Premium brands driving on-trade spirits growth

By Becky Paskin

- Last updated on GMT

Related tags: Cent, Alcoholic beverage, Distilled beverage

Cocktails could help lure consumers away from their current 'pre-load' culture
Cocktails could help lure consumers away from their current 'pre-load' culture
A growth in cocktails, premium drinking venues and the rise of the Weekend Millionaire has fuelled growth of the spirits market, which is largely driven by premium brands.

According to First Drinks’ inaugural spirits and Champagne Market Report for 2011, which has gathered data from CGA Strategy and Nielsen amongst other sources, spirits account for 64 per cent of weekend drink sales in the on-trade – a higher share than any other category.

The value of premium spirits in the on-trade is now worth £234m, up 11 per cent on last year, driving an overall growth of the spirits category of 3 per cent.

The overall key spirit categories by volume are vodka (35 per cent), blended whisky (11 per cent), non-cream liqueurs (7 per cent) and gin (7 per cent).

The key spirits seeing volume growth in the on-trade in the past year are flavoured vodka (up 112 per cent), golden rum (up 19 per cent), cream liqueurs (up 11 per cent) and Irish whiskey (up 9 per cent).

Weekend Millionaire

The report pins the growth of premium spirits on the continued rise of the Weekend Millionaire – 18-24 year olds that go out less often but spend more when they do.

According to the report, the number of these young people going out once a week has risen from 38 per cent in 2005 to 70 per cent in 2011.

It also notes that consumers are continuing to ‘pre-load’ at home before a night out, with a quarter of people not leaving home until after 9pm. As such, the off-trade now accounts for 80 per cent of total spirit volume sales.

Jon Collins, chief executive of CGA Strategy, said operators should appeal to consumers’ desire for value to convince them to drink out of home.

“Consumers are looking for something different from the drink at home experience,” he said. “Unique flavour combinations, theatre of serve and the ‘treat’ aspect of cocktails all support the continued growth of this category.”

Premium offer

The number of pubs, restaurants and hotels now serving cocktails has increased by 36 per cent, with the most popular drinks being the Mojito, Kir Royale, Champagne cocktail, Cosmopolitan and Blue Lagoon.

The popularity of Champagne has also risen, and many establishments have adapted to the demand by offering more by the glass and have subsequently seen sales soar by almost 24 per cent in the last year.

The report also adds that special occasions and events will continue to be crucial for the on-trade, as proven by the 13 per cent sales increase during the Royal Wedding, and operators must be prepared to capture the treat spend.

“Pubs and bars must give people a reason to get off the sofa and out of the house,” Collins said. “CGA research shows that bank holidays or events can increase sales by up to 18 per cent. The need to maximise – and on a local level, actually create – events which drive footfall is a no brainer.

“Savvy operators have known for some time now that they need to evolve their offer and, with all the commercial, regulatory and consumer pressures facing the alcohol industry, this has never been more relevant.”

CGA predicts that 5 per cent of all on-trade outlets will close by 2014, with stabilisation returning to the industry in 2015. It forecasts that those businesses offering a premium experience in terms of brands, serves and entertainment will gain market share in the future.

For more insight into what drinks trends are likely to shape the market over the coming months, read our special four-part feature here.

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