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Own Label Alcoholic Drinks - UK - April 2014

“Retailers should proactively promote their quality and awards won to level the playing field against brands, particularly as the economy improves and brands are poised to benefit from an easing of the budgeting mentality.”

– Chris Wisson, Senior Drinks Analyst

Some questions answered in this report include:

  • Is greater transparency the way forward for own-label drinks?
  • Can own-label drinks move beyond just offering value for money?
  • Why has own-label wine been such a success story?

The own-label alcoholic drinks market has enjoyed steady growth in recent years. However, this lags behind the increase enjoyed by the wider own-label food and drink market, underlining the limited success of own-label alcoholic drinks. Wines have been the success story for own-label drinks, with a highly fragmented and poorly branded market enabling the own-labels to claim market-leading shares. Own-label spirits also perform well, enabling consumers to enjoy drinks such as vodka and brandy at lower prices.

However, own-label drinks remain a minority consideration in many other lucrative categories such as beer and cider. These are well-branded markets, and this has stifled the progress of own-label alternatives. Own-label brands in these markets have also been slow to react to trends such as flavoured drinks, further limiting the potential for growth.

Although the economy is in recovery, this has not yet translated to a significant increase in real disposable incomes. This means that there is still scope for own-brand drinks to increase their share of the market. However, as confidence improves, brands are likely to become more appealing to consumers looking to relieve recession fatigue. If own-label drinks are to remain part of consumers’ drinking repertoires in the coming years, then they will have to provide consistently high quality and innovative products.

This report focuses on off-trade sales of own-label alcoholic drinks, although references to branded drinks are made throughout the report. Retailer exclusives such as Tesco Ogio and Sainsbury’s Mondelli wines are also included. Own-label drinks are controlled and managed by retailers, carrying either the retailer’s name or an exclusively created name. These broadly fall into three tiers: Premium (eg Sainsbury’s Taste the Difference), Standard (eg Tesco) and Value/Economy (Waitrose essentials).

The report excludes sales of both branded and own-label soft drinks.

Value figures throughout this report are at retail selling prices (rsp) unless stated otherwise. Market sizes at constant 2013 prices are devised using Mintel’s alcoholic drinks deflator.

Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen’s Printer for Scotland.

 

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Forecast of UK value sales of own-label alcoholic drinks, 2008-18
            • Market factors
              • Alcohol consumption is in decline
                • Consumer confidence bounces back
                  • Population changes could affect the own-label market
                    • Innovation and advertising
                      • Own-label NPD loses share
                        • Retailers’ adspend plateaus
                          • The consumer
                            • Brands continue to dominate alcoholic drinks
                              • Figure 2: Usage of branded and own-label alcoholic drinks, by gender, age and socio-economic group, December 2013
                            • 28% say that they have cut back on own-label drinks
                              • Figure 3: Buying habits of branded and own-label alcoholic drinks, December 2013
                            • Taste is the main driver for buying branded drinks…
                              • …while value for money is key for own-label drinks
                                • Value for money evokes the strongest response for own-label drinks
                                  • Figure 4: Own-label drinkers’ associations with different own-label alcoholic drinks, December 2013
                                • Trust and quality continue to be issues for own-label drinks
                                  • Figure 5: Attitudes towards own-label alcoholic drinks, December 2013
                                • What we think
                                • Issues in the Market

                                    • Retailers need to up their game in the beer and cider markets
                                      • The facts
                                        • The implications
                                          • Is greater transparency the way forward for own-label drinks?
                                            • The facts
                                              • The implications
                                                • Can own-label drinks move beyond just offering value for money?
                                                  • The facts
                                                    • The implications
                                                      • Why has own-label wine been such a success story?
                                                        • The facts
                                                          • The implications
                                                          • Trend Application

                                                              • Trend: Prove It
                                                                • Trend: Collective Intelligence
                                                                  • Mintel Futures: Old Gold
                                                                  • Market Drivers

                                                                    • Key points
                                                                      • Consumer confidence bounces back
                                                                        • Figure 6: Consumer Confidence Index, monthly, January 2007-February 2014
                                                                      • Own-label food and drink has flourished in the slowdown
                                                                        • Special offers are still important to shoppers
                                                                          • Figure 7: Grocery shopping habits, December 2013
                                                                        • Health considerations play a part in drinking habits
                                                                          • An ageing population needs consideration
                                                                            • Figure 8: Projected trends in the age structure of the UK population, 2013-18
                                                                          • C2DEs could hold the key to growth
                                                                            • Figure 9: Projected changes in the socio-economic structure of the UK adult population, 2013-18
                                                                          • Alcohol minimum pricing plans shelved in England and Wales
                                                                          • Strengths and Weaknesses

                                                                            • Strengths
                                                                              • Weaknesses
                                                                              • Who’s Innovating?

                                                                                • Key points
                                                                                  • Branded launches come even further to the fore
                                                                                    • Figure 10: NPD of alcoholic drinks in the UK, branded vs private label, 2009-13
                                                                                  • Own-label NPD ramped up in cider and mix drinks
                                                                                    • Figure 11: Share of branded vs private label alcoholic drink launches, by category, 2012 and 2013
                                                                                  • Tesco and M&S continue to dominate own-label launches
                                                                                    • Figure 12: Private label launches within alcoholic drinks, by company, 2009-13
                                                                                  • NPD at the premium end of the market
                                                                                    • M&S and Tesco capitalise on seasonal trends
                                                                                      • Sainsbury’s responds to consumer demand for clearer labelling
                                                                                        • Is copying the sincerest form of flattery?
                                                                                          • Retailers need to fight against downmarket associations with own-brand drinks
                                                                                          • Market Size and Forecast

                                                                                            • Key points
                                                                                              • The own-label drinks market continues to rise…
                                                                                                • Figure 13: UK value and volume sales of own-label alcoholic drinks, at current and constant prices, 2008-18
                                                                                                • Figure 14: Forecast of UK value sales of own-label alcoholic drinks, 2008-18
                                                                                              • …buoyed by still wine and spirits
                                                                                                • Forecast methodology
                                                                                                • Market Segmentation and Share

                                                                                                  • Key points
                                                                                                    • Still wine dominates the own-label market
                                                                                                      • Figure 15: Value of own-label sales per alcoholic drinks category, 2012/13
                                                                                                      • Figure 16: Value and volume performance of alcoholic drinks markets, 2011/12 vs 2012/13
                                                                                                      • Figure 17: Share of own-label sales per alcoholic drinks category, 2012/13
                                                                                                    • Other own-label wine categories also leave the brands in their wake
                                                                                                      • Own-label also influential in the spirits market…
                                                                                                        • …particularly in the dark spirits market
                                                                                                          • Other drinks categories are brand-dominant
                                                                                                          • Companies and Products

                                                                                                              • Figure 18: Sales of food, drink and tobacco, by type of retailer, 2013 (est)
                                                                                                            • Asda
                                                                                                              • Overview and market positioning
                                                                                                                • Recent activity and innovation
                                                                                                                  • Retailer communication and promotion
                                                                                                                    • The Co-operative Group
                                                                                                                      • Overview and market positioning
                                                                                                                        • Recent activity and innovation
                                                                                                                          • Retailer communication and promotion
                                                                                                                            • Marks & Spencer
                                                                                                                              • Overview and market positioning
                                                                                                                                • Recent activity and innovation
                                                                                                                                  • Retailer communication and promotion
                                                                                                                                    • Morrisons
                                                                                                                                      • Overview and market positioning
                                                                                                                                        • Recent activity and innovation
                                                                                                                                          • Retailer communication and promotion
                                                                                                                                            • Sainsbury’s
                                                                                                                                              • Overview and market positioning
                                                                                                                                                • Recent activity and innovation
                                                                                                                                                  • Retailer communication and promotion
                                                                                                                                                    • Tesco
                                                                                                                                                      • Overview and market positioning
                                                                                                                                                        • Recent activity and innovation
                                                                                                                                                          • Retailer communication and promotion
                                                                                                                                                            • Waitrose
                                                                                                                                                              • Overview and market positioning
                                                                                                                                                                • Recent activity and innovation
                                                                                                                                                                  • Retailer communication and promotion
                                                                                                                                                                  • Brand Communication and Promotion

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Retailers’ alcohol adspend stays flat year on year
                                                                                                                                                                        • Figure 19: Topline advertising expenditure on own-label alcoholic drinks, by category, 2009-13
                                                                                                                                                                        • Figure 20: Advertising expenditure in own-label alcoholic drinks as a share of adspend in the total alcoholic drink market, by category, 2009-13
                                                                                                                                                                      • Tesco is the biggest advertiser, but coming under pressure
                                                                                                                                                                        • Figure 21: Highest-spending retailers for own-label alcoholic drinks in the UK, 2009-13
                                                                                                                                                                      • Christmas is key for advertising own-label drinks
                                                                                                                                                                        • Figure 22: Topline advertising expenditure in own-label alcoholic drinks, by quarter, 2011-13
                                                                                                                                                                      • Press leads the way for own-label advertising
                                                                                                                                                                        • Figure 23: Advertising expenditure on own-label alcoholic drinks, by media type, 2009-13
                                                                                                                                                                    • The Consumer – Purchase of Alcoholic Drinks

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Branded drinks lead the way
                                                                                                                                                                            • Figure 24: Purchase of branded and own-label alcoholic drinks, by gender, age and socio-economic group, December 2013
                                                                                                                                                                          • Beer and still wine are the most popular drinks
                                                                                                                                                                              • Figure 25: Purchase of branded alcoholic drinks, December 2013
                                                                                                                                                                              • Figure 26: Purchase of own-label alcoholic drinks, December 2013
                                                                                                                                                                            • Cider also shows a notable skew towards branded operators
                                                                                                                                                                              • All other own-label drinks are drunk by less than one in five adults
                                                                                                                                                                                • A higher share of drinkers are cutting back on both branded and own-label alcohol
                                                                                                                                                                                  • Figure 27: Buying habits of branded alcoholic drinks, December 2013
                                                                                                                                                                                  • Figure 28: Buying habits of own-label alcoholic drinks, December 2013
                                                                                                                                                                                • The economic squeeze is still prompting some to cut back
                                                                                                                                                                                • The Consumer – Reasons for Buying Branded Alcoholic Drinks

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Taste is the main driver for buying branded drinks
                                                                                                                                                                                      • Figure 29: Reasons for buying branded alcoholic drinks, December 2013
                                                                                                                                                                                    • Trust and credibility also help the brands
                                                                                                                                                                                    • The Consumer – Reasons for Buying Own-label Alcoholic Drinks

                                                                                                                                                                                      • Key points
                                                                                                                                                                                        • Value for money key for own-label drinks
                                                                                                                                                                                          • Figure 30: Reasons for buying own-label alcoholic drinks, December 2013
                                                                                                                                                                                        • The improving taste of own-label drinks
                                                                                                                                                                                          • Own-label drinks can also appeal as ‘something different’
                                                                                                                                                                                          • The Consumer – Perceptions of Own-label Alcoholic Drinks

                                                                                                                                                                                            • Key points
                                                                                                                                                                                              • Value for money evokes the strongest response
                                                                                                                                                                                                • Figure 31: Associations with different own-label alcoholic drinks, December 2013
                                                                                                                                                                                                • Figure 32: Own-label drinkers’ associations with different own-label alcoholic drinks, December 2013
                                                                                                                                                                                              • Reducing the negatives
                                                                                                                                                                                              • The Consumer – Attitudes Towards Own-label Alcoholic Drinks

                                                                                                                                                                                                • Key points
                                                                                                                                                                                                  • Summary of attitudes towards own-label alcoholic drinks
                                                                                                                                                                                                    • Figure 33: Attitudes towards own-label alcoholic drinks, December 2013
                                                                                                                                                                                                  • Issues with quality and trust still evident for own-label drinks
                                                                                                                                                                                                    • Figure 34: Attitudes towards the quality of own-label alcoholic drinks, December 2013
                                                                                                                                                                                                  • Trust in own-label drinks can be eroded as a result
                                                                                                                                                                                                    • Almost half of drinkers want more information about own-label drinks
                                                                                                                                                                                                      • Figure 35: Attitudes towards the production and image of own-label alcoholic drinks, December 2013
                                                                                                                                                                                                    • Traceability and labelling can improve perceptions
                                                                                                                                                                                                      • Advances in packaging boosting the appeal of own-label drinks
                                                                                                                                                                                                        • An economic recovery could pose a threat to the sector
                                                                                                                                                                                                          • Figure 36: Attitudes towards the price and range of own-label alcoholic drinks, December 2013
                                                                                                                                                                                                        • Only a quarter of drinkers think that there should be more own-label drinks
                                                                                                                                                                                                        • The Consumer – Target Groups

                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                            • Four target groups
                                                                                                                                                                                                              • Figure 37: Target groups, December 2013
                                                                                                                                                                                                            • Disengaged (33%)
                                                                                                                                                                                                              • Own-label Lovers (25%)
                                                                                                                                                                                                                • Own-label Sceptics (22%)
                                                                                                                                                                                                                  • Drink Lovers (20%)
                                                                                                                                                                                                                  • Appendix – Market Size and Forecast

                                                                                                                                                                                                                      • Figure 38: Best- and worst-case forecasts for the own-label alcoholic drinks market, by value, 2013-18
                                                                                                                                                                                                                  • Appendix – The Consumer – Purchase of Alcoholic Drinks

                                                                                                                                                                                                                      • Figure 39: Purchase of branded alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 40: Most popular types of branded alcoholic drinks purchased, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 41: Next most popular types of branded alcoholic drinks purchased, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 42: Other types of branded alcoholic drinks purchased, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 43: Purchase of own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 44: Most popular types of own-label alcoholic drinks purchased, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 45: Next most popular types of own-label alcoholic drinks purchased, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 46: Other types of own-label alcoholic drinks purchased, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 47: Variance in usage between branded and own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 48: Repertoire of purchase of own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 49: Repertoire of purchase of own-label alcoholic drinks, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 50: Buying habits of branded alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 51: Buying habits of branded alcoholic drinks, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 52: Buying habits of own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 53: Buying habits of own-label alcoholic drinks, by demographics, December 2013
                                                                                                                                                                                                                  • Appendix – The Consumer – Reasons for Buying Branded Alcoholic Drinks

                                                                                                                                                                                                                      • Figure 54: Reasons for buying branded alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 55: Most popular reasons for buying branded alcoholic drinks, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 56: Next most popular reasons for buying branded alcoholic drinks, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 57: Reasons for buying branded alcoholic drinks, by purchase of branded alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 58: Reasons for buying branded alcoholic drinks, by purchase of branded alcoholic drinks, December 2013 (continued)
                                                                                                                                                                                                                  • Appendix – The Consumer – Reasons for Buying Own-label Alcoholic Drinks

                                                                                                                                                                                                                      • Figure 59: Reasons for buying own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 60: Most popular reasons for buying own-label alcoholic drinks, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 61: Next most popular reasons for buying own-label alcoholic drinks, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 62: Reasons for buying own-label alcoholic drinks, by purchase of own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 63: Reasons for buying own-label alcoholic drinks, by purchase of own-label alcoholic drinks, December 2013 (continued)
                                                                                                                                                                                                                  • Appendix – The Consumer – Perceptions of Own-label Alcoholic Drinks

                                                                                                                                                                                                                      • Figure 64: Associations with different own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 65: Most popular associations with own-label beer/cider, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 66: Other associations with own-label beer/cider, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 67: Most popular associations with own-label still wine, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 68: Other associations with own-label still wine, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 69: Most popular associations with own-label white spirits, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 70: Other associations with own-label white spirits, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 71: Most popular associations with own-label dark spirits, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 72: Other associations with own-label dark spirits, by demographics, December 2013
                                                                                                                                                                                                                  • Appendix – Consumer – Attitudes towards Own-label Alcoholic Drinks

                                                                                                                                                                                                                      • Figure 73: Attitudes towards own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                      • Figure 74: Agreement with the statements ‘Branded alcoholic drinks provide a reassurance of quality which own-label doesn’t’ and ‘There is not enough information about the maker of the own-label drink on the packaging’, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 75: Agreement with the statements ‘I am hesitant to trust own-labels for more expensive alcoholic drinks’ and ‘The packaging of own-label alcoholic drinks has become more attractive in recent years’, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 76: Agreement with the statements ‘Own-label alcoholic drinks sacrifice quality for a lower price’ and ‘I would consider buying more branded alcoholic drinks when my financial situation has improved’, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 77: Agreement with the statements ‘Low price is the most important factor when buying alcoholic drinks regardless of branded or own-label’ and ‘Own-label and branded alcoholic drinks are made by the same manufacturers’, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 78: Agreement with the statements ‘It is sometimes hard to tell which alcoholic drinks are branded and which are own-label’ and ‘The quality is unimportant when using own-label alcohol for mix drinks’, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 79: Agreement with the statements ‘There are not enough own-label alcoholic drinks in supermarkets’ and ‘I feel embarrassed to buy own-label alcoholic drinks’, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 80: Own-label drink buyers’ attitudes towards own-label alcoholic drinks, December 2013
                                                                                                                                                                                                                  • Appendix – Consumer – Target Groups

                                                                                                                                                                                                                      • Figure 81: Target groups, December 2013
                                                                                                                                                                                                                      • Figure 82: Target groups, by demographics, December 2013
                                                                                                                                                                                                                      • Figure 83: Purchase of own-label alcoholic drinks, by target groups, December 2013
                                                                                                                                                                                                                      • Figure 84: Buying habits of own-label alcoholic drinks, by target groups, December 2013
                                                                                                                                                                                                                      • Figure 85: Reasons for buying own-label alcoholic drinks, by target groups, December 2013
                                                                                                                                                                                                                      • Figure 86: Attitudes towards own-label alcoholic drinks, by target groups, December 2013

                                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                                  • Advertising Standards Authority
                                                                                                                                                                                                                  • Asda Group Ltd
                                                                                                                                                                                                                  • Co-operative Group
                                                                                                                                                                                                                  • J. Sainsbury
                                                                                                                                                                                                                  • John Lewis Partnership
                                                                                                                                                                                                                  • Marks & Spencer
                                                                                                                                                                                                                  • Tesco (UK)
                                                                                                                                                                                                                  • Waitrose
                                                                                                                                                                                                                  • Walmart Stores (USA)
                                                                                                                                                                                                                  • Wm Morrison Supermarkets

                                                                                                                                                                                                                  Own Label Alcoholic Drinks - UK - April 2014

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