Christmas has more of an effect on sales of spirits than any other category, and for many consumers it will be the only time in the year when they buy any, so it is crucial for local stores, and their wholesale suppliers, that they seize the opportunity.
But with sales in the 12 weeks leading up to Christmas set to reach pound;1bn, competition is sure to be intense. The major multiples will be muscling in with below cost offers on some of the best known brands and independent retailers will not want to be stuck with identical stock at much higher prices.
With four of the top ten brands, Diageo has a crucial role to play in supporting the independent sector. Paul Downing, channel director RTM, says: “Diageo will be focusing on litre bottles for the grocers and driving 70cl bottles into smaller shops.”
However, there will be no repeat of the successful price-marked packs Diageo ran last year. Downing says: “We will not be doing price-marked products in the run-up to Christmas because a tax increase is expected in January, possibly as early as New Year’s Day, and that would leave a lot of stock with very little or no margin for any point in the supply chain. This year we will be concentrating on strong depot floor pricing and aggressive pricing for trade days to allow the independent retailers their day in the sun. We’ll also be providing strong pricing points for retail club members. The retail clubs are very efficient and give good support for the brands and the price points in store.”
Diageo’s primary focus in the run-up to Christmas will be on Gordon’s, Bell’s and particularly Smirnoff and Baileys. With the increasing popularity of rum it will also be looking to drive distribution of Captain Morgan’s Spiced Rum. Gifting is an important factor at Christmas and Diageo has around 40 gift packs, although it will be concentrating on about 15 of the highest volume and lower price variants for the wholesale channel. Downing adds: “We’re conscious of the average spend in an independent store, and that adding alcohol can increase that substantially, so we don’t want to push the price point too far.”
He warns that wholesalers and their retail customers should display their Christmas offer early because the grocers will be starting this month. He explains: “They need to make their customers aware of their offer, so that when sales ramp up there is a good chance of customers buying from them. Then they need to maintain visibility and availability right through to January 2.”
Dan Reuby, customer development director at Pernod Ricard, emphasises the opportunity for premium spirits at Christmas. While sales of standard spirits at pound;10- pound;12 grew 55% in the period before last Christmas, sales of premium spirits in the pound;12-plus category were up 161%, and he says consumers are looking for the reassurance of big brands.
He adds: “We know space is tight, but there is an opportunity for retailers to flex space. Spirits massively over indexes at Christmas and if retailers are adding just one more product it should be a premium one rather than a tertiary one.”
Pernod Ricard shopper research last Christmas found that 48% of shoppers claimed to spend pound;15-20 on a gift, and it is offering a wide range of gift packs to help retailers take advantage of the opportunity, with brands including Chivas Regal, Jameson, Havana Club and Martell Cognac. Reuby says the Chivas Regal and Jameson tins stood out particularly strongly on depot shelves last year.
Absolut vodka will be one of the brands receiving support with a continuation of its ‘Absolut World’ advertising campaign, and in cash and carry depots there will be pallet display units for Abolut, The Glenlivet 12 Year Old, Chivas Regal 12 Year Old, Malibu, Jameson and Martell VS.
Maxxium UK, the joint venture between Beam Global Spirits and Wine Inc and The Edrington Group, has been investing in its off trade structure. Mark Riley, commercial operations director, says: “For the cash and carry channel, this has meant a 30% increase in our resource with the creation of two new national account manager positions. These new roles are specifically targeted towards developing our “pull” strategy from depot, through both symbol and fascia groups and independent retailers nationally and onwards to the consumer.”
Almost 40% of malt whisky and a third of cognac is sold at Christmas making the period very important for Maxxium’s portfolio. Riley says: “Maxxium UK is proud to carry what we believe is the best portfolio of prestigious single malts in the industry. Each of our five malts – The Macallan, Highland Park, Laphroaig, Ardmore and The Glenrothes – has a competitive support plan in place for the cash and carry and delivered wholesale sectors for the key Christmas selling period.
Investing in visibility
“During the Christmas period, sales of single malt whisky can be transformed by investing in visibility. It is definitely worth wholesalers and cash and carry managers focusing on the category, especially as it offers a good return for them.”
He adds: “The Christmas season is a key selling period for our blends. We recognise the importance of gifting and display within the cash and carry and convenience sector, and this year in order to support these key off trade outlets further, The Famous Grouse gift box is being distributed to cash and carry accounts. This is exclusively available for this trade sector, and so provides a real point of difference for these accounts, helping to boost sales.”
He advises that with cognac it is important to stock a range from Courvoisier VS right through to XO in order to cater for all needs and to maximise the profit potential of the category.
Maxxium UK has developed a range of display units for Christmas 2009 designed to maximise impact in depot and generate impulse sales. They include a new mixed Malt Whisky display unit featuring Highland Park 12 Year Old, The Macallan Fine Oak 10 Year Old and Laphroaig 10 Year Old, and a new unit featuring The Black Grouse.
Riley says: “Maxxium UK is investing more advertising and promotional spend into the cash and carry channel for Christmas 2009 than ever before. This additional investment includes the launch of price-marked initiatives specifically for this sector, such as the Teacher’s blended whisky 70cl price-marked pack. Fractional sizes, which are less price sensitive, and on which independent retailers can make enhanced margins, also feature strongly in the Christmas promotional support package.”
While Whyte Mackay whisky and Vladivar are the main brands for Whyte Mackay, David Brown, sales director RTM and Ireland, says single malts play an important role at Christmas. He adds: “The malts have done well this year, with Jura 10 and Jura Superstition leading the charge. Both products have proved to be attractive to consumers looking for ‘something different’, which makes them ideal brands to be selling at Christmas. One brand that we will be watching especially closely will be Glayva. The brand always sells very strongly at Christmas but this year Glayva should be boosted even further as the stunning new pack design will be supported by a heavyweight consumer awareness campaign in the national press.”
Brown says Whyte Mackay works hard to ensure the wholesale channel can maximise sales. He explains: “Our approach is to help wholesalers through supporting disciplined retail clubs and we have also found channel specific SKUs such as Vladivar price-marked packs to be popular. Cash and carry has developed as a very significant route to market for the on trade and again we have worked with customers to assist them in diversifying their businesses in the on trade.”
The growth in vodka sales has been exceptional in the UK with it taking the top spot from blended whisky and then motoring ahead in the last two years, and this has attracted new competitors into the market. A heavyweight entrant is Eristoff, from Bacardi-Martini, which is looking to take on the likes of Smirnoff and Absolut in the premium sector. The company says Eristoff is the market leading vodka brand across France, Austria, and Portugal and sells more than 1.5 million cases annually across Europe.
Eristoff vodka is available in two varieties – Eristoff Original premium vodka and Eristoff Black, a wild berry flavoured black vodka spirit that resists mixing when poured with the result that it creates naturally-layered drinks when added to mixers.
Mark Holdsworth, marketing controller, said: “The international popularity of Eristoff goes from strength to strength and its reputation has been boosted by The International Wine and Spirit Record’s inclusion of Eristoff in its recently released Elite Brands List – only 21 brands make this grade and they have to achieve consistently steady growth outside their main market and in more than one region. We will be supporting our launch of Eristoff in the UK in 2009 with a pound;1.5m marketing campaign and an increased presence in our established markets.”
Cellar Trends has a wide range of spirits brands, which sell in the on and off trade, and has a strong heritage in the growing sambuca category with its Luxardo brand. Marketing director Terry Barker says Cellar Brands has almost single handedly developed the category and Luxardo is the market leader in the on and off trade despite a number of new entrants in the UK.
Catherine Rigby, marketing manager for Luxardo Sambuca and liqueurs at Cellar Trends, says the company launched a second nationwide campaign of promotions this autumn for its new range of Luxardo Sambuca, Sambuca flavours and Luxardo Cream Sambuca Liqueur, following its summer launch.
She adds: “Christmas is crucial within cash and carries as bars tend to visit them for last minute purchases or for speciality spirits like Luxardo. Wholesalers are really important in getting behind selling and communicating to their customers the offers we have available, especially POS items to drive sales within their accounts. Trade shows are particularly influential as it gives us the opportunity to speak directly to our customers. We also work well with regional sales managers to support them within their accounts.” This Christmas Cellar Brands will be supporting the brand in cash and carries with Luxardo long drink and ‘Shotail kits’ to communicate special Christmas drinks serves made with the product.
ICB is doing exceptional business with the cash and carry sector according to its recently appointed managing director John Mills. He says: “Cash and carry is a growing and fundamental part of our business. We doubled our business with Booker last year, and also saw very good growth with Makro, Bestway and Batleys, and we’ve done some amazing business with members of Landmark and Today’s. Some of the growth was down to
St Helier cider, but light spirits and liqueurs are showing real growth”
He believes ICB’s Vodkat and Zamaretto brands match two major consumer trends on price and health. As light spirits their lower ABV means lower duty and therefore a lower price point, and the lower alcohol content chimes with the trend looking for drinks that don’t knock you out.
‘This year’s drink’
Mills says Vodkat’s 70cl bottle with pound;5.99 price mark on its lid is performing well in cash and carry, and in the run-up to Christmas it will be supported with a pound;400,000 TV campaign. Zamaretto joins the burgeoning amaretto category. Mills comments: “With young people developing a taste for it, it’s definitely this year’s drink. Cash and carries have been seeing a lot of business from the on-trade.” It will be supported with Tony Christie ‘Show me the way to Zamaretto’ bumpers through the new series of Benidorm on ITV1.
Mills adds: “Christmas is very important for us in terms of volume, but not as important in terms of a sales spike as for brands like Baileys. Rather than being a once or twice a year purchase, people are buying our products week in, week out, because of their price point and ABV.
“With our pound;5.99 price point I’m always telling retailers our products should be out on display, rather than behind the counter with heavier, more expensive spirits, and the same goes for cash and carries. Visibility is what sells and if they are on display they will sell.”
Global Brands trade marketing manager Justin Horsman reckons his company has got some ideal products for the Christmas season. He says: “Goldschlager Cinnamon Schnapps is the second fastest-growing non-cream liqueur by volume (+15%) and by value (+14%), and is the perfect option for any Christmas drinks cabinet, as its cinnamon undertones gesture towards traditional Christmas flavours.” He suggests Myers’s Dark Rum is ideal for a warming English rum punch, and Corky’s flavoured vodka shots can be consumed at home like a liqueur. For calorie conscious revellers VK Lo, an extension of the VK Vodka Kick brand, contains just 49 calories.
CWF’s field sales team prides itself on the close contact and service offered to the wholesale channel, according to marketing manager Vicky Lee. She says: “From head office, through to spirits managers within individual branches, our sales team provides support by ensuring regular and targeted promotion activity is in place, that attractive merchandising displays are created and that trade tasting days are supported to promote the products.”
She describes CWF products as value positioned and they include: VXi, an eight-bottle party pack; Orchards flavoured schnapps; Bali, a rum-flavoured mixer; and Arino amaretto.
“ARTDs are a really important spirit option over the festive period,” says Debs Carter, Beverage Brands marketing director. “Last year, WKD led the ARTD market at Christmas with its average weekly sales rocketing by 113% in take home. With consistently high levels of consumer demand, WKD really is a ‘must-stock’ brand in the run-up to Christmas.
“As well as investing heavily in the brand to build consumer demand, we’ll also be offering a comprehensive selection of trade and consumer promotions across our range of SKUs to encourage stocking and ensure high rates of sale. As a result, WKD is a brand that both wholesalers and retailers can trust to sell-through. In uncertain economic times, managers should avoid the temptation to stock high-risk, alternative brands as these are likely to take up shelf space, sell slowly and tie-up all-important cash around Christmas.”