To help retailers cut through the clutter, Convenience Store is joining forces with leading manufacturers in a year-long campaign to help you get the best from your alcohol offer. We're calling 2010 our Year of Good Cheer because it is all about gaining the positives from the many opportunities available in a post-recession, World Cup year.
We begin our activity with a guide to the fast-growing pre-mixed spirits category, presented to you in partnership with Diageo.
Pre-mixed spirits are 'perfect serve' versions of consumers' favourite spirits and mixers, sold in a can format. And as well as benefiting from a convenient format and the marketing clout of major brands, the category is also being boosted by manufacturers working very hard to position the products within their own drinking 'occasion'. This opportunity is based around the transition that consumers make from work to home, from activity to relaxation.
But while products such as pre-mixed gin and tonic have been on the market in various formats for some time, the category is now in a completely different mode, with an off trade retail sales value of £30m and a current growth rate of 39%.
According to Steve Hamilton, innovation and nurture director at Diageo GB, the major difference is choice.
"Lots of major spirits brands, with lots of different mixers, are now being offered to consumers," he says. "Manufacturers are investing in this category, and really positioning the drinking occasion in an in-home setting for the first time.
"In addition, until recently suppliers have not been able to place products as a range in-store before. But with more products available, it means we can promote a range together, with multibuys and such like."
Hamilton continues: "Among consumers who want to drink spirits, there are barriers to purchasing them. Consumers ask themselves: 'Have I got a bottle at home? Is it chilled? Have I got the right mixer? What are the right proportions to use?' With these cans, it's easy."
The pre-mix category is entirely distinct and separate from RTD products such as Smirnoff Ice and WKD.
Whereas RTDs have a younger, slightly downmarket profile and are associated with energetic occasions, the pre-mix purchaser is typically 25-45 years old and reasonably affluent, and will consume the drinks at home in a relaxed, 'unwinding' context.
And as such, consumers shopping in c-stores on their way home from work are ideal targets, argues Hamilton.
"Research tells us that 60% of pre-mixes are consumed on the day of purchase, so this category is absolutely spot-on for convenience stores," he says.
A wide range of well-known spirits and mixer brands are already available such as Gordon's gin with Schweppes tonic, and Smirnoff vodka with Ocean Spray cranberry juice drink.
Diageo's range alone covers eight different combinations, and other major spirits brands such as Bacardi and Jack Daniel's are also available in convenient pre-mix variants.
When selecting a range, a good place to start is to pair the most popular spirits with the most popular mixers, such as vodka & cola, gin & tonic and rum & cola. If space permits, add in other spirits and mixers such as whiskey & cola and vodka & tonic, and allow for products with a strong seasonal bias such as Pimm's & lemonade.
As usual, the challenge is to appeal to the needs and tastes of as many customers as possible without creating repetition. It is also worth remembering that stocking as wide a range as you can allows you to run multibuys or to encourage customers to try new varieties while they are picking up their favourite line.
Wherever possible, pre-mix spirits should be sold chilled as most products are consumed on the same day as purchase. In tests, moving the range from ambient display to chilled created a 30% uplift in sales.
Diageo regularly visits 8,000 convenience stores and is able to help with merchandising and pos material. The company recommends that products from the range are sold at a single price point of £1.70, although some retailers and groups are choosing to charge at above this level.
New products are being added at a good rate, but Diageo is particularly excited by the launch of Smirnoff vodka & cola. "Vodka and cola is the number one spirit and mixer combination," says Hamilton. "This pairing will drive a huge number of consumers into this category.
"Within three years, we believe the pre-mixed spirits market could be three times bigger than today, which would make it worth £10m to c-stores."
And when you bear in mind that to date 83% of purchases of pre-mixes are incremental to spirits sales, that's worth claiming a part of.
lThe pre-mix market is growing because there is a good range of products on offer, so stock as many products as space and customer profile allows
A good starting range would be vodka & cola, gin & tonic and rum & cola styles, ideally supported by a vodka & tonic and a whiskey & cola variant l Avoid duplication, but be mindful that slight variations can appeal to different consumers. For example, there are different pre-mix brands on the market using white, dark and golden/spiced rums
Take advantage of the changing seasons. In the summer months, products such as Pimm's & lemonade will be popular l Merchandise in the chiller if at all possible in store tests, selling pre-mixed spirits chilled delivers a 30% sales uplift compared with ambient
Keep pre-mix spirits and RTDs (such as Smirnoff Ice and WKD) as distinct offers as they target different consumers l Consumers generally select pre-mix spirits as an 'unwind' drink, so target shoppers on their way home from work
Diageo recommends that 250ml cans should retail at £1.70, although many retailers are choosing to sell them at above this.