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Alcohol Ready to Drink (RTDs) - UK - September 2009

While FABs (Flavoured Alcoholic beverages) grew the alcoholic RTD (Ready-to-drink) sector exponentially during the late 90s, the landscape of the alcoholic market has since led to their equally sharp decline. With furore over binge and underage drinking, they have found themselves, somewhat harshly, a scapegoat for wider societal problems, however, they have done little to challenge this label and appeal to a broader audience.

The alcohol market has changed dramatically since then. Concern about healthy lifestyles means that consumption is now on the decline, with the soft drinks market on the rise. There is also an ageing population – and one that is more likely to “grow old disgracefully”, meaning sales of alcohol are increasingly being driven by 45+ adults; there is also an increasing shift towards in-home drinking.

Pre-mixed spirits and cocktails have emerged recently but look set to capitalise on this changing market dynamic. Mintel’s research shows that they appeal to an older and more sophisticated target audience, and they can capitalise on the current popularity – but lack of knowledge of how to make - cocktails in particular.

Key themes

  • What are the reasons behind the continuing rejection of the market and how can it be redeveloped?

  • How are brands competing in this market being positioned to avoid being tainted with the FABs brush?

  • Can improvements in quality drive consumption amongst an older group?

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definition
          • Abbreviations
          • Future Opportunities

              • Upping the ante
                • Addressing moodstates
                • Market in Brief

                  • FABs in freefall
                    • Pre-mixed are the new generation of RTDs
                    • Internal Market Environment

                      • Key points
                        • Decline in on-trade means a decline in drinking
                          • Figure 1: Drinking trends for the adult population, and proportion who drink in-home and out-of-home, 2005-09
                        • Younger consumers becoming less valuable
                          • Figure 2: Volume Index Importance* of alcohol drinkers, by age, 2005-09
                          • Figure 3: Agreement that the point of drinking is to get drunk, by age group, 2005-09
                        • However, cider is challenging FABs on in-store price
                          • Figure 4: Supermarket price point of RTDs versus flavored cider and lager, 2009
                        • More need to capitalise on a convenience culture
                          • Figure 5: Statements about convenience, 2009
                        • Naturalness versus energetic
                          • The attraction of low calories
                            • Figure 6: Calories contained in typical serves of different alcohol types, 2009
                        • Broader Market Environment

                          • Key points
                            • A political football
                              • Taxed to the limit
                                  • Figure 7: Rates of excise duty on RTDs*, 2002-09
                                • Economic outlook still uncertain
                                  • Figure 8: Consumer confidence index over 12 months Aug 2008-Aug 2009
                                  • Figure 9: Trends in PDI and consumer expenditure, 2004-14
                                • Legislation increases off-trade influence
                                  • Figure 10: UK premises with 24-hour licences, 2008
                                • Double-digit growth among 25-34s
                                  • Figure 11: Structure of the UK 18+ population, by age, 2004-14
                                • Increasingly middle class
                                  • Figure 12: Structure of the UK population, by socio-economic group, 2004-14
                              • Competitive Context

                                • Key points
                                  • Wine, cider and champagne see the most success
                                      • Figure 13: UK value sales of alcoholic drinks, by type, 1998-2008
                                      • Figure 14: Trends in consumer base, by type of drink, 2005-09
                                    • Increased range of sweet-tasting competitors
                                      • Population going soft
                                        • Figure 15: A comparison of UK value sales for alcoholic and non-alcoholic drinks, 1998-2008
                                        • Figure 16: Value sales of the non alcohol drinks market, 2004-08
                                    • Strengths and Weaknesses

                                      • Strengths
                                        • Weaknesses
                                        • Who’s Innovating?

                                          • Key points
                                            • New products and brand extensions fuelling the market
                                              • Figure 17: UK NPD activity in alcoholic RTDs, by launch type, 2006-08
                                            • Low-calorie products a key selling point
                                              • Mixed success when it comes to fruit mixers
                                                • US market better at tapping super-fruit trends
                                                  • Big brands and pre-mixed spirits
                                                    • Own-label backs off
                                                      • New pre-mixed cocktails
                                                        • DIY cocktails bring out the fun factor
                                                        • Market Size and Segmentation

                                                          • Key points
                                                            • Market in freefall
                                                                • Figure 18: UK volume and value sales of RTDs, 2004-14
                                                              • Amidst the gloom, a silver lining
                                                                • Strong growth of pre-mixed drinks will help the RTD category to recover
                                                                  • Figure 19: UK value sales of RTDs at current prices, by sector, 2004-14
                                                                  • Figure 20: UK value sales of RTDs at real prices, by sector, 2004-14
                                                                  • Figure 21: UK volume sales of RTDs, by sector, 2004-14
                                                                  • Figure 22: Share of UK volume sales of RTDs, by drink type , 2004-14
                                                                • FABs continue to decline but will still appeal to a core
                                                                  • Factors used in the forecast
                                                                  • Market Share

                                                                    • Key points
                                                                      • Diminishing FABs market dominated by big brands
                                                                        • Smaller companies helping to pioneer pre-mixed category
                                                                        • Companies and Products

                                                                          • Key points
                                                                            • Anglo Drinks
                                                                              • Bacardi-Martini Ltd
                                                                                • Beverage Brands
                                                                                  • Diageo
                                                                                    • G&J Greenall
                                                                                      • Global Brands
                                                                                        • Halewood International
                                                                                          • Manchester Drinks
                                                                                            • West Eleven Cocktails
                                                                                              • Other
                                                                                                • Own-label
                                                                                                • Brand Communication and Promotion

                                                                                                  • Key points
                                                                                                    • FABS pull the plug on above-the-line support
                                                                                                      • Figure 23: Main monitored media advertising spend on FABs, compared to market value sales, 2005-09
                                                                                                    • Bacardi Mojito single-handedly driving spend on pre-mixed cocktails
                                                                                                      • Figure 24: Main monitored media advertising spend on Bacardi Mojito, 2005-09
                                                                                                    • WKD is the last FAB standing
                                                                                                      • Figure 25: Main monitored media advertising expenditure on RTDs, by top 10 brands, 2005-09
                                                                                                    • A seasonal targeting strategy
                                                                                                      • Figure 26: Seasonal average adspend and new product launching for RTDs, 2006-08
                                                                                                  • Channels to Market

                                                                                                    • Key points
                                                                                                      • Despite a decline in share, on-trade dominates market value
                                                                                                          • Figure 27: UK volume and value sales of RTDs, in the on- and off-trade, 2007-09
                                                                                                          • Figure 28: UK volume sales of RTDs, in the off-trade, 2007-09
                                                                                                        • A hard time for pubs and clubs
                                                                                                          • Figure 29: UK volume sales of RTDs in the on-trade, by outlet type, 2007-09
                                                                                                      • Consumer Usage

                                                                                                        • Key points
                                                                                                          • Three in ten are drinkers
                                                                                                            • Figure 30: Consumption of RTDs in the past 12 months, July 2008
                                                                                                            • Figure 31: Consumption of RTD types amongst RTD users in the past 12 months, July 2008
                                                                                                          • An increasingly narrow focus
                                                                                                            • Figure 32: VII (volume Importance Index) of pre-mixed spirits and alcoholic carbonates, gender, age and socioeconomic group, 2005-09
                                                                                                            • Figure 33: Usage of pre-mixed spirits and alcoholic carbonates, July 2009
                                                                                                          • Pre-mixed spirits/cocktails seen as more mature option
                                                                                                          • Attitudes and Occasions

                                                                                                            • Key points
                                                                                                              • Figure 34: Attitudes towards RTDs, July 2009
                                                                                                            • Bringing out the benefits
                                                                                                              • Capitalising on festival fever
                                                                                                                • RTDs not on the radar of most drinkers
                                                                                                                  • Lowering ABV can attract a more mature consumer
                                                                                                                    • Being in control
                                                                                                                      • Pre-mixed have a greater association with summer and mealtime occasions
                                                                                                                        • Figure 35: Occasions associated with RTDs, July 2009
                                                                                                                    • Identifying potential targets

                                                                                                                      • Key point
                                                                                                                        • 12 million strong potential targets out there…
                                                                                                                          • Figure 36: Attitudinal targets according to attitudes towards RTDs
                                                                                                                        • Xmas Indulgers
                                                                                                                          • Pleased With The Ease
                                                                                                                            • Not On Their Radar
                                                                                                                              • Not Ready to Drink
                                                                                                                                  • Figure 37: Statements on ready-to-drink alcoholic beverages, by target groups, July 2009
                                                                                                                              • Appendix – Internal Market Environment

                                                                                                                                  • Figure 38: Drinking trends by volume, for the total population, in-home and out-of-home drinkers, 2005-09
                                                                                                                              • Appendix – Brand Communication

                                                                                                                                  • Figure 39: Top spending above-the-line advertisers in the FAB category, 2005-09
                                                                                                                                  • Figure 40: Above-the-line advertising spend in the FAB category, by media type, 2006-08
                                                                                                                              • Appendix – Consumer Usage

                                                                                                                                  • Figure 41: Overall consumption of pre-mixed spirits and alcoholic carbonates, gender, age and socio-economic group, 2005-09
                                                                                                                                  • Figure 42: Heavy consumption of pre-mixed spirits and alcoholic carbonates, by gender, age and socio-economic group, 2005-09
                                                                                                                              • Appendix –Attitudes and Occasions

                                                                                                                                  • Figure 43: Attitudes towards RTDs, by demographics, July 2009
                                                                                                                                  • Figure 44: Attitudes towards RTDs, by demographics (continued)
                                                                                                                                  • Figure 45: Occasions people associate with drinking RTDs, by demographics, July 2009
                                                                                                                                  • Figure 46: Occasions people associate with drinking RTDs, by demographics (continued)
                                                                                                                              • Appendix – Identifying Potential Targets

                                                                                                                                  • Figure 47: Target groups, by demographics, July 2009
                                                                                                                                  • Figure 48: Ready-to-drink alcoholic beverages drunk in the past 12 months, by target groups, July 2009
                                                                                                                                  • Figure 49: Drinking occasions associated with ready-to-drink alcoholic beverages, by target groups, July 2009

                                                                                                                              Companies Covered

                                                                                                                              • Aldi Stores Ltd (UK & Ireland)
                                                                                                                              • Asda Group Ltd
                                                                                                                              • Bacardi-Martini Ltd
                                                                                                                              • Beverage Brands (UK) Ltd
                                                                                                                              • British Beer and Pub Association
                                                                                                                              • British Market Research Bureau (BMRB)
                                                                                                                              • British Medical Association (BMA)
                                                                                                                              • Co-operative Group
                                                                                                                              • Coca-Cola GB
                                                                                                                              • Daily Express
                                                                                                                              • Daily Mail
                                                                                                                              • Daily Mirror (The)
                                                                                                                              • Diageo Plc
                                                                                                                              • Federal Trade Commission
                                                                                                                              • G&J Greenall
                                                                                                                              • GBL International Ltd
                                                                                                                              • Gfk NOP
                                                                                                                              • Häagen-Dazs
                                                                                                                              • Halewood International Ltd
                                                                                                                              • J. Sainsbury
                                                                                                                              • Lidl (UK)
                                                                                                                              • Manchester Drinks Company
                                                                                                                              • Marks & Spencer
                                                                                                                              • Ocean Spray Cranberries, Inc
                                                                                                                              • Office for National Statistics
                                                                                                                              • Red Bull UK
                                                                                                                              • Tesco Plc
                                                                                                                              • The Sun
                                                                                                                              • Unilever Bestfoods UK Ltd
                                                                                                                              • Waitrose
                                                                                                                              • West Eleven Cocktails
                                                                                                                              • Wm Morrison Supermarkets

                                                                                                                              Alcohol Ready to Drink (RTDs) - UK - September 2009

                                                                                                                              £1,995.00 (Excl.Tax)