Raising the spirits

Spirits are in good shape. The gin craze of recent years has lifted the spirits of the distillers in general by turning consumer’s minds towards cocktails and distilled liquor, even if it meant that other categories, such as vodka and whisky, did not share the riotous popularity of “mother’s ruin”.

What has been added to that over the past twelve months for spirits is buoyant sales across the off-trade for the very obvious reason that pubs and restaurants have been shuttered due to the pandemic for far longer than anybody could have imagined this time last year.

Meanwhile, a nation stuck at home has been watching impatiently as the sun approaches the yard-arm, and apparently has decided to allow the start of cocktail hour to become earlier little by little as the boring work-from-home routine goes on and on (and on …)

It’s a lamentable situation but has been good for the convenience channel, and alongside increased alcohol sales generally there have been other trends unimagined by our forefathers – such as low and no alcohol spirits (they have the technology) beyond what Seedlip ever imagined, and also –perhaps especially for those working from home and growing impatient – an upsurge in the sale of ready-to-drink (RTD) cocktails and long drinks, so that the thirsty ex-commuter does not have to waste time actually adding mixer to spirits by hand.

“There has been a big shift in purchasing habits at convenience stores during the pandemic, and many local retailers have really nailed their spirits offering, with a selection of drinks to suit a variety of budgets, taste preferences and drinking occasions,”said Becky Davies, Head of Commercial, Ten Locks, a new distiller launched into the teeth of the lockdown last August.

A rumour that the gin boom is over comes from the fact that there are just too many small, independent and craft distillers (over a hundred new ones were registered with HMRC last year). It’s a bit like a stock-market bubble: everybody gets in on the act and eventually the crash arrives as there’s not enough profit to go around.

But the crash is moot and hasn’t happened yet: let’s see how it goes when the sun is shining, and the UK population is allowed out again. The gasping thirst for a long, ice-cold G&T after an endless boring winter might prompt a fresh revival of gin’s fortunes. The drink is above all a social mixer for long sunny days, and everybody is looking forward to getting together for some celebrations after lockdown is finally lifted.

Gin it up!

As Hannah Dawson, Diageo’s Head of Category Development for Off Trade says,“Gin is a key player and is driving the biggest growth in spirits with flavoured variants, making up 45.8 per cent of total value share MATand we expect this momentum to continue.”

She says people are looking for quality drinks they can enjoy at home – which is the key point. A 70cl bottle of spirits represents good value for the consumer at average RRPs, containing anything between a dozen and 15 drinks measures – often working out at barely more than £1.50 a drink excluding mixers. That’s as cheap as off-trade beer, and spirits can offera particular sense of occasion, adding further value.

Dawson adds that gin’s strength is that it lies at the base of many popular mixed drinks such as G&Ts and Spritz serves. “Pink gin has been one of the driving forces behind the category’s growth, offering a sweeter taste profile and encouraging customers to trial different options within the wider category. This has been led by products such as Gordon’s Premium Pink Gin (37.5 per cent ABV) which was the biggest spirits launch in the last decade.”

Innovation has since exploded, with popular flavour profiles such as citrus being introduced with Gordon’s Sicilian Lemon (37.5 per cent ABV). Dawson believes there is still more growth potential through innovation and providing new taste profiles to consumers – as current performance shows that gin variants have contributed to £+29.5m worth of value sales vs YA since March 2020.

For its part, 2021 has seen Diageo spruce up established premium brands such as Tanqueray, expanding its portfolio and bringing new gins such as Tanqueray Blackcurrant Royale (41.3 per cent ABV) inspired by founder Charles Tanqueray’s travels to France in the early 1800s. It mixes Tanqueray London Dry Gin and its four botanicals (juniper, angelica root, liquorice and coriander seeds) with French blackcurrants, and exudes warm vanilla and exotic floral notes of black orchid. Adrienne Gammie, Marketing Director for Gins, Pimms and Baileys says, says it will elevate the classic crisp summer G&T.

Contrarily, three years ago a whisky explosion was being eagerly heralded but it’s not clear that has happened, and the Scotch industry, according to latest figures released by the Scotch Whisky Association, show that global exports fell by more than £1.1bn during 2020. It is not the case that exports affect the convenience channel, but it remains indicative of what the Association terms a “lost decade of growth”, made worse over the past year – at least internationally – by the pandemic and post-Brexit tariffs and trade red-tape confusion.

The producers of “brown spirits” such as whisky, brandy and especially rum, have been hoping that the gin tide would turn, as also have vodka-distillers – bearing in mind that the big distillers are hedged because they all produce every different sort of liquor – so  that sales across spirits would even out a little.

Other drinks are available

Whisky for some time had become seen as an older person’s – specifically an older man’s –tipple and did not have the sun-drenched party-time credentials of Caribbean rum to lend it a halo of youthful hipness.On the other hand we have an ageing demographic  with “maturing tastebuds” that suggests a stable long-term future for Scotch. And Scotch commends itself with a quiet sophistication and all the north-of-the-border traditions and refinements that lends an eternal aura and appeal – perhaps just not to the social media crowd.

That is not to say that whisky is being eclipsed. The Famous Grouse outsells many other drinks; single malts are their own special and robust market, especially for gifting; Japanese whisky is a premium and ever-popular tipple (so is Irish whiskey); and the US bourbons have been going through their own “mini gin” renaissance with many small and independent labels popping up to increase choice, among reinvigorated brands such as Jim Beam and Maker’s Mark.

In fact, bridging the whisky-rum divide, Pernod Ricard has just brought out its first-ever rum barrel-finished single malt. The Glenlivet has launched a Caribbean Reserve variant, breaking traditions in single malt Scotch and looking to satisfy consumer appetite for flavour exploration by combining the worlds of Scotch and rum.

“The new malt brings the spirit of the Caribbean islands to life through vibrant packaging and imagery where warm coral shades and palm trees meet The Glenlivet’s trademark teal and cream colours,” says Marnie Corrigan, Pernod Ricard UK brand director. “The Glenlivet Caribbean Reserve is a unique proposition and the launch is an important next step in our ‘Original by Tradition’ platform, to reinforce our innovative credentials and to recruit new-to-category drinkers.”

“While rum and gin are still popular spirits, there’s an emerging appetite for drinks such as tequila, vodka, and whisky, especially at the top end of the price bracket,” says Ten Locks’ Davies. “Ensure you stock on-trend spirits brands, along with premium mixers and the all-important bag of ice, to meet the trend towards making premium drinks and cocktails at home head on. “

The rum category has been seeing a lot of action and innovation – it being the party drink that can challenge the reign of gin – vodka appears subdued (one wag claimed that gin was just flavoured vodka, so perhaps they are competing in much the same space), and lacks the proliferation of flavours gin can easily offer, although brands such as Absolut have been offering many variants for decades (and experimenting with other crowd-pleasing measures such as the recent paper-bottle innovation).

Vodka certainly has its fans, but the appeal perhaps lies in purity and provenance (Stolichnaya and Moskovskaya celebrating Russian and Soviet heritage, and Zubrowka Polish), along with triple-distilled elegance and exclusivity for clubbers beyond the velvet rope with fashionable and exclusive, Instagram-worthy labels such as Ketel One and Cîroc, Edrington Beam Suntory’s Snow Leopard, Grey Goose, Belvedere and Au (with its gold bottle – apparently flying off the shelves of convenience stores). There are also potato- and even milk-based vodkas, such as Black Cow, but it seems they haven’t broken through in the way the colourful and fruity-berry gins have.

Back to rum, however, and we see the bright colours of NPD such as the unconventional Spiced Rum brand, Dead Man’s Fingers, which has just announced that it is extending its range to include a new, striking 1.75 litre bottle format across six of its popular flavoured variants. Party, anyone?

Dead Man’s Fingers is now the number one premium rum contributing to total rum growth, delivering £11.2m year on year, and is the fastest growing spiced/flavoured rum family within the top 10 performing brands and the 1.75 litre bottles are now available, RRP £50.

“As the popularity of flavoured rum continues to grow, we’ve seen strong results for the Dead Man’s Fingers range, and fantastic engagement with the brand,” says Brand Manager Samantha Caulfield. “For some time now, fans across our social media channels have been calling out for us to introduce a larger format, so we’re naturally very pleased to announce this latest news.

Rum is going in two directions: spiced and fruity. Along with a spiced version, Dead Man’s Fingers comes in Pineapple, Mango, Raspberry, Passionfruit and Lime. Now, Captain Morgan has announced a lower-strength (25 per cent ABV) new 70cl variant, Captain Morgan Tiki, which has pineapple and mango flavours and comes in aneye-catching Tiki embossed bottle to drive standout on shelf and behind the bar.

“We know our customers are looking to experiment and try different spirit taste combinations. Captain Morgan Tiki offers something completely new to consumers,” commented Nick Payman, head of Captain Morgan Europe.

Pernod Ricard, meanwhile, has released an edition of Lamb’s Spiced Rum that is targetting convenience as a PMP at a very attractive £13.99 price point.

“Spiced Rum represents a significant opportunity for convenience retailers and Lamb’s Spiced Rum performance has been on the up since the brand introduced energetic new packaging in 2019,” says Chris Shead, Off-Trade Channel Director for Pernod Ricard UK. “With 61 per cent of shoppers believing PMPs offer better value for money than a non-price-marked pack, they give consumers confidence they are being offered good value, helping retailers shift more stock and keeping shelves rotating.”

Incidentally, watch out for more such offers in this Year of the PMP. Pernod Ricard believes that Lamb’s Spiced Rum’s new look provides real stand out and that (importantly) it is a brown liquor with cross-gender appeal amongst younger consumers. Shead says it is being repositioned as“ the go-to Spiced Rum for all occasions”.

It will be interesting to see if the much -anticipated and talked-about rum lift-off actually takes place. And if rum does indeed claim the brown liquor first-place, whisky will be left thinking what it has to do next to climb down the age ladder.

Another liquor that seems to be making good inroads to the UK market is tequila, and its more exclusive and premium variant, mezcal (made from agave). Ten locks has been working with the convenience sector to bring a range of premium spirits brands to store shelves and its range currently includes tequila, mezcal, rum, gin, and whisky – “All distinctive brands that lead with purpose,” says Becky Davies,“be it supporting sustainable producers, profiling the overlooked or marginalised, or championing brands that place provenance, heritage or family at the heart of what they do.”

Especially interesting is the clear challenger to the gin slot, tequila – riding on the back of the popularity of Mexican food and the new “Mexitarian” (meatless Mexican) trend that became evident in the recent Veganuary national campaign.

“Tequila and mezcal are set to be popular choices in 2021, with El Tequileño and Banhez Mezcal  doing a great jobin educating the drinks trade and consumers on the virtues of agave spirits,” says Davies.

“El Tequileño (RRP £23-£26) tequila is certainly a brand to watch, and our conversations with drinks industry players reveal this to be one of the spirit brands they have been trying to get their hands on for some time – especially the Blanco,” says Davies.

The premium Banhez Ensemble (RRP £42) could be the perfect introduction into the upmarket mezcal category:“It’s a brilliant option for cocktails and expertly positioned to be a popular choice in the UK and grow further interest in mezcal,” she adds.

As they say in Mexico: “Para todo mal, mezcal, y para todo bien, también.” (“For everything bad, mezcal, and for everything good as well.”)

No and Low

Not technically spirits at all, spirits without any alcohol are perhaps an inevitable outgrowth of the no-and-low beer category, which has seen its reverse-osmosis tech refined to the point where zero beers can taste just as good as regular, and which has really taken off during those long slow hours of lockdown as people try to cut their alcohol intake.

Will zero spirits be as popular as zero beers? It is too early to tell, but the price of spirits without alcohol appears similar to those with (even though no 80 per cent tax is being paid by the producer). Beer can get away with that sort of pricing (but just about and probably not for ever) because what is being sold is refreshment and taste.

But with spirits it is also serious intoxication and the hit of the alcohol as it goes down. But there could still be a firm market for zero spirits, and the first mass-market – and mass marketed – offering from the big distillers are now beginning to appear – Gordons 0.0% and Tanqueray 0.0% from Diageo for example. In fact spirits are the fastest growing segment within the no and low alcohol category, growing at +31 per cent (though from a very low base).

“Social occasions are becoming increasingly diverse to give choice to those who choose not to drink alcohol as well as those who do,” says Diageo’s Dawson.“This presents an opportunity for retailers to review their selection of low and no alcohol choices to align with the ‘conscious consumer’ and increase opportunity for profitability.”

Get ready for RTDs

RTDs have been around for a while and look to be solid, popular skus because of their convenience and time-saving qualities. “We know that the RTD category has allowed retailers to tap into customers’ preference towards high-quality and convenient drinks and this is likely to continue throughout 2021,” says Diageo’s Dawson.“Therefore, we recommend stocking a good range of RTDs to tap into the convenience trend. Ensuring your range of RTDs is kept chilled, ready for immediate consumption as well as utilising eye level placements in the chiller next to fruit ciders, will also increase the visibility of these products.”

Becky Davies of Ten Locks is a little more skeptical. “There is a huge amount of noise for RTDs but the conditions we’ve faced will mean a make or break summer for this hyped format,” she says.“Quality is on the up, and with the right consumption conditions, RTDs are likely to be an important format in any good drinks range.”

“The RTD category can unlock further opportunities to drive sales beyond the convenience trend. Recent data has demonstrated that 35 per cent of total premix growth comes from multipacks,” is Dawson’s answer. “We also know that customers have been visiting stores 22 per cent less often than usual, but basket size has increased by 45 per cent – to £23 from £16 per trip⁵. Therefore, maintaining a range of RTD multipacks can encourage customers to increase basket spend in-store.”

Diageo is putting its money where its mouth is. In April, Tanqueray is set to introduce two brand new ready-to-drink (RTD) 250ml can formats for Tanqueray London Dry Gin and Tanqueray Flor de Sevilla Distilled Gin (6.5 per cent ABV).