While wine and beer are usually the star performers in wholesalers’ alcohol section, spirits take a leading role in the run-up to Christmas. In the four weeks before Christmas last year sales of spirits in GB off-trade reached £420m, compared with £415m for wine and £334m for beer, and in the seven days prior to Christmas spirits sales totalled £153m. In all 11.8 million households buy spirits at Christmas and for some it may be their sole purchase of them in the year.
Some of the shine has been taken off the category by deep discounting from the major multiples, but there is still money to be made for independent retailers and wholesalers who have the right brands on their shelves at the critical times; but the enormous surge in demand puts a tremendous strain on the supply chain. Indeed, Benet Slay, joint MD of Diageo UK, suggests that one of the limiting factors on sales of spirits during this period is the capacity of the supply chain to cope.
He believes that if retailers were able to encourage consumers to start buying their Christmas spirits earlier it would provide more time to cope with the surge in demand and could lead to greater overall sales.
“Spirits volumes start to climb in mid November, but there is a spike in demand just before Christmas,” he says, and he suggests marketing campaigns to raise the profile of the spirits category are needed earlier.
With so much demand squeezed into the last week, even the timing of Christmas day within the week can have a significant effect. This year Christmas falls on a Sunday, giving a full week of shopping days preceding it, and Slay says cash and carries will need to be prepared to drive sales throughout the last full week.
Two main drivers for consumers buying spirits at Christmas are ensuring they have a full range of drinks available at home, and buying drinks for parties, but a third big opportunity is gifting. Slay says 26% of alcohol sales at Christmas are for gifts and the alcoholic gifts market is worth £215m. For this reason many of Diageo’s brands are available in gift boxes.
With the big market for gifts, and many consumers who are not regular spirits buyers, bigger brands’ market shares tend to rise around Christmas because many consumers choose brands they recognise and trust. For instance, the average value share of the vodka category that Smirnoff takes outside Christmas is 27%, but this leapt to 34% over the eight weeks before last Christmas. These same factors also mean that price is less important to such buyers.
Diageo will be investing a substantial amount to ensure its leading brands are at the front of consumers’ minds in the months before Christmas. Leading the way will be Smirnoff, the leading spirits brand in the UK with sales more than twice the size of the second placed spirits brand. There will be a new TV and cinema advertising campaign in October and November, and an on-pack campaign to highlight Smirnoff being voted the world’s favourite vodka in a blind tasting by the New York Times, with prizes including holidays in New York.
Gift boxes with a silver birch finish will also be available and outer cases with the same finish will be available to provide greater standout in cash and carries. Smirnoff Norsk, a new variant which has been available in the on trade for the last year, is also being launched with a £400,000 campaign.
Baileys is the most popular alcohol brand in the UK over Christmas and Diageo will be spending £5m on its Christmas campaign. It will include new TV adverts and a tie-up with Moulinex to encourage consumers to blend it with ice. For the cash and carry sector there will be an exclusive 50cl pack and Makro and Booker are among companies stocking the gift pack.
Bells has been the number one whisky in the UK for over 20 years, and blended whisky is the number one category at Christmas. In 2004 the total value from the category was £215m. Whisky is also second only to wine as a Christmas alcohol beverage gift with 22% of Bells’ off-trade volume bought as Christmas gifts.
Diageo will mount a major Christmas initiative for Bells in the independent and cash and carry sector in a move to add “pull though” from retailers. For the first time it will have a dedicated field sales team calling on 6,000 independent retailers. The team of 24 business development executives and three regional sales managers will draw stock from cash and carries and sell to independent retail outlets. They will also build displays and help with POS. This team will be in addition to the team of more than 30 calling on cash and carries to help merchandise and build displays from mid November.
Other major brand activity from Diageo will include a new Winter Warmer variant for Pimms, introducing a new sales opportunity for a drink traditionally associated with summer, and a £2.8m investment in Gordon’s gin.
Pernod Ricard is investing in a promotion to support its new Martell Cognac advertising campaign ‘Let the Conversation Flow’. The new initiative will run in the on and off-trade and cash and carries in the build up to Christmas, offering consumers a Conversation Collection book, designed to stimulate friendly debate among close friends, when they purchase Martell.
The promotion is designed to support the above the line activity targeting discerning cognac drinkers and aims to promote a more frequent and informal occasion to enjoy Martell, such as dinner parties with friends.
John Grieveson, marketing director at Pernod Ricard, commented: “We are confident that this fully integrated campaign for Martell will increase our share of voice in the coming months.”
Courvoisier will also be mounting a campaign for its cognac over the Christmas period including national press and magazine advertising. For the trade it will be running neck collar promotions for both the Courvoisier VS and Courvoisier VSOP Exclusif styles, designed to encourage consumers to trade up from grape brandy and trial Courvoisier VSOP.
“With 38% of all annual Courvoisier sales made during the eight weeks of November and December, Christmas plays a critical role in Courvoisier’s fortunes,” says Liz Hodson, senior brand manager for Courvoisier in the UK.
Bacardi rum has launched a new advertising campaign in cinemas under the banner of ‘The Way It Should B’, which will be followed by TV and outdoor coverage from October 15. It is the first broadcast advertising campaign released by Bacardi rum since the tightening of advertising restrictions within the alcohol category, and the company says the three commercials, posters, online coverage and in-bar materials, marks a significant departure from its historical advertising strategy – which included the Latin Quarter executions.
Bacardi rum’s director of marketing, Andrew Carter, comments: “This change in strategic execution marks a new direction for Bacardi rum’s advertising. Although the Latin Quarter advertisements positioned us strongly as a fun and sociable brand, we think that this particular execution places us firmly as a credible, relevant and modern premium spirits brand.”
Despite a significant decline in overall sales in the RTD category, major players are optimistic about the future, citing renewed investment and innovation, and pointing out that it is still worth £1.1bn.
Beverage Brands’ WKD is the biggest selling RTD in the impulse sector, and by holding steady while sales of other leading brands have gone down markedly, it has just climbed to number two in the take home market. In the run up to Christmas Beverage Brands will be backing WKD with £4m of media support including a £2.5m launch campaign for its new addition, WKD Red.
WKD brand controller Debs Carter says the independent sector is very important to the company and it has turned down some Christmas promotions suggested by the major multiples because it felt they would compromise its offer. “We are trying to maintain a level playing field for all our customers,” she says.
The company is a strong supporter of the FWD Take Home Blueprint and has been doing a lot of category management work with cash and carries. In a pilot scheme with Parfetts, the fixture at Stockport was remerchandised and the resulting increase in sales encouraged the WKD team to offer the service to other customers.
Smirnoff Ice, WKD’s biggest competitor and the leading RTD seller in total off-trade, is also investing heavily in its Christmas campaign. An overall marketing spend of £4m will be the biggest investment in the brand since 1999 and will include a continuation of the Uri campaign with £2m of TV adverts. Jon McCarthy, brand manager for Smirnoff Ice, says the brand will also benefit from the halo effect from the Smirnoff parent brand.
Steve Perez, MD of Global Brands, has confidence in the RTD market. He says: “Reports of the category’s demise have been exaggerated. The RTD market is worth over £1bn in the UK, it’s the most innovative of all the categories and it’s here to stay.”
After a strong performance in the on-trade, Global Brands has been working to build the presence of VK Vodka Kick in the off-trade. Perez says: “The off-trade represents a key growth area for VK Vodka Kick and as such Global Brands has this year invested to support the off-trade through marketing and promotions, new pack formats and designs specifically for this sector. In particular, 70cl packs are showing sales growth as consumers want bigger packs offering greater value.”
More innovation is being introduced into the market with the launch of a second juice variant of Red Square Reloaded. Blue Juice will include a mix of blueberry, citrus and guarana.
Richard Clark, head of marketing at Halewood International, comments: “Red Square Reloaded is a brand that holds a very strong position in the market, with a real USP and Juiced has given this a real boost. Blue Juice is the natural progression for the brand, it is a drink that is in demand; it has the unique advantage of the vodka, fruit juice and guarana combination.
“Our confidence in this concept is proven by the fact that we are very positive about the launch of a new drink in a category that is in decline. We believe there is a gap in the market for genuine innovation and that is just what we can offer the trade with Blue Juice.”
Martin Swadling, BWS category manager, MBL
The RTD market is now quite mature and we have seen polarisation into a few strong brands. Many of the other brands that helped fuel the strong growth over the last few years are now struggling and face an uncertain future.
Smirnoff Ice and WKD are the two best selling brands in our business. Other brands such as Bacardi Breezer, Red Square and Reef have struggled over the last couple of years, and we have seen our sales move strongly into 70cl formats away from 275ml.
Smirnoff and WKD are the best supported brands with Diageo and SHS tailoring their support to suit our business requirements.
The big brands will continue to grow at the expense of the other brands unless they can deliver genuine innovation to the category. The days of simply relying on a new colour or flavour are long gone. Any successful launch or relaunch will need to respond to changing consumer tastes such as healthier products, more premium ingredients, or more interesting packaging formats.
John Baines, senior trading controller, Today’s Group
At Christmas it is the big spirits brands such as Bells, Famous Grouse and Smirnoff that are the big sellers, but unfortunately they are also the brands that attract most attention from the supermarkets.
We concentrate on the 70cl bottles rather than the litres that supermarkets sell but it can sometimes make a mockery of pricing when a litre is selling for the same price as a bottle.
When it comes to activity the smaller brands can really only do deals, which can lead to too much clutter on the shelves. The above the line activity by the bigger brands is what tends to create the pull through.
We’ve had a reasonable year overall but Christmas tends to come later every year with a lot of trade coming very close to Christmas, which can make stock requirements very difficult to predict.