The UK on-trade drinks market is straining under the weight of the recession, with consumers now tending to react in one of two ways: trade up and buy less, or trade down and buy more, according to the 2012 First Drinks Market Report.
The Report, which looks at the spirits and champagne markets for pubs, clubs, hotels and restaurants, predicts growth in premium and discount drinks, while the mid-market will become an ‘increasingly uncomfortable’ sector.
“While drinkers are cutting back on going out for drinks in considerable numbers, when they do go out, they are looking for brands which really deliver on taste and value,” said David Crosbie, associate director of the GfK Group - one of the market research companies which helped construct the First Drinks report.
Una McCullough, marketing director of First Drinks Brands, added: “UK spirits drinkers are changing their consumption habits; they are looking for brands that really deliver on taste, authenticity and value.”
Key report findings for the UK on-trade:
- The on-trade spirits market is now worth £5bn, up nine per cent.
- Pubs and clubs are worth £4bn, up nine per cent.
- Hotels and restaurants are worth over £825m, up nine per cent
- Premium spirits are worth £341m, up 29 per cent
The Report revealed the difficulties that UK pubs, bars and clubs are facing in the tough economic climate; there are five nightclub closures for every opening and rural pubs are continuing to close at the rate of over one a day.
It also highlighted cocktails as a potential growth driver for the on-trade. The cocktail market has grown by 26 per cent in the past year, yet only 22 per cent of outlets offer them. Consumption of cocktails is set to grow by over 10 per cent in the next two years as 76 per cent of on-trade outlets report equal or increased cocktail sales year-on-year.
The importance of authenticity and an added enthusiasm among drinkers for taste and flavours were mentioned as rising trends for the drinks sector, as an interest in craft, tradition and heritage and of an ‘authentic story’ behind premium drinks brands are beginning to take centre stage.
The 2012 First Drinks Market report also focused on policy and promotion, stating that ‘the spirits market is in the midst of a period of evolutionary change’. The duty escalator, which has been retained by the Coalition until at least 2014/15, and minimum unit pricing, as well as the banning and restriction of promotions such as ‘happy hours’, were all highlighted as significant factors in this period of change.
Most popular drinks in the on-trade:
- Malt Whisky: Glenfiddich 12 year-old
- Brandy/Cognac: Courvoisier VS
- White rum: Bacardi
- Vodka: Smirnoff
- Gin: Gordon’s
- Liqueurs: Sourz
- Champagne/sparkling wine: Moet & Chandon
And, with visits to the on-trade being increasingly seen as a ‘treat’, consumers are now looking for something new and different; premium drinks brands and a top-quality experience.
As on-trade consultant Ryan Chetiyawardana concluded: “There’s been a recent trend towards providing more honest and open information for consumers and bartenders alike. This movement towards educating the market is key to allowing the industry to develop amidst previously wafty details and growing Government pressures.”