A new report from William Grant & Sons finds a buoyant spirits category being driven by a perception of value, along with the availability of premium brands, while gifting makes up a huge proportion of sales.
The newly renamed William Grant & Sons UK (which was previously First Drinks Brands) has launched a report looking at the spirits and Champagne markets in which the company operates. The report aims to identify current consumer trends and how shopper habits are changing as the country emerges from recession. The report investigates the impact this is having on the way the drinks industry engages with customers. Perception of value, perhaps unsurprisingly, features prominently in the report’s top line findings.
It says that perception of value is also evolving, now relating to brands that offer added value. In addition, the growth of desirable products is growing in popularity as consumers are being exposed to more and more choice. Other forms of scarcity are emerging in importance such as access to unusual experiences and knowledge. Seeking out something that is limited or unique in the way it is crafted, is increasingly common.
This remains especially relevant for premium brands in the drinks sector, such as limited edition whiskies. Something local retailers might want to consider if they are looking to create a point of difference, though of course the market has to exist before you can exploit it, otherwise you just end up with a lot of expensive stock sitting on a shelf. There’s no disputing that people are willing to spend more on so-called luxury brands. In the off-trade, value has increased by 6.4%, outperforming the growth of non-premium spirits which are up 4.5%. The report also reveals strong value growth in the malt whisky and spiced/flavoured rum categories.
Gin is also performing well thanks to an explosion of new brands that have helped fuel general consumer interest in the category. With premium gin growing at six and a half times the rate of mainstream gin, the opportunity remains for further growth. The report offers some interesting insights into off-trade purchasing behaviours.
Almost 60% of branded spirits are sold at a promoted price in the off-trade – promotions play a key role for shoppers, while 90% of shoppers will visit the main spirits aisle after seeing promotion shelves to validate their decision and ensure they are getting value for money. It’s also worth knowing that shoppers are willing to pay above expectations for categories viewed as more premium such as malt whisky and Cognac.
The report also touches on the popularity of fractionals saying that whilst smaller size bottles encourage trial of products and categories, 48% of people buying a 35cl bottle will only purchase this smaller size and not larger variants. Gifting is hugely important to the whisky sector with 68% of Scotch malt whisky shoppers are purchasing the category as a gift.
Overall, 73% of people have purchased an alcohol gift in the past year – of these, 51% of shoppers have bought spirits as a gift. Furthermore, 40% of spirits gifts are Scotch whisky and 29% of total spirits category value sales are purchased with the intention of gifting, estimated to be worth over £1bn per annum. Last point of note on gifting is that when purchasing gifts, shoppers are willing to trade up by an average of 11% versus their standard purchase. The report also touches on the growth of online shopping.
Now offered by all supermarket chains, the fact that 45% of the population have purchased their groceries online with a third planning to use online more this year, could have a bearing on the future of the convenience sector. According to the report, online retailing is one of the fastest growing channels in the grocery market, with 24% growth achieved last year. However, BWS online sales still only represents 4% of UK grocery sales.
With heavier items a key driver for shopping online, it is important for retailers to embrace this buying channel with spirits. “Premium brands are extremely well placed to benefit from the trends the market is experiencing,” said Chris Mason, Managing Director of William Grant & Sons UK. “This is why building premium brands that consumers desire is core to our business. It is these higher-end spirits which can offer more in terms of value, to appeal to the consumer. In the year ahead we aim to work even more closely with our customers to deliver premium experiences – be they online, in-store or in outlet.”
