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Dark Spirits - UK - August 2011

“One of the key reasons why malt whisky has not seen the growth in sales that might have been expected given the many positive attributes associated with it, is the lack of major brands within this highly fragmented product segment. Those brands which have invested in their brand equity, such as Glenfiddich and Talisker, have also been guilty of focusing too much in ‘heather and weather’ imagery rather than the more personable identity projected by the likes of Jack Daniel’s.”

– Jonny Forsyth, Senior Drinks Analyst

  • Given its many advantages why isn’t malt whisky performing better than it is?
  • How can bourbon/Tennessee whiskey grow in the UK market?
  • Is it worthwhile Cognac/Armagnac investing further in the UK market given the opportunities in developing economies?
  • How can dark spirits leverage the trend for mixing drinks?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: UK value sales and forecast for dark spirits, 2006-16
            • Companies, brands and innovation
              • Figure 2: Market share of the dark spirit’s brands, by value sales in the off-trade, 2010
            • The consumer
                • Figure 3: Perceptions of drinkers of malt whisky, bourbon/Tennessee whiskey and Armagnac/Cognac, June 2011
              • What we think
              • Issues in the Market

                  • Given its many advantages why isn’t malt whisky performing better than it is?
                    • How can bourbon/Tennessee whiskey grow in the UK market?
                      • Is it worthwhile Cognac/Armagnac investing further in the UK market given the opportunities in developing economies?
                        • How can dark spirits leverage the trend for mixing drinks?
                        • Future Opportunities

                            • Experience is all
                              • Premiumisation and Indulgence
                              • Internal Market Environment

                                • Key points
                                  • Increasing importance of the off-trade to spirits
                                    • Figure 4: Trends in drinking alcohol, by venue, 2006-10
                                  • Younger people more likely to party at home
                                    • Figure 5: Occasions for drinking alcohol at home, 18-24-year-olds versus all drinkers, May 2011
                                  • More generally, targeting in-home is about mealtimes and relaxation
                                    • The challenge of de-seasonalisation
                                      • Figure 6: Weekly value sales of dark spirits and total spirits in the UK off-trade, May 2010-April 2011
                                    • Premiumisation is key for spirits
                                      • Provenance and ensuring quality is key for older consumers…
                                        • Figure 7: Index of agreement with lifestyle statements about paying extra for quality and British provenance, by gender, age group and social grade, 2010
                                      • … while more overt status motivates younger consumers
                                        • Figure 8: Index of agreement with lifestyle statements about status/quality, by gender, age group and social grade, 2010
                                      • Taxation creates an uneven playing field for spirits
                                        • Figure 9: Latest excise duty, by major alcohol category, August 2011
                                    • Broader Market Environment

                                      • Key points
                                        • Consumer incomes become increasingly squeezed…
                                          • Figure 10: Change in average weekly earnings compared to inflation in the UK, January 2005-April 2011*
                                        • Baby boomers are a key source of income
                                          • Figure 11: How respondents would describe their financial situation, by age group, May 2011
                                          • Figure 12: Forecast of adult population trends, by age group, 2006-16
                                        • ABC1 population is on the rise
                                          • Figure 13: Forecast adult population trends, by socio-economic group, 2006-16
                                      • Competitive Context

                                        • Key points
                                          • Hard times for the UK alcohol market
                                            • Spirits fare reasonably well compared to wine and lager
                                              • Figure 14: Trends in drink types consumed in the past 12 months, 2006-10
                                            • Only vodka outdoes dark and golden rum within the spirits category
                                                • Figure 15: Changes in penetration of different spirits, 2006-10
                                            • Strengths and Weaknesses in the Market

                                              • Strengths
                                                • Weaknesses
                                                • Who’s Innovating?

                                                  • Key points
                                                    • US import introduces flavoured variant to the UK whiskies market
                                                      • Kraken aims to take dark rum upmarket
                                                      • Market Size and Forecast

                                                        • Key points
                                                          • Dark spirits market continues its slow decline
                                                            • Figure 16: Volume and value sales and forecast for total dark spirits, 2006-16
                                                          • Whiskies will suffer a tough 2011 but things will improve thereafter
                                                              • Figure 17: Volume and value sales and forecast for whiskies, 2006-16
                                                              • Figure 18: UK value sales/forecast for whiskies, 2006-16
                                                            • Brandy goes into a steep decline
                                                              • Figure 19: Volume and value sales and forecast for brandy, 2006-16
                                                              • Figure 20: Value sales/forecast for brandy, 2006-16
                                                            • Cognac and Armagnac increasingly eye profitable overseas markets
                                                              • Figure 21: Volume and value sales and forecast for Cognac/Armagnac, 2006-16
                                                              • Figure 22: Value sales/forecast for Cognac/Armagnac, 2006-16
                                                            • Rum hits gold
                                                              • Figure 23: Volume and value sales and forecast for dark and golden rum, 2006-16
                                                              • Figure 24: Value sales/forecast for dark and golden rum, 2006-16
                                                            • Forecast methodology
                                                            • Market Segmentation

                                                              • Key points
                                                                • Rum sees double-digit growth in the on-trade
                                                                  • Whiskies become more reliant on declining off-trade volume sales
                                                                    • Figure 25: Volume sales in the on- and off-trade, by dark spirits category, 2009-11
                                                                    • Figure 26: Value sales in the on- and off-trade, by dark spirits category, 2009-11
                                                                  • A disappointing performance for malt as imports grows share
                                                                    • Figure 27: Whisky volume and value sales within the off-trade, by sub-category, 2010-11
                                                                • Market Share

                                                                  • Key points
                                                                    • Price dictates success of whisky brands
                                                                      • Figure 28: Market share of the top ten dark spirit’s value sales within the off-trade, 2008-10
                                                                      • Figure 29: Prices of top selling 70 cl whiskies* in the off-trade, August 2011
                                                                    • Morgan’s Spiced helps grow the rum category
                                                                    • Companies and Products

                                                                      • Key points
                                                                        • Beam Global
                                                                          • Brown-Forman
                                                                            • Diageo
                                                                              • First Drinks Brands
                                                                                • Gruppo Campari
                                                                                  • LVMH
                                                                                    • Maxxium
                                                                                      • Pernod Ricard
                                                                                      • Brand Research

                                                                                        • Brand map
                                                                                            • Figure 30: Attitudes towards and usage of dark spirits brands, June 2011
                                                                                          • Brand attitudes
                                                                                            • Figure 31: Attitudes by dark spirits brand, June 2011
                                                                                          • Brand personality
                                                                                            • Figure 32: Dark spirits brand personality – macro image, June 2011
                                                                                            • Figure 33: Dark spirits brand personality – micro image, June 2011
                                                                                          • Correspondence analysis
                                                                                            • Brand experience
                                                                                              • Figure 34: Dark spirit brand usage, June 2011
                                                                                              • Figure 35: % Satisfaction with various dark spirits brands, June 2011
                                                                                              • Figure 36: Consideration of dark spirits brands, June 2011
                                                                                              • Figure 37: Consumer perceptions of current dark spirit brand performance, June 2011
                                                                                              • Figure 38: Dark spirit brand recommendation – Net Promoter Score, June 2011
                                                                                            • Brand index
                                                                                              • Figure 39: dark spirit brand index, June 2011
                                                                                              • Figure 40: dark spirit brand index vs. recommendation, June 2011
                                                                                            • Target group analysis
                                                                                              • Figure 41: Target groups, June 2011
                                                                                              • Figure 42: Dark spirit brand usage, by target groups, June 2011
                                                                                            • Group One – The Conformists
                                                                                              • Group Two – Simply the Best
                                                                                                • Group Three – Shelf Stalkers
                                                                                                  • Group Four – Habitual Shoppers
                                                                                                    • Group Five – The Individualists
                                                                                                    • Channels to Market

                                                                                                      • Key points
                                                                                                        • Pubs/bars still account for more revenue than multiples – just
                                                                                                          • Figure 43: Value sales within the off- and on-trade channels for the total dark spirits market, 2009-11
                                                                                                        • Multiples go from strength to strength
                                                                                                          • The rise of online alcohol purchasing
                                                                                                          • Brand Communication and Promotion

                                                                                                            • Key points
                                                                                                              • Low spend is a sign of lack of brand investment
                                                                                                                • Figure 44: Topline advertising spend for total dark spirits, 2006-11*
                                                                                                              • Jack Daniel’s drives above-the-line spend in the sector
                                                                                                                • Figure 45: Share of above the line advertising spend by the top spending dark spirits brands between 2008-11*
                                                                                                            • Consumer Usage of Dark Spirits

                                                                                                              • Key points
                                                                                                                • A nation divided on the merits of dark spirits
                                                                                                                    • Figure 46: Consumption of dark spirits in the past year, June 2011
                                                                                                                  • Mixing means attracting younger drinkers and women…
                                                                                                                      • Figure 47: Drinkers of dark spirits as part of a mixed drink (ie cocktail, long-serve or RTD), by gender and age group, June 2011
                                                                                                                    • … explaining why some dark spirits are succeeding – and others are not
                                                                                                                        • Figure 48: How dark spirits are consumed, June 2011
                                                                                                                      • Jack Daniel’s is driving whisky usage among younger age groups
                                                                                                                          • Figure 49: Whiskies usage in the past year, by gender, age and socio-economic group, June 2011
                                                                                                                        • Malt is for men
                                                                                                                          • US whiskey’s appeal to new, younger drinkers is benefiting total sector
                                                                                                                              • Figure 50: Crossover of usage of whiskies, June 2011
                                                                                                                            • US whiskey attracts the most loyalty
                                                                                                                                • Figure 51: Index of solus usage of whiskies, June 2011
                                                                                                                              • Blended whisky relies on high volume consumption of the over-55s
                                                                                                                                  • Figure 52: measures consumed per month for different dark spirits, by age group, 2010
                                                                                                                                • Young drinkers are drinking rum in much greater volume than US whiskey
                                                                                                                                  • Cognac and brandy are relying too much on the over-55s
                                                                                                                                      • Figure 53: Index of usage of rum, brandy and Cognac, by gender, age and socio-economic group, June 2011
                                                                                                                                  • Consumer – Attitudes Towards Drinking Dark Spirits

                                                                                                                                    • Key points
                                                                                                                                      • Dark spirits are drunk by half the nation…
                                                                                                                                          • Figure 54: Attitudes towards drinkers’ favourite dark spirits, June 2011
                                                                                                                                        • … but lack obvious regular drinking occasions
                                                                                                                                          • Encouraging mixing among the young and the female
                                                                                                                                              • Figure 55: Agreement with attitude ‘I can only drink my favourite dark spirits with a mixer’, by gender and age group, June 2011
                                                                                                                                            • Peers are the key influencers for 18-24-year-old dark spirit drinkers
                                                                                                                                                • Figure 56: Index of who introduced drinkers to their favourite dark spirits, by age group, June 2011
                                                                                                                                            • Consumer – Perceptions of Dark Spirits

                                                                                                                                              • Key points
                                                                                                                                                • With its many strengths, why is malt whisky not performing better?
                                                                                                                                                    • Figure 57: Personality traits used to describe drinkers of whiskies and Armagnac/Cognac, June 2011
                                                                                                                                                  • Malt whisky needs to inject more personality in its brands
                                                                                                                                                      • Figure 58: Perceptions of drinkers of malt whisky, bourbon/Tennessee whiskey and Armagnac/Cognac, June 2011
                                                                                                                                                    • Accessibility is the watchword
                                                                                                                                                      • Cognac/Armagnac can capitalise on younger people’s status anxiety
                                                                                                                                                          • Figure 59: Index of perceptions of Armagnac/Cognac drinkers being stylish and sophisticated, by age group, June 2011
                                                                                                                                                      • Appendix – Internal Market Environment

                                                                                                                                                          • Figure 60: Agreement with selected lifestyle statements, by demographics, 2010
                                                                                                                                                      • Appendix – Brand Communication

                                                                                                                                                          • Figure 61: Ad spend on dark spirits by highest spending advertisers, 2008-11
                                                                                                                                                          • Figure 62: Ad spend on dark spirits by highest spending brands, 2008-11
                                                                                                                                                      • Appendix – Brand Research

                                                                                                                                                          • Figure 63: Brand usage, June 2011
                                                                                                                                                          • Figure 64: Brand commitment, June 2011
                                                                                                                                                          • Figure 65: Brand momentum, June 2011
                                                                                                                                                          • Figure 66: Brand diversity, June 2011
                                                                                                                                                          • Figure 67: Brand satisfaction, June 2011
                                                                                                                                                          • Figure 68: Brand recommendation, June 2011
                                                                                                                                                          • Figure 69: Brand attitude, June 2011
                                                                                                                                                          • Figure 70: Brand image – macro image, June 2011
                                                                                                                                                          • Figure 71: Brand image – micro image, June 2011
                                                                                                                                                          • Figure 72: Profile target groups, by demographics, June 2011
                                                                                                                                                          • Figure 73: Psychographic segmentation, by target group, June 2011
                                                                                                                                                          • Figure 74: Brand usage, by target group, June 2011
                                                                                                                                                          • Figure 75: Brand index, June 2011
                                                                                                                                                      • Appendix – Consumer Usage

                                                                                                                                                          • Figure 76: Most popular types of dark spirits consumed in the past year, by demographics, June 2011
                                                                                                                                                          • Figure 77: Next most popular types of dark spirits consumed in the past year, by demographics, June 2011
                                                                                                                                                          • Figure 78: Other types of dark spirits consumed in the past year, by demographics, June 2011
                                                                                                                                                          • Figure 79: Consumption of malt, blended and bourbon/Tennessee whisky in the past year, by demographics, June 2011
                                                                                                                                                          • Figure 80: Most popular ways in which dark spirits are consumed, by demographics, June 2011
                                                                                                                                                          • Figure 81: Next most popular ways in which dark spirits are consumed, by demographics, June 2011
                                                                                                                                                          • Figure 82: Type of mix (neat), by demographics, June 2011
                                                                                                                                                          • Figure 83: Type of mix (cola), by demographics, June 2011
                                                                                                                                                          • Figure 84: Type of mix (with any other mixer), by demographics, June 2011
                                                                                                                                                      • Appendix – Consumer Attitudes Towards Dark Spirits

                                                                                                                                                          • Figure 85: Statements about dark spirits, June 2011
                                                                                                                                                      • Appendix – Consumer Perceptions of Dark Spirits

                                                                                                                                                          • Figure 86: Most popular personality traits used to describe drinkers of Bourbon/Tennessee whiskey, by demographics, June 2011
                                                                                                                                                          • Figure 87: Next most popular personality traits used to describe drinkers of Bourbon/Tennessee whiskey, by demographics, June 2011
                                                                                                                                                          • Figure 88: Other personality traits used to describe drinkers of Bourbon/Tennessee whiskey, by demographics, June 2011
                                                                                                                                                          • Figure 89: Most popular personality traits used to describe drinkers of malt whisky, by demographics, June 2011
                                                                                                                                                          • Figure 90: Next most popular personality traits used to describe drinkers of malt whisky, by demographics, June 2011
                                                                                                                                                          • Figure 91: Other personality traits used to describe drinkers of malt whisky, by demographics, June 2011
                                                                                                                                                          • Figure 92: Most popular personality traits used to describe drinkers of Armagnac/Cognac, by demographics, June 2011
                                                                                                                                                          • Figure 93: Next most popular personality traits used to describe drinkers of Armagnac/Cognac, by demographics, June 2011
                                                                                                                                                          • Figure 94: Other personality traits used to describe drinkers of Armagnac/Cognac, by demographics, June 2011

                                                                                                                                                      Companies Covered

                                                                                                                                                      • Beam Global Spirits & Wine
                                                                                                                                                      • Campari Group
                                                                                                                                                      • Diageo Plc
                                                                                                                                                      • Glenmorangie plc
                                                                                                                                                      • Havana Club International
                                                                                                                                                      • J. Sainsbury
                                                                                                                                                      • LVMH Moët Hennessy Louis Vuitton SA
                                                                                                                                                      • Pernod Ricard
                                                                                                                                                      • William Grant and Sons Distillers Ltd

                                                                                                                                                      Dark Spirits - UK - August 2011

                                                                                                                                                      US $2,672.70 (Excl.Tax)