It’s a good time to be in the booze business. Nielsen figures show that the total off-trade BWS market was up 3.8% in the year to December 29, 2018.
Gin, sparkling wine, fruit cider and craft beer are among the fastest-growing categories, though still wine is among the few strugglers in the face of the dynamic changes in those rival segments.
Alcohol has long been one of the biggest profit generators in the convenience sector but recent growth in numerous categories has increased its importance.
Spar Blakemore Retail at Newark in Nottinghamshire has just undergone a refit to its forecourt shop in which an improved BWS section was a key element. "It’s a strong category for us," says store manager Gemma Lathan. "We’re probably running at about 20% of total sales. It’s all been relaid and we’ve had new chillers, display and signage put in for it.
"We sell an awful lot of premium vodka," she adds. "That’s quite big for us. We sell more single cans of lager and ale than four-packs, but then we sell a lot of fridge packs, so we go from single packs straight to 10-packs and bigger.
"Red wine is more popular than white wine and Prosecco hasn’t been a big seller for us.
"I’ve purposely brought in more flavoured gin lines because they were very popular over last summer. They died down over the winter but we’ve refreshed the range with some different flavours and it’s starting to shift a little bit more now.
"World beer is a big one. If I’ve got it on promotion it’s a very big mover. Then outside of that the main sellers in beer are the big brands like Stella Artois."
Last year was a great one for beer and cider frequently grouped together as long alcoholic drinks with combined off-trade sales for the two categories up by 8.1% to just under £3.8bn (IRI, year to February 2).
Lager was the big winner within beer, up 8.6%, with every sub-sector in growth, driven by the glorious early summer weather in 2018 and the football World Cup.
So-called world beer including brands such as Peroni, San Miguel and the fast-rising likes of Moretti and Estrella Damm was the best growth performer, up 18.2%, aided by interest in the cuisine and culture of their countries of origin.
Mainstream premiums, including the likes of Stella Artois and Budweiser, posted growth of 6.5%.
Toby Lancaster, category and shopper marketing director at Moretti supplier Heineken UK, says the market has inched away from the big-pack promotions of the past.
"In recent years, the beer category has been characterised by heavily discounted large packs which have stemmed value growth in the category," says Lancaster "We saw a step change in this promotional strategy over the course of 2018 with an improved mix of products and packs being sold as well as some degree of promotional inflation in large packs of classic beer.
"With a third of all drinking occasions now including food and 43% of large single bottles purchased to accompany a meal, a huge revenue stream has been created for retailers who have cross-merchandised food and drink to drive sales."
Standard lager has struggled to keep up with premium brand growth in recent times, but it too saw improvement last year, up 2.4% (IRI, year to February 2).
Carlsberg is trying to inject some energy into standard lager with a major relaunch for its main brand this spring under the name Carlsberg Danish Pilsner, with a new UK-only recipe.
It is also leading the market in taking the plastic hi-cone off the top of open multipacks to replace it with pull-apart cans connected with a glue. It says the move will reduce its plastic use by 50%.
Liam Newton, vice president of marketing for Carlsberg UK, says: "In the UK, over the course of the last 10-20 years we’ve lost our way a little bit on our core Carlsberg brand. We started focusing on the wrong things in the way all standard lager focused on the wrong things."
He says consumer research showed that young people have become more adventurous in their beer choices and see standard lager as an older consumer’s drink, sold on imagery around bloke-ish nights in the pub watching sport.
"There are 1.6 million fewer people drinking standard lager than there were five years ago," he adds. "A million of those 1.6 million are 18- to 34-year-olds.
"Those consumers that in the past perhaps started their beer journey in standard lager and premiumised as they got older have fundamentally turned their back on standard lager. It’s been a tough place to operate in for the last few years."
Carling is also changing tack this year, though less dramatically, with a new marketing campaign championing "local pride" and people who make things happen in their communities. It’s also set up a fund to help community projects. The campaign is inspired by the people of Burton-on-Trent who make the beer, said brand director Miranda Osborne at brewer Molson Coors.
"Scratch beneath the surface and you’ll find countless stories like ours, those of passionate, dedicated people making things happen in their hometowns," says Osborne.
"Uncovering some of these inspired us to create the Made Local Fund, our commitment to supporting new ideas and activities that will benefit communities and the people that underpin them."
The emergence of a vibrant craft brewing scene has seen traditional premium bottled ales take a knock with sales down 1.6% in the year to February.
Craft beer is the biggest single-growing sub-category of the market, with craft ale up 34.5% annually and craft lager up 54.6%, and several multiples have been promoting it with ’three-for’ promotions to generate trial.
It’s definitely an area for forecourts to explore but perhaps also one in which to tread carefully against other categories. Craft ale is still only around a sixth the size of world beer, for example, and a tenth that of mainstream premium lager. "Craft beer has not made much of an impression at all for us," says Gemma at the Spar forecourt in Newark.
Jim Hopkins, off-trade category manager at Pedigree brewer Marston’s, says injecting variety into ale ranges is important.
"Ensure that you satisfy a breadth of range before extending the depth of the range within categories," he says.
"Simply put, stocking an amber, gold, dark and IPA premium bottled ale brand is better than stocking four amber SKUs.
"Our consumer research shows that premium canned ale attracts a different shopper to bottles. Fifteen per cent of ale shoppers will only buy into the premium can format, so it is important to stock a range of bottled and canned ale SKUs to attract more shoppers."
Cashing in on the gin craze
The phenomenal growth of gin in recent years has seen other categories attempt to muscle into its territory in the hope that some of the good fortune rubs off.
The Wine & Spirit Trade Association says that over 66 million bottles of gin, worth £1.9 billion, were sold in the UK last year, an annual increase of 41%.
Two of the biggest alcohol product launches of the first quarter of 2019 see well-known non-gin brands adopting distinctly gin-like characteristics.
Treasury Wine Estates has launched Blossom Hill Gin Fizz, an 8.5% abv spin-off of its famous Californian wine brand made with white wine, botanical-infused water and a "dash of gin". It comes in Lemon & Rosemary and Rhubarb flavours, has an rrp of £9 and has convenience sector listings with Booker and Nisa.
Global marketing manager Bo Jakubenko says: "The launch underlines our determination to modernise the Blossom Hill brand and to help make the wider wine category more relevant.
"Gin is booming and people are looking for freshness and convenience from their drinks purchases."
Diageo’s Ketel One premium vodka is making a more subtle encroachment on gin terrain with its Ketel One Botanical, which comes in Peach & Orange Blossom, Cucumber & Mint, and Grapefruit & Rose varieties. Master distiller Bob Nolet says: "We’ve watched the gin category boom in recent years, introducing new and herbaceous flavours.
"Premium vodka continues to grow alongside this. We see Ketel One Botanical playing a key part of this ongoing evolution."
The trend towards better-for-you products has had a positive impact on the drinks market. Low and no-alcohol beers and ciders are increasing sales rapidly with the value of the off-trade market up 30.2% in the year to February 2 (IRI).
Big brewers’ lagers such as Beck’s Blue, Budweiser Prohibition and Heineken 0.0 dominate the sector but ales such as Greene King’s Old Speckled Hen Low Alcohol have also gained retail space.
Matt Starbuck, managing director of Greene King Brewing & Brands, says: "The low-alcohol beer market is fast evolving as people’s drinking habits adapt to fit with healthier lifestyle choices."
Brewers have also got into the free-from market with gluten-free versions of brands including Corona, Peroni and Stella Artois, while Stella brewer AB-Inbev has made a significant move into the low-calorie arena with its Michelob Ultra in slimline cans.
The better-for-you movement has also reached spirits with the launch of alcohol-free brands such as Diageo-backed Seedlip, Pernod Ricard’s Ceder’s and Elegantly Spirited’s Stryyk range.
Diageo has made considerable distribution gains for Baileys Almande, a dairy-free and vegan-friendly version of its best-selling cream liqueur.
Toby Lancaster, category and shopper marketing director at Heineken UK, which has also just launched Moretti Zero, says: "With alcohol-free options creating new drinking occasions for shoppers, retailers should position no-alcohol options in Zero Zones to capture shoppers’ attention and increase visibility."