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Attitudes towards Premium Alcoholic Drinks - UK - March 2015

“As many consumers appear to have become savvier and more discerning, brands need to move beyond attaching a generic premium claim to their drinks.”
– Chris Wisson, Senior Drinks Analyst

This report looks at the following areas:

  • Moving beyond generic ‘premium’ claims
  • Boosting premium associations in lighter drink categories
  • Utilising promotions to drive volume sales
  • Encouraging trading up in financially challenging times

Despite disposable incomes remaining under pressure and prices of alcohol rising, various premium drink brands have enjoyed strong sales growth in recent years. Over 50% of adults report buying premium alcoholic drinks in the six months to December 2014, reflecting the popularity of the top tier of the market. However, the majority of Brits are still cutting back on alcoholic drinks in general, partially driven by cost considerations.

Around a third of drink buyers now associate premium variants with those which are more expensive than similar drinks, underlining how the widespread use of the term ‘premium’ has seen its meaning evolve. As many drinkers scrutinise their purchases, brands are under pressure to justify a premium claim/positioning and provide tangible reasons for their comparatively high prices.

This report explores consumer perceptions of premium alcoholic drinks and their usage of and attitudes towards them. Despite the economic downturn, premium drinks remain one of the key drivers of future growth in a mature alcohol market.

 

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • Market factors
              • Drink prices continue to rise
                • Financial health remains rocky for many
                  • Population changes pose threats and opportunities
                    • Companies and brands: Innovation
                      • The consumer
                        • Premium and standard drinks are equally popular in most categories
                          • Figure 1: Purchase of alcoholic drinks, December 2014
                        • Perceptions of premium drinks are mixed
                          • Figure 2: Alcoholic drinks’ premium associations, by category, December 2014
                        • Consumers have rational expectations of spend on premium drinks
                          • Flavour leads the way when defining premium alcoholic drinks
                            • Figure 3: Qualities seen to define premium alcoholic drinks (any ranking 1-5), December 2014
                          • Widespread distrust of premium drinks’ credentials
                            • Figure 4: Attitudes towards premium alcoholic drinks, December 2014
                          • What we think
                          • Issues and Insights

                              • Moving beyond generic ‘premium’ claims
                                • The facts
                                  • The implications
                                    • Boosting premium associations in lighter drink categories
                                      • The facts
                                        • The implications
                                          • Utilising promotions to drive volume sales
                                            • The facts
                                              • The implications
                                                • Encouraging trading up in financially challenging times
                                                  • The facts
                                                    • The implications
                                                    • Trend Application

                                                        • Make it Mine
                                                          • Minimize Me
                                                            • Collective Intelligence
                                                            • Market Drivers

                                                              • Key points
                                                                • Alcoholic drink prices continue to rise
                                                                  • Figure 5: RPI indexed annual change for alcoholic drink prices versus all items except housing, 2000-14
                                                                  • Figure 6: UK excise duty rates for selected alcoholic drinks, 2003-14
                                                                • Financial health recovers but remains fragile
                                                                  • Figure 7: Trends in how consumers describe their financial situation, December 2009-December 2014
                                                                  • Figure 8: Trends in consumer sentiment for the coming year, December 2014
                                                                • UK consumers have continued to cut back on alcohol
                                                                  • Figure 9: Trends in UK per capita consumption of 100% alcohol, 2007-13
                                                                  • Figure 10: HM Treasury estimated changes in volume consumption of alcohol over 2014/15-2018/19 following changes to alcohol duty in Budget 2014, April 2014
                                                                • An ageing population could pose a threat to premium drinks
                                                                  • Figure 11: Projected trends in the age structure of the UK population, 2014-19
                                                              • Strengths and Weaknesses

                                                                • Strengths
                                                                  • Weaknesses
                                                                  • Who’s Innovating?

                                                                    • Key points
                                                                      • Selected premium NPD activity
                                                                        • Beer
                                                                          • Cider
                                                                            • Wines
                                                                              • Spirits/Liqueurs
                                                                              • The Consumer – Purchase of Alcoholic Drinks

                                                                                • Key points
                                                                                  • Premium and standard drinks are equally popular in most categories
                                                                                    • Figure 12: Purchase of alcoholic drinks, by category, December 2014
                                                                                    • Figure 13: Purchase of premium alcoholic drinks, by category, by gender, December 2014
                                                                                  • Still/fortified wines fare poorly at the premium tier
                                                                                    • Figure 14: Purchase of premium alcoholic drinks in the past year as a share of overall purchase within category, December 2014
                                                                                    • Figure 15: Purchase of premium alcoholic drinks as a proportion of category purchases, by gender, December 2014
                                                                                  • Dark spirits perform strongly at the premium tier
                                                                                    • 57% of adults buy premium drinks
                                                                                      • Figure 16: Repertoire for purchase of standard/economy and premium alcoholic drinks, December 2014
                                                                                  • The Consumer – Perceptions of Premium Alcoholic Drinks

                                                                                    • Key points
                                                                                      • Summary of perceptions of premium alcoholic drinks
                                                                                        • Figure 17: Alcoholic drinks’ premium associations, by category, December 2014
                                                                                      • Lager is seen most widely as the most premium type of beer
                                                                                        • Figure 18: Beer types seen as most premium, December 2014
                                                                                      • Fruit-flavoured is seen most widely as premium cider
                                                                                        • Figure 19: Cider types seen as most premium, December 2014
                                                                                      • Still wine falls behind sparkling on premium image
                                                                                        • Figure 20: Wine types seen as most premium, December 2014
                                                                                      • Red leaves white and rosé behind on premium image in still wine…
                                                                                        • Figure 21: Still wine types seen as most premium, December 2014
                                                                                      • …while Champagne still dominates in sparkling
                                                                                        • Figure 22: Sparkling wine types seen as most premium, December 2014
                                                                                      • Prosecco enjoys a premium image within the sparkling segment
                                                                                        • Figure 23: Sparkling wine types seen as most premium, December 2014
                                                                                      • White spirits have an image problem
                                                                                        • Figure 24: Spirit and liqueur types seen as most premium, December 2014
                                                                                        • Figure 25: White spirits types seen as most premium, December 2014
                                                                                      • Cream liqueurs edge out non-cream ones in premium connotations
                                                                                          • Figure 26: Liqueur types seen as most premium, December 2014
                                                                                        • Brandy/Cognac leads the way in perceptions of dark spirits
                                                                                          • Figure 27: Dark spirits types seen as most premium, December 2014
                                                                                      • The Consumer – Spending on Premium Alcoholic Drinks

                                                                                        • Key points
                                                                                          • Consumers have realistic expectations of premium prices
                                                                                            • Users are prepared to spend almost £2.50 on premium beer and cider
                                                                                                • Figure 28: Amount consumers are prepared to spend on premium beer and cider (500ml bottle), December 2014
                                                                                              • A third of still wine buyers are prepared to spend more than £10
                                                                                                • Figure 29: Amount consumers are prepared to spend on premium still wine (750ml bottle), December 2014
                                                                                                • Figure 30: Estimated share of the price of bottles of wine which is accountable to ‘wine quality’
                                                                                              • 36% of sparkling wine/Champagne buyers are prepared to break the £25 mark
                                                                                                • Figure 31: Amount consumers are prepared to spend on premium sparkling wine/Champagne (750ml bottle), December 2014
                                                                                              • A quarter of spirit buyers prepared to spend £25 or more
                                                                                                • Figure 32: Amount consumers are prepared to spend on premium spirits (700ml bottle), December 2014
                                                                                            • The Consumer – Qualities Associated with Premium Alcoholic Drinks

                                                                                              • Key points
                                                                                                • Flavour leads the way when defining premium alcoholic drinks
                                                                                                  • Figure 33: Qualities seen to define premium alcoholic drinks (any ranking 1-5), December 2014
                                                                                                  • Figure 34: Qualities seen to define premium alcoholic drinks (ranking 1), December 2014
                                                                                                • Heritage and ageing are additional levers for premiumisation
                                                                                                  • Other cues only garner limited response
                                                                                                  • The Consumer – Attitudes towards Premium Alcoholic Drinks

                                                                                                    • Key points
                                                                                                      • Widespread distrust of premium drinks’ credentials
                                                                                                        • Figure 35: Attitudes towards premium alcoholic drinks, December 2014
                                                                                                      • Gifting and special occasions are important for premium drinks
                                                                                                        • Cost and premium alcoholic drinks
                                                                                                          • Encouraging consumers to pay more
                                                                                                          • The Consumer – Target Groups

                                                                                                            • Key points
                                                                                                              • Four target groups
                                                                                                                • Figure 36: Target groups, December 2014
                                                                                                              • Traditionalists (26%)
                                                                                                                • Disengaged (30%)
                                                                                                                  • Connoisseurs (23%)
                                                                                                                    • Enthusiasts (21%)

                                                                                                                    Attitudes towards Premium Alcoholic Drinks - UK - March 2015

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