Christmas is crucial to the beers, wines and spirits (BWS) category and the week leading up to December 25 is the most important time, when 38% of December alcohol sales occur (Nielsen data).
Faith Holland, head of category development at Diageo GB, says premiumisation is a key trend, with 69% of shoppers planning to trade up in alcohol over the Christmas period.
"We have seen premium spirits experience double-digit growth and drive total spirits performance, which really demonstrates that people are happily trading up in their purchases. Consumers are increasingly looking for unique products that provide a quality taste experience, which they are willing to pay more for, and this is reflected in their spirit purchases.
"The trend towards premium-isation is likely to continue as consumers become more mindful than ever about how a particular drink was made, where it comes from and how it is served."
Holland says creating cocktails at home is currently a huge trend for consumers as they look to replicate what they’ve seen in pubs and bars in their own homes.
"Retailers should make it easy for shoppers to find ingredients to create their own cocktails by grouping ingredients and suggesting simple serve ideas. Stores can personalise their offering using ’Manager’s Choice’ or ’Cocktail of the Day’ labels, or by creating an in-store bar, which provides visibility of finished drink solutions on display together," she advises.
And alcohol gifting continues to grow too with Holland explaining that price, brand approval, and brand appreciation are key influencing factors in the customer’s decision.
Alistair Pummery, Tia Maria’s off trade brand manager UK, says that this Christmas, he expects shoppers to be on the hunt for ingredients to create the classic Espresso Martini as well as experimenting with different cocktails, all in the comfort of their own home.
"With this in mind, it is important that retailers stock up ahead of the festive period to ensure they can cater to these consumer needs," he adds.
Pummery says the number of core spirits on offer has grown dramatically in the past few years, as brands introduce limited edition offerings and new flavours to the market. "The Top 20 spirits make up 69% of total spirit sales (Nielsen) so it is vital that retailers stock leading brands such as Tia Maria, which is one of the shopper’s favourites during the winter months," he says.
As for sub-category performance, gin is still popular. And, according to the latest market report from the Wine and Spirit Trade Association (WSTA), gin sales in the UK reached £1.5bn in the 12 months to March 2018, the equivalent of almost 55 million bottles.
Gordon’s benefited from the successful launch of its Premium Pink variant in the on and off trade towards the end of last year and has cemented its position as Britain’s biggest-selling gin brand (Nielsen).
The brand is tapping into demand for credible low or non-alcoholic alternatives with new Gordon’s Ultra Low Alcohol G&T a low-alcohol drink in two flavour variants that Holland says doesn’t compromise on taste and contains the same botanicals as a classic gin and tonic. It contains less than 0.5% alcohol and just 68 calories per serve.
Overall, Diageo spirits sales are up 13.8% since last year, to 30.6% (Nielsen). The rum category has seen 4% year-on-year growth, driven by the Captain Morgan brand, which is growing 15.9% year-on-year. Meanwhile the whisky category is worth over £1.2bn annually and has increased by 2.1% compared with last year.
The vodka category has seen a decline over the past year, however Smirnoff is still the largest brand in the UK, with a 63% volume share. And the popularity of cocktails is good for vodka as over half (58.7%) of cocktails served in GB contain the spirit.
Pernod Ricard UK is calling on convenience retailers to plan an eight-week Christmas campaign from November onwards to capitalise on an £18.4m sales opportunity. The premium drinks company has identified that if every convenience store took an additional £557 in spirits sales (by selling an additional three bottles per week) in the eight weeks before Christmas, the channel would command the same market share as grocery.
At the same time, Pernod Ricard UK is investing £3m in Christmas marketing to ensure shoppers are thinking about their alcohol choices before going into a store. Its campaign focuses on Absolut, Jameson, Plymouth Gin and Beefeater Pink. It’s the second installment of the ’Mix with The Good Stuff’ campaign and will include the following four key serves: Jameson Irish Coffee, Absolut Porn Star Martini, Plymouth Gin & Tonic, The Beefeater Pink & Tonic.
Chris Shead, off-trade channel director for Pernod Ricard UK, says: "This is a huge opportunity for retailers and one they can get right by doing three things: ensure premium spirits get proportionately more shelf space than standard; increase basket spend by advertising cocktails in store, using our pos; and finally, ensure NPD is listed to excite consumers looking for new flavours and tastes."
For total off-trade, NPD represents 40% of total spirits value growth so innovation presents a growing sales opportunity for the impulse channel. Shead says Beefeater Pink is a case in point.
"If impulse retailers matched grocery conversion they could sell almost double the volume of this new SKU in stores. And flavoured vodka drove all vodka category growth in the past year in impulse yet it is only in 55% distribution in this channel."
Finally, at Costcutter Supermarkets Group, they are tapping into the booming craft pint trend, and introducing 30 craft beers and ciders for independent retailers.
Brand manager Jenny Leetch says: "The range includes beers and ciders from around the globe as well as locally sourced small batch brewers which are available to retailers through Costcutter Supermarkets Groups central supply chain as well as Direct to Store. Grapefruit, liquorice and tropical fruits are just some of the exotic flavours available in 330ml cans and 500ml bottles."
Leetch says it’s worth remembering that the festive period often brings new shoppers through the doors, and if you give them a great shopping experience they’ll be back in the New Year.
"Making the shopper’s visit as stress-free as possible is more important than ever at this time of the year, which is why retailers really need to up their game when it comes to in-store marketing, merchandising and festive displays," she explains.
"Ensure Christmas stock is at the front of the shop, with key categories grouped together, and place inspirational marketing, like recipe cards or staff recommended shelf barkers, around the store."
Inspire, display then sell
Tap into the top three missions for convenience shoppers: ’something for tonight’, top up and gifting.
Make alcohol more visible and accessible in-store as off-fixture displays can help grow sales.
Stock ’must stock’ lines to increase alcohol sales.
Enhance ’must stock lines’ with additional SKUs, such as new, premium and local or seasonal products.
Blocking sub-categories should be blocked together (such as whisky, gin and rum) as it helps shoppers see what a store has to offer more easily. Consider vertical blocking for larger fixtures to make them easier to navigate.
Brand signposts brand leaders, such as Gordon’s and Smirnoff, are recognisable place them in the centre of the sub-category to make them stand out.
Clear pricing shoppers are less likely to make a purchase if they are unsure of the price. Ensure the price of each product is clearly labelled.
Stock PMPs to reassure your customers they are getting the best value.
Run promotions in-store to drive impulse purchases and positive value perception among shoppers.
Upskill staff in the area of alcohol and ensure they can talk to customers confidently about the category, encouraging trade up and driving associated purchases.
To help retailers unlock the sales potential presented by spirits and party drinks, Diageo has developed My Store Matters merchandising advice under the Inspire, Display and Sell name.
Andrew Jackson, Fentimans marketing director, says: "Increasingly, consumers are drinking less alcohol with Brighter Futures revealing that 43% of millennials drink less than they did three years ago, and some even describing themselves as teetotal. Retailers need to ensure their soft drinks offer something to suit everyone, from authentic craft soft drinks, to premium tonics, as well as more exciting and unusual flavours. Ensuring there is a product to suit all tastes is key.
"The continued rise in the popularity of premium tonics is another key trend that retailers should be thinking about when planning their stock range for Christmas. During the festive season, where customers might usually choose to enjoy an alcoholic drink, they are now more likely to spend a little more and pick a premium mixer to accompany their spirit of choice. In addition, a report by RBC Capital Markets shows that 80% of consumers list taste as the most important factor when choosing a tonic water, compared with just 15% who consider price."
Retailer view Alex Clement, Spar Warton, Preston:
"We have quite a big beer and wine range all year round, but we’ll definitely stock more spirits for Christmas and New Year. We’ll have a festive display of fancy gins and juniper berries because gin is very popular at the moment.
"On beer we sell more crates than four-packs for Christmas. There’s no one big seller; it all sells well, but in cider Strongbow Dark Fruits is popular.
"I think people generally trade up at Christmas to nice bottles of wine, especially when they are on promotion."