one premium vodka brand (Nielsen 25 March 2017, Total Coverage, Value Sales), has unveiled a limited-edition bottle to support the LGBTQ community and drive sales this summer.
The new rainbow design is the brand’s third bottle to support the LGBTQ community, with this year’s interpretation of the flag at the centre of a high-impact, multimillion-pound media campaign.
The bottle, which includes a ‘Taking pride in diversity’ statement on the back, contains Absolut Original.
Adam Boita, head of marketing at Pernod Ricard UK, said: “It’s going to be an exciting few months for Absolut, with this limited-edition bottle marking the start of an ambitious multimillion-pound marketing campaign for us. Absolut’s bold creativity and historical championing of the LGBTQ community has always been its point of difference, and with this year being the 50th anniversary of the decriminalisation of homosexuality in England and Wales, we’re proud to promote diversity once again.
“Our iconic bottle, clad in a Rainbow design, is sure to grab the attention of shoppers due to its high visibility on shelf versus the rest of the category. We strongly recommend stocking this product ahead of our heavy-weight consumer activity to maximise the sales opportunity.”
Premium vodka continues to drive growth within the category and Absolut has increased its distribution by +2% and growing by just under £2m year on year (Nielsen 25 March 2017, Total Impulse, Value Sales).
The brand is continuing to increase category value by encouraging shoppers to trade up into Absolut from standard vodka, with these purchases equating to 36% of sales, highlighting the importance of stocking premium SKUs.
The new limited-edition bottle will be available from July in 6x70cl cases. In-store POS is available on request.