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Premium Alcoholic Drinks - UK - November 2012

“Premium brands would be ill-advised to follow a strongly promotional driven strategy as a means of appealing to more drinkers. However, this is not to say that they should not promote at all in order to preserve their exclusive status, as infrequent price cuts are undoubtedly an effective way of encourage trialling.”

– Chris Wisson, Senior Drinks Analyst

Some questions answered in this report include:

  • How can premium brands enhance accessibility without losing exclusivity?
  • How can premium brands better convince female drinkers that they are worth the money?
  • What is the craft drinks movement bringing to markets?
  • How can wine develop its premium tier?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • Market factors
              • Low consumer confidence influences the market…
                • … while population changes pose threats and opportunities
                  • Luxury lifestyles fall from favour
                    • Companies and brands: Strategies
                      • The consumer
                        • Two thirds of adults buy premium alcoholic drinks
                          • Figure 1: Purchase of alcoholic drinks in the last year, by type, September 2012
                        • Defining premium beers
                          • Figure 2: Main factors which consumers see as defining a premium alcoholic drink, September 2012
                        • Defining premium spirits
                          • Defining premium wines
                            • Providing tangibly higher quality is key for premium brands
                              • Figure 3: Attitudes towards premium alcoholic drinks, September 2012
                            • Purity and limited/special editions hold the key to trading up
                              • Figure 4: Factors which would encourage users to spend more on alcoholic drinks, September 2012
                            • What we think
                            • Issues in the Market

                                • How can premium brands enhance accessibility without losing exclusivity?
                                  • How can premium brands better convince female drinkers that they are worth the money?
                                    • What is the craft drinks movement bringing to markets?
                                      • How can wine develop its premium tier?
                                      • Trend Application

                                          • Secret Secret
                                            • Patriot Games
                                              • 2015: East Meets West
                                              • Market Environment

                                                • Key points
                                                  • Consumer confidence remains in the doldrums
                                                    • Figure 5: Consumer Confidence Index, monthly, January 2007-October 2012
                                                    • Figure 6: Percentage year-on-year change in average weekly earnings compared to inflation in the UK, January 2007-August 2012
                                                  • Demographic changes pose threats and opportunities
                                                    • Figure 7: Projected trends in the age structure of the UK population, 2012-17
                                                  • ABs and C2s are the key groups for premium drink brands
                                                    • Figure 8: Forecast of changes in the adult socio-economic structure of the UK population, 2012-17
                                                  • Luxury-oriented products fall from favour…
                                                    • Figure 9: Agreement with selected statements on luxury, 2008-12
                                                  • …with consumers becoming less willing to spend more for products
                                                  • Competitive Context

                                                    • Key points
                                                      • Lager and cider show strong potential at the premium tier
                                                        • Figure 10: Purchase of premium and standard/value alcoholic drinks in the past year, September 2012
                                                      • Premiumisation plays a central role in spirits markets
                                                        • Wines and Champagne/sparkling wine struggle to convince at the premium tier
                                                          • Consumer sentiment suggests a level of openness to premium products
                                                            • Figure 11: Expected changes in purchase patterns of premium own-label food and drink in the next 12 months, December 2011
                                                        • Strengths and Weaknesses

                                                          • Strengths
                                                            • Weaknesses
                                                            • Who’s Innovating?

                                                              • Key points
                                                                • Key themes in premium innovation
                                                                  • The rise of artisanal spirits
                                                                    • Selected innovations in design, packaging and glassware
                                                                      • Glassware
                                                                        • Packaging/bottle design
                                                                          • Absolut innovation
                                                                            • Limited editions and exclusivity
                                                                              • Anniversary editions
                                                                                • Limited editions
                                                                                  • The development of super/ultra/hyper-premium products
                                                                                    • Back to black
                                                                                      • Affordable and ‘tangibly’ premium drinks
                                                                                        • Expanding to a more affordable positioning
                                                                                          • …or a more exclusive one
                                                                                          • Companies and Brands – Strategies

                                                                                            • Key points
                                                                                              • Key themes and developments
                                                                                                • Investing in a premium position
                                                                                                  • Bringing in premium brands
                                                                                                    • … or repositioning in the premium segment
                                                                                                      • ‘Educational’ campaigns look to build understanding of the premium proposition
                                                                                                        • Brands turn to sponsorship for premium associations
                                                                                                          • Heritage/provenance enjoys strong associations with premium positioning
                                                                                                            • Brands continue to use celebrity endorsements
                                                                                                            • Consumer – Purchase of Alcoholic Drinks

                                                                                                              • Key points
                                                                                                                • Two thirds of adults buy premium oriented drinks
                                                                                                                    • Figure 12: Purchase of premium alcoholic drinks in the past year, by gender, age and socio-economic group, September 2012
                                                                                                                  • Premium wines struggle to convince drinkers
                                                                                                                    • Figure 13: Purchase of alcoholic drinks in the past year, September 2012
                                                                                                                    • Figure 14: Purchase of premium alcoholic drinks in the past year by category, as a share of overall usage in category, September 2012
                                                                                                                  • Lager and cider enjoy strong premium usage
                                                                                                                    • Spirits markets also well placed to continue growing at the top tier
                                                                                                                        • Figure 15: Overall usage of white and dark spirits in the past year, by gender, age and socio-economic group, September 2012
                                                                                                                      • Men and 25-44-year-olds are the most likely to have broad premium drinks repertoires
                                                                                                                        • Figure 16: Repertoire for purchase of premium alcoholic drinks, September 2012
                                                                                                                    • Consumer – Defining Premium Beers

                                                                                                                      • Key points
                                                                                                                        • High quality ingredients and smooth/full flavour come to the fore
                                                                                                                          • Figure 17: Main factors which define a premium beer, September 2012
                                                                                                                        • Extra time in production and high ABV convey a premium position to male beer drinkers
                                                                                                                          • Packaging is better placed to convey a premium positioning to female beer drinkers
                                                                                                                          • Consumer – Defining Premium Spirits

                                                                                                                            • Key points
                                                                                                                              • Premium spirits are also best defined by high quality ingredients and a smooth/full flavour
                                                                                                                                • Figure 18: Main factors which define a premium spirit, September 2012
                                                                                                                              • Many users also define premium spirits by a how it is made
                                                                                                                                • Female spirit drinkers more likely to seek assurances in price and stylish packaging
                                                                                                                                • Consumer – Defining Premium Wines

                                                                                                                                  • Key points
                                                                                                                                    • Premium wine is also best defined by high quality ingredients and a smooth/full flavour
                                                                                                                                      • Figure 19: Main factors which define a premium wine, September 2012
                                                                                                                                    • Younger wine buyers are more likely to see ageing and niche brands as premium markers
                                                                                                                                    • Consumer – Defining Premium Drinks – Market Comparison

                                                                                                                                      • Key points
                                                                                                                                        • Comparisons between the markets
                                                                                                                                            • Figure 20: Main factors which define a premium alcoholic drink, September 2012
                                                                                                                                        • Consumer – Attitudes Towards Premium Alcoholic Drinks

                                                                                                                                          • Key points
                                                                                                                                            • Providing tangibly higher quality is key for premium brands…
                                                                                                                                              • Figure 21: Attitudes towards premium alcoholic drinks, September 2012
                                                                                                                                            • … but ongoing pressures on household budgets are a risk to the premium tier
                                                                                                                                              • Figure 22: Attitudes towards the price of premium alcoholic drinks, September 2012
                                                                                                                                              • Figure 23: Views on shopping for luxury brands, September 2011
                                                                                                                                            • Over half of alcohol drinkers consider premium drinkers to be discerning
                                                                                                                                              • Figure 24: Attitudes towards the quality and image of premium alcoholic drinks, September 2012
                                                                                                                                            • Reassurance and recommendations are an important factor
                                                                                                                                              • Figure 25: Attitudes towards recommendations of premium alcoholic drinks, September 2012
                                                                                                                                            • Opportunities for mainstream brands to expand into the premium tier
                                                                                                                                              • Figure 26: Other attitudes towards premium alcoholic drinks, September 2012
                                                                                                                                            • Packaging factors hold surprisingly limited influence
                                                                                                                                            • Consumer – Encouraging Trading Up

                                                                                                                                              • Key points
                                                                                                                                                • Purity and limited editions are the best way to encourage trading up
                                                                                                                                                  • Figure 27: Factors which would encourage drinkers to spend more on alcoholic drinks, September 2012
                                                                                                                                                • ‘Single origin’ and craft drinks appeal to men and 55-64-year-olds
                                                                                                                                                  • Added flavours and unique packaging are good ways of encouraging women and younger drinkers to trade up
                                                                                                                                                    • Appealing to the reluctant over-45s
                                                                                                                                                      • Which brands are best placed to benefit from trading up?
                                                                                                                                                        • Figure 28: Agreement with the statements ‘A brand that is worth paying more for’ and ‘A brand that offers good value’, by selected alcoholic drinks brands
                                                                                                                                                      • Food and non-alcoholic drinks brands worth ‘paying more for’
                                                                                                                                                        • Figure 29: Agreement with the statement ‘A brand that is worth paying more for’, by 10 highest scoring food and non-alcoholic drink brands
                                                                                                                                                    • Consumer – Target Groups

                                                                                                                                                      • Key points
                                                                                                                                                        • Five target groups
                                                                                                                                                          • Figure 30: Target groups for premium alcoholic drinks, September 2012
                                                                                                                                                        • Demanders (23%)
                                                                                                                                                          • Enthusiasts (22%)
                                                                                                                                                            • Price-conscious (19%)
                                                                                                                                                              • Disengaged (18%)
                                                                                                                                                                • Impressionable (18%)
                                                                                                                                                                • Appendix – Market Environment

                                                                                                                                                                    • Figure 31: Agreement with selected lifestyle statements, by demographics, 2012
                                                                                                                                                                    • Figure 32: Agreement with selected lifestyle statements, by demographics, 2012 (continued)
                                                                                                                                                                • Appendix – Consumer – Purchase of Alcoholic Drinks

                                                                                                                                                                    • Figure 33: Purchase of alcoholic drinks in the past year, September 2012
                                                                                                                                                                    • Figure 34: Purchase of alcoholic drinks (any tier) in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 35: Purchase of alcoholic drinks (any tier) in the past year, by demographics, September 2012 (continued)
                                                                                                                                                                    • Figure 36: Types of alcoholic drinks purchased in the past year, purchasers of premium drinks only, by demographics, September 2012
                                                                                                                                                                    • Figure 37: Types of alcoholic drinks purchased in the past year, purchasers of premium drinks only, by demographics, September 2012 (continued)
                                                                                                                                                                    • Figure 38: Types of alcoholic drinks purchased in the past year, purchase of standard/economy drinks only, by demographics, September 2012
                                                                                                                                                                    • Figure 39: Types of alcoholic drinks purchased in the past year, purchase of standard/economy drinks only, by demographics, September 2012 (continued)
                                                                                                                                                                    • Figure 40: Purchase of lager in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 41: Purchase of ale/stout in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 42: Purchase of cider in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 43: Purchase of wine/fortified wine in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 44: Purchase of sparkling wine in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 45: Purchase of Champagne in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 46: Purchase of ready-to-drink mixes in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 47: Purchase of white spirits in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 48: Purchase of dark spirits in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 49: Purchase of liqueurs in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 50: Repertoire for purchase of premium alcoholic drinks in the past year, by demographics, September 2012
                                                                                                                                                                    • Figure 51: Purchase of premium alcoholic drinks in the past year, by repertoire for purchase of premium alcoholic drinks, September 2012
                                                                                                                                                                • Appendix – Consumer – Defining Premium Beers

                                                                                                                                                                    • Figure 52: Most popular factors which define a premium beer, by demographics, September 2012
                                                                                                                                                                    • Figure 53: Next most popular factors which define a premium beer, by demographics, September 2012
                                                                                                                                                                    • Figure 54: Most popular factors which define a premium beer, by demographics, September 2012
                                                                                                                                                                    • Figure 55: Next most popular factors which define a premium beer, by demographics, September 2012
                                                                                                                                                                    • Figure 56: Main factors which define a premium beer among beer drinkers, by purchase of lager and ale/stout, September 2012
                                                                                                                                                                    • Figure 57: Main factors which define a premium beer among premium beer drinkers, by purchase of lager and ale/stout, September 2012
                                                                                                                                                                • Appendix – Consumer – Defining Premium Spirits

                                                                                                                                                                    • Figure 58: Most popular factors which define a premium spirit, by demographics, September 2012
                                                                                                                                                                    • Figure 59: Next most popular factors which define a premium spirit, by demographics, September 2012
                                                                                                                                                                    • Figure 60: Main factors which define a premium spirit, by demographics, September 2012
                                                                                                                                                                    • Figure 61: Main factors which define a premium spirit among spirit drinkers, by purchase of white and dark spirits, September 2012
                                                                                                                                                                    • Figure 62: Main factors which define a premium spirit among premium spirit drinkers, by purchase of white and dark spirits, September 2012
                                                                                                                                                                • Appendix – Consumer – Defining Premium Wines

                                                                                                                                                                    • Figure 63: Most popular factors which define a premium wine, by demographics, September 2012
                                                                                                                                                                    • Figure 64: Next most popular factors which define a premium wine, by demographics, September 2012
                                                                                                                                                                    • Figure 65: Main factors which define a premium wine, by demographics, September 2012
                                                                                                                                                                    • Figure 66: Main factors which define a premium wine among wine drinkers, by purchase of wine/fortified wine and sparkling wine, September 2012
                                                                                                                                                                    • Figure 67: Main factors which define a premium wine among premium wine drinkers, by purchase of wine/ fortified wine and sparkling wine, September 2012
                                                                                                                                                                • Appendix – Consumer – Attitudes Towards Premium Alcoholic Drinks

                                                                                                                                                                    • Figure 68: Buyers’ attitudes towards premium alcoholic drinks, September 2012
                                                                                                                                                                    • Figure 69: Agreement with the statements ‘I’m only willing to pay more if I can easily taste the difference from cheaper equivalents’ and ‘I am likely to buy fewer premium alcoholic drinks due to rising prices’, by demographics, September 2012
                                                                                                                                                                    • Figure 70: Agreement with the statements ‘Premium brands appeal to drinkers who think more about what they drink’ and ‘I choose quality over quantity when buying alcoholic drinks’, by demographics, September 2012
                                                                                                                                                                    • Figure 71: Agreement with the statements ‘Positive reviews or independent awards reassure me of high quality’ and ‘I’m more willing to try a higher priced drink if recommended’, by demographics, September 2012
                                                                                                                                                                    • Figure 72: Agreement with the statements ‘I would be more likely to buy a premium version of one of my favourite brands rather than switching to a new one’ and ‘I look for limited and special editions for special occasions’, by demographics, September 2012
                                                                                                                                                                    • Figure 73: Agreement with the statements ‘I would expect a premium product to come with luxurious packaging’ and ‘I think that foreign drinks brands are more premium than UK equivalents’, by demographics, September 2012
                                                                                                                                                                    • Figure 74: Agreement with the statements ‘I would be more likely to buy premium drinks if they were sold in smaller bottles’ and ‘Regular discounting makes a brand feel less special’, by demographics, September 2012
                                                                                                                                                                    • Figure 75: Attitudes towards premium alcoholic drinks, by purchase of lager and ale/stout, September 2012
                                                                                                                                                                    • Figure 76: Attitudes towards premium alcoholic drinks, by purchase of cider and wine/fortified wine, September 2012
                                                                                                                                                                    • Figure 77: Attitudes towards premium alcoholic drinks, by purchase of sparkling wine and Champagne, September 2012
                                                                                                                                                                    • Figure 78: Attitudes towards premium alcoholic drinks, by purchase of RTDs and white spirits, September 2012
                                                                                                                                                                    • Figure 79: Attitudes towards premium alcoholic drinks, by purchase of dark spirits and liqueurs, September 2012
                                                                                                                                                                • Appendix – Consumer – Encouraging Trading Up

                                                                                                                                                                    • Figure 80: Main factors which would encourage users to spend more on alcoholic drinks, by demographics, September 2012
                                                                                                                                                                    • Figure 81: Other factors which would encourage users to spend more on alcoholic drinks, by demographics, September 2012
                                                                                                                                                                    • Figure 82: Main factors among which would encourage premium drink users to spend more on alcoholic drinks, by demographics, September 2012
                                                                                                                                                                    • Figure 83: Other factors which would encourage premium drink users to spend more on alcoholic drinks, by demographics, September 2012
                                                                                                                                                                    • Figure 84: Purchase of alcoholic drinks, by factors which would encourage users to spend more on alcoholic drinks, September 2012
                                                                                                                                                                    • Figure 85: Purchase of alcoholic drinks, by factors which would encourage users to spend more on alcoholic drinks, September 2012 (continued)
                                                                                                                                                                    • Figure 86: Factors which would encourage users to spend more on alcoholic drinks, by purchase of lager and ale/stout, September 2012
                                                                                                                                                                    • Figure 87: Factors which would encourage users to spend more on alcoholic drinks, by purchase of cider and wine/fortified wine, September 2012
                                                                                                                                                                    • Figure 88: Factors which would encourage users to spend more on alcoholic drinks, by purchase of sparkling wine and Champagne, September 2012
                                                                                                                                                                    • Figure 89: Factors which would encourage users to spend more on alcoholic drinks, by purchase of RTDs and white spirits, September 2012
                                                                                                                                                                    • Figure 90: Factors which would encourage users to spend more on alcoholic drinks, by purchase of dark spirits and liqueurs, September 2012
                                                                                                                                                                • Appendix – Consumer – Target Groups

                                                                                                                                                                    • Figure 91: Target groups, by demographics, July 2012
                                                                                                                                                                    • Figure 92: Purchase of alcoholic drink, by target groups, September 2012
                                                                                                                                                                    • Figure 93: Main factors which define a premium beer, by target groups, September 2012
                                                                                                                                                                    • Figure 94: Main factors which define a premium spirit, by target groups, September 2012
                                                                                                                                                                    • Figure 95: Main factors which define a premium wine, by target groups, September 2012
                                                                                                                                                                    • Figure 96: Factors which would encourage users to spend more on alcoholic drinks, by target groups, September 2012
                                                                                                                                                                    • Figure 97: Attitudes towards premium alcohol drinks, by target groups, September 2012
                                                                                                                                                                    • Figure 98: Grocery shopping habits, by target groups, September 2012

                                                                                                                                                                Companies Covered

                                                                                                                                                                • Anheuser Busch-InBev
                                                                                                                                                                • Aspall
                                                                                                                                                                • Avion Group
                                                                                                                                                                • Bruichladdich Distillery Company Ltd
                                                                                                                                                                • Diageo UK
                                                                                                                                                                • Kaufmann's
                                                                                                                                                                • LVMH Moët Hennessy Louis Vuitton SA
                                                                                                                                                                • Miller Brands (UK) Ltd
                                                                                                                                                                • Molson Coors Brewing Company
                                                                                                                                                                • Pernod Ricard
                                                                                                                                                                • Rekorderlig
                                                                                                                                                                • Rémy Cointreau
                                                                                                                                                                • Stolichnaya
                                                                                                                                                                • Veuve Clicquot

                                                                                                                                                                Premium Alcoholic Drinks - UK - November 2012

                                                                                                                                                                US $2,672.70 (Excl.Tax)