Vodka and blended whisky continue to dominate the spirits category, but this does not mean there is a not a lot of innovation and developing trends that offer opportunities for fleet-footed wholesalers.
Despite the challenging economic environment premium spirits are out-performing the overall spirits market with sales up 7% by value and 0.7% volume, versus 5.4% value and -1.3% volume (Nielsen Scantrack total off-trade to 24.12.11). Premium products are especially popular for celebrating events, and the Diamond Jubilee and Olympics this summer should help to bolster sales. John Moore, business unit director for convenience, specialists and wholesale at First Drinks, says: “With a number of important events this year we are expecting the more indulgent categories to come to the fore, such as Glenfiddich and Remy Martin.”
Even without the special events, summer is a crucial period for the off-trade, especially if the fickle British weather gives us some sunshine. Chris Ellis, channel director for off-trade spirits at Pernod Ricard UK, says: “Consumers are looking to purchase spirits to create their own light and fresh drinks that are perfect for Barbecues and other social get-togethers during the warmer weather. This summer will be a particularly key sales period in the UK retailers should ensure they have the right offerings for people looking to celebrate and get together with friends and family.
“In terms of spirits gin, vodka and rum are among the top sellers during this period. Long mixed spirits tend to play a more prominent role in consumers’ repertoire of drinks during the summer, so it is important for retailers to capitalise on this opportunity by stocking popular higher-margin brands that consumers know and trust such as Absolut, Beefeater and Havana Club. These brands are perfect for consumers to try out simple serves, as well as being authentic ingredients in popular long summer jug cocktails based on popular long drinks, such as gin and tonic.”
With sales of vodka so strong it is no surprise that the established brands are facing increasing competition. Moore says: “We have just taken over Green Mark, which is the biggest selling vodka in Russia. We will backing it with pound;2m of support and will reveal our plans shortly.” And at Whyte amp; Mackay, channel controller (wholesale) Peter Wells, says: “The Russian Standard brand, which was are now distributing, is performing extremely well. It has grown by 23% with value ahead of volume.”
Building on the strength of vodka, flavoured vodka is growing strongly. Ellis at Pernod Ricard UK says: “Absolut Flavours are performing well in the off-trade and this has been driven by the success of Mango, which was launched last year. Mango is now the second biggest flavour behind Raspberri, tracking around 80% of the volume of this leading SKU, and now forms part of our core Absolut flavours range. Absolut has built on the current success of the category with continued innovation from which the wholesale channel can benefit.”
Another trend that strongly favours wholesalers and their retail customers is the growth in sales of 35cl and 50cl. John Moore comments: “35cl and 50cl are in growth while one litre is becoming less relevant. In convenience the pound;10 price point is very important and while these smaller measures come in under this, we estimate that by 2014 one litre will be more than pound;25.”
And Ellis says: “Pernod Ricard UK has expanded its portfolio of 35cl spirits by 60%, with eight of its premium spirits now available in this smaller format. Beefeater and The Glenlivet are the latest brands to be bottled in 35cl and join Absolut, Jameson, Malibu, Chivas Regal and Martell in the range.”
Mark Tinsley, regional sales director EMEA at E amp;J Gallo Winery, says: “E amp;J Brandy grew by 24% in a declining market driven by the launch of 35cl. It is exclusive to the wholesale channel and this year Gallo will be doubling its investment in brandy.”
Although much smaller than vodka and whisky the fastest growing segment of the market in non cream liqueurs. Moore says Disaronno and Tia Maria have been performing strongly for First Drinks and that Cointreau has taken off recently. John Mills, ICB managing director, says: “ICB focuses on the speciality drinks category and all of the brands in this dynamic category are performing well. V~Kat dry schnapps and Cactus Jacks are both growing well and are being re-launched with new packaging in April. Messer Schmitt, our herbal brand, is very strong, as is Sambuxo, our aniseed brand.”
He advises wholesalers: “Create a liqueurs and speciality drinks bay and fixture in the bottle shop, putting all the brands together sales will increase dramatically.” ICB concentrates on lower cost versions of popular drinks and Mills adds: “Retailers should be encouraged to put speciality drinks that retail between pound;5- pound;10 into the free flow shelves next to wines and fortified wines this will also increases sales dramatically.”
Nick Masters, off-trade sales director at Hi-Spirits, comments: “Fireball is the brand of the moment and we are expecting great things in 2012. It’s a liqueur blended with cinnamon and whisky, which we launched right at the end of 2010. Everyone seems to love it. We already have a good grounding of distribution after one year, so we are very pleased with its performance. We’re running a big promotion soon as we are about to take it to 10 cities across the country to further increase the interest and buzz.
“Our flagship brands Antica Sambuca and Buffalo Trace Bourbon continue to grow; the quality and heritage of these two are such an advantage to us when we are talking to the trade.”
Reflecting on the RTD market, Debs Carter, marketing director at Beverage Brands, says: “70cl bottles have dominated the RTD market with 58% of sales and is the stalwart pack for the category in this channel. WKD Blue 70cl accounts for 20% of the overall RTD market and is a significant driver of the category.
“However sales of multi packs are increasing and they are a great way to up-sell at key times such as Christmas and summer, and ‘Oasis moments’ events such as the Diamond Jubilee and Olympics which offer a great opportunity to up-sell.”
The company has just released an exclusive price-marked four-pack for the channel, in response to requests from retailers, and Carter adds: “We are finding the really smart retailers are using PMPs to demonstrate to their customers they are providing value for money.”
This spring also sees the launch of WKD’s biggest cross-sector campaign. Under the umbrella theme of ‘WKD Weekends Bring It On!’, the campaign will include ‘augmented reality packaging’ which comes to life when viewed through a smartphone on promotional stock of WKD Blue 8 and 10-packs. There will also be augmented reality POS for stockists and innovative digital media across key lifestyle websites.
Global Brands has vowed to drive growth back into the RTD category by rewarding consumers with pound;4.5m worth of prizes, as part of VK’s biggest on-pack promotion.
The ‘Win the Ultimate VKend’ campaign will appear on the neon neck tags of 18 million bottles between May and October, and VK has partnered with some big brand names, including Club 18-30 holidays, Barry M cosmetics and Zavvi music, to offer every VK consumer a weekend-enhancing prize.
Global Brands is supporting the campaign, which is centred on the current trend for neon bright colours, with social media activity, and neon party kits for on-trade accounts to ensure consumer awareness is filtering into the off-trade.
Global Brands marketing director Simon Green comments: “With this huge investment we want to communicate the importance of RTDs to retailers’ offering.”
After a couple of decades of continuous growth wine is now in the doldrums and light wine household penetration and volume are both in marginal decline, by 2.1% and 2.3%, according to Nielsen Homescan data for the 52 weeks to 06/08/11 and Nielsen ScanTrack data for the 52 weeks to 04/02/12 respectively.
However, within the category there are wide variations with budget wines, under pound;4, down 24%, while the biggest winner is premium wines ( pound;6.50- pound;8.50) which is up 28.6%. This fact is being highlighted by Pernod Ricard UK, which has launched its ‘Building Premium Wine Brands’ initiative’ to encourage wholesalers and retailers to make the most of the opportunity. This initiative includes bespoke activations for wholesale RTM channel customers, including A5 leaflets and aisle-end bus stops detailing the premium wine opportunity for retailers (as well as other activations still to be announced) to make premium wines easy to find.
Lee James, channel director for wine at Pernod Ricard UK, says: “In terms of wines, our research suggests that nearly 60% of consumers are willing to trade up to premium wines, yet this is not being reflected in current household penetration. Since premium wine returns an average retail sales value of pound;2.74 more per bottle, there is a compelling opportunity for retailers to add value into the mix at the wine fixture.
“Campo Viejo, for example, continues to perform strongly in the independent sector with a 46% share of the Rioja category and a value increase of +19.1% year-on-year. Despite accounting for one in every two bottles of Rioja sold in the independent channel, the brand still only has 38% distribution, therefore Campo Viejo is a good example of a premium wine opportunity still to be fully explored in this channel.” He suggests Jacob’s Creek Reserves and Brancott Estate are other brands which provide opportunities to drive value in the category.
Ian Prime, national sales manager, wholesale, C amp;C and convenience at Concha Y Toro agrees about the premium opportunity. He says: “A very interesting phenomenon that we’re seeing at the moment in the convenience sector particularly is an increase in sales of the premium branded wines like Casillero del Diablo and even the Marques range (RRP pound;12). Our theory is that people may be going out less and as a consequence are more inclined to treat themselves by trading up a bit on their wine purchase.”
He adds: “The wholesale sector is such a high priority that we’re currently in the process of recruiting a team of merchandisers who will be going out into the market to work with our customers to implement the branded POS that we’ve been producing and really give them some expert and hands-on support. We’re hoping to launch this completely new division within CyT UK in June 2012.”
Treasury Wine Estates is another wine company that has worked with wholesalers to help retailers understand wine. Dan Townsend, Treasury Wine Estates UK amp; Ireland general manager, says: “A large proportion of retailers are unaware of which products to stock in store, with less than half of all independents knowing the top-selling wines and spirits.
“As a high proportion of retailers do not drink themselves, they do not know a lot about wine even though they may be very switched on when it comes to other categories in their store. There is a job to be done on demystifying the wine category and wholesalers could do more to help their customers, by making range and merchandising best-practice advice available. In 2011 we produced a free retailers’ guide to maximising wine sales which can be utilised in depot and in store. We have also worked with wholesalers on category advice management programmes either through live events or on their websites (see box left).”
Moscato is expected to be the fashionable varietal this summer, with new launches from major producers such as Pernod Ricard, with Jacob’s Creek Moscato 2010 and Jacob’s Creek Moscato Ros eacute; 2010, and Gallo Family Vineyards. Bill Roberts, general manager of E amp;J Gallo EMEA, says sales of the Moscato grape increased by 73% in the US last year, and he is confident this trend will be replicated in the UK.
He adds that Gallo will be investing more in launching the new variety than it has on any single launch in the UK, and the campaign will include print, online, and outdoor activity and sampling, and trade advertising with the strapline ‘Sweeten your Sales’.
Ros eacute; has also been one of the successes of recent years. Blossom Hill, the UK’s number one ros eacute; wine is kick starting the summer with a pound;1.2m campaign. It focuses on the core ros eacute; range Blossom Hill White Zinfandel, Blossom Hill Grenache Rose and Blossom Hill Sparkling and the campaign strapline, ‘Get things started with the taste of summer’, aims to encourage consumers to think differently about ros eacute; and position it at the start of their meal, event or get together. Summer 2012 will also see the highest consumer media spend to date for the Blossom Hill brand and include outdoor, digital, press and radio advertising.
Summer would not be complete without sparkling wines. Suzanne O’Hara, head of marketing at Freixenet UK, says: “We focus on driving distribution of our core product range within the wholesale channel, namely Freixenet Cordon Negro Brut, Cordon Rosado and the latest addition, Cordon Oro. Freixenet continues to perform extremely well with the brand accounting for almost 9% value share of the sparkling category. The recent economic downturn has resulted in end consumers going out less but trading up to trusted premium brands for their special nights in. As a brand supported by mainstream advertising in national press and on-line, Freixenet has benefited from this and has worked with the wholesale sector to ensure independent and symbol groups are also benefiting from Freixenet’s premium image. We are also actively working with our customers to develop their Bordeaux wine category with our Yvon Mau wines.”
Greg Wilkins, director of Brand Phoenix, says its drive brand is First Cape, but it also has a tie-up with Distell, which produces a third of South Africa’s wine and is the 10th largest wine company in the world, with Nederburg as its most prominent brand in the UK.
He says the wholesale channel is very important for Brand Phoenix and it expects to see growth in sales and distribution. SHS manages the company’s brands in the channel and he adds: “They are our eyes and ears and our engine into the channel.”
Summer is the most important sales period in the year, according to Wilkins. He says: “Summer is as big as Christmas and more sustained. Sales at Christmas are telescoped into a very short period, making it difficult to manage replenishment and get the most out of it.”
He says First Cape’s 5.5% ABV Caf eacute; Collection wines are ideal for extended summer drinking and will be featured at a number of events planned as part of the Diamond Jubilee celebrations.
No wine feature would be complete without the British success story. Vicky Lee, trading and marketing controller at CWF (Continental Wine amp; Food Ltd), says “Silver Bay Point continues to be the darling of both retail and convenience. Indeed the success of CWF’s Silver Bay Point brand has been left in no doubt by the latest Nielsen statistics, which place it firmly at the number one spot in the thriving British Wine category, with a leading 33% market share across total off trade volume sales and upward trend of +657% points on an MAT basis.”
She says CWF”s research shows the demand is being driven largely by younger consumers who are considering in their purchase choices lighter style drinks which are in line with positive alcohol health messages.
She adds: “With a recommended everyday price point of pound;2.99 per 75cl bottle, and offering scope for ongoing ‘Two bottles for pound;5′, CWF will be investing over pound;1.5m in marketing and promotional support for the Silver Bay Point brand, focusing efforts on the spring/summer season and some of the key events taking place.”
treasury wines – retailer training programme
ENGAGING WITH THE CUSTOMER
Treasury Wine Estates recently worked with Booker to deliver a free retailer training programme on the depot floor in Telford. The goal of the evening was to engage Booker customers with the importance of the wine channel to their business and increase their knowledge in this area. The evening involved an informal wine tasting of some of TWE’s leading wines and grape varieties. This was followed by a short presentation which talked retailers through why they should focus on wine; what they should stock to maximise their sales; merchandising top tips and how to differentiate themselves from the multiple grocers.
Booker retail development manager Andy Trow says: “Wine provides an important revenue stream for our customers so it’s important for us to work with companies like Treasury Wine Estates to tap into their expertise and help de-mystify the category for them. The event in Telford was a great success providing targeted insights, informative tastings and practical tips for our customers to take away and put into practice.”