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White Spirits and RTDs - UK - December 2014

“The continued decline in volume sales of bottled RTDs makes a complete overhaul of the segment a necessity for the segment A shift to premium bottle designs coupled with a focus on more adult orientated flavours would be a good starting point.”
– Douglas Faughnan, Senior Food & Drink Analyst

This report looks at the following areas:

  • Bottled RTDs need a complete overhaul
  • Operators continue to market ‘craft’ spirits, despite little consumer understanding
  • The removal of the tax escalator set to boost white spirit volume sales

The white spirits and RTDs market includes some of the most popular alcoholic drinks in the UK, 47% of the adult population drinking vodka in the 12 months to September 2014. Vodka’s high level of usage is evident in that it accounts for 60% of total value sales in the UK at an estimated £2,583 million. The category’s versatility is a key benefit, 34% of adults drink it with a mixer.

Gin continues to grow in popularity, estimated to have seen modest volume growth in 2014 with value sales up by 8% to £834 million. White rum is facing increased competition from dark and golden rums, with values stagnating at £489 million in 2014 and volume sales declining.

The RTD segment continues to be negatively impacted by the poor performance of older style bottled RTDs, which are losing users from the key 18-24 demographic to flavoured cider. Bottled RTDs, despite sharply declining volume sales are still the more popular format, drunk by 30% of adults, 23% drinking RTDs in cans.

  • Vodka is a clear, colourless, almost odourless spirit made from the distillation of potatoes, and sometimes from corn, rye, wheat, sugar beet molasses or other agricultural matter. The European Union requires that vodka must have a minimum ABV of 37.5%. Flavoured vodka products such as Smirnoff Blueberry and Absolut Raspberri Vodka which are simple flavoured versions of the base spirits are included in this report.
  • Gin predominantly derives its flavour from juniper berries and falls into two distinct categories: Distilled gin is made from re-distilling the neutral spirit of agricultural origin with juniper berries and other botanicals, while compound gin is made by flavouring the neutral spirit with flavourings without re-distilling it and is hence typically considered inferior in quality.
  • White rum is produced from sugarcane juice and molasses. Unlike dark rum, it is aged in plain oak casks or stainless steel tanks so the colour remains clear. Bacardi and Malibu are the two most well-known brands in the segment.
  • Tequila is a distilled beverage made from the blue agave plant, primarily in the area surrounding the city of the same name in Mexico. Tequila is most often made at 38-40% ABV but can also be produced at 31-55%. Mezcal is made from the maguey plant, a type of agave plant, although remains decidedly niche in the UK.
  • RTDs (Ready-to-Drink) is a trade term used to describe any drink featuring an alcohol and a mixer sold pre-mixed typically either in bottles or cans. They include fruit-, herb-, soda- or water-based, still or carbonated drinks combined with at least one base spirit, and usually have an ABV of 4-6%.
  • Not all RTDs are made from white spirits (eg Jack Daniel’s & Coke in a can), although white spirits have traditionally been the base spirit for this category.This report will analyse the whole RTD market, not just those products with white spirits as a base.

Both on- and off-trade sales are included in the market size. Value sales throughout this report are at consumer prices. Market sizes at constant 2014 prices are devised using Mintel’s alcoholic drink deflator.

 

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Forecast UK value sales of white spirits and RTDs, 2009-19
            • Market factors
              • Changes in the UK’s age structure bring challenges and opportunities
                • Overall alcohol intake falls
                  • Spirits duty frozen in 2014 Budget
                    • Companies, brands and innovation
                      • Innovation
                        • Market share
                          • Figure 2: Value share of top-selling white spirit and RTD brands in the off-trade, 2014*
                        • Brand Communication and Promotion
                          • The consumer
                            • Vodka remains the most popular white spirit
                              • Figure 3: Usage of white spirits by type, September 2014
                            • Quality of ingredients is key for brands targeting the premium tier
                              • Figure 4: Important factors in defining a premium white spirit, September 2014
                            • Sophisticated flavours can help attract older drinkers to flavoured vodka
                              • Figure 5: Attitudes towards white spirits, September 2014
                            • ‘Craft’ is undefined and misunderstood, and holds little appeal to many
                              • Figure 6: Attitudes towards craft white spirits, September 2014
                            • Flavoured ciders are taking the place of alcopops
                              • Figure 7: Attitudes towards pre-mixed drinks in cans or bottles, September 2014
                            • What we think
                            • Issues and Insights

                                • Bottled RTDs need a complete overhaul
                                  • The facts
                                    • The implications
                                      • Operators continue to market ‘craft’ spirits, despite little consumer understanding
                                        • The facts
                                          • The implications
                                            • The removal of the tax escalator set to boost white spirit volume sales
                                              • The facts
                                                • The implications
                                                • Trend Application

                                                    • Prove it
                                                      • Slow It All Down
                                                        • Locavore
                                                        • Market Drivers

                                                          • Key points
                                                            • Changes in age structure will bring challenges and opportunities
                                                              • Figure 8: Trends in the age structure of the UK population, 2009-14 and 2014-19
                                                            • Overall alcohol consumption continues to fall
                                                              • Figure 9: Trends in UK per capita consumption of 100% alcohol, 2009-13
                                                            • 2014 Budget sees the tax escalator removed
                                                              • Figure 10: HM Treasury estimated changes in volume consumption of alcohol, 2014/15-2018/19
                                                          • Strengths and Weaknesses

                                                            • Strengths
                                                              • Weaknesses
                                                              • Who’s Innovating?

                                                                • Key points
                                                                  • Big brands opting for natural over novelty when it comes to flavour
                                                                    • Brands opt for hybrid spirits to attract new users
                                                                      • Aged expressions are popping up in tequila, gin and rum
                                                                      • Market Size and Segment Performance

                                                                        • Key points
                                                                          • Value sales grew by 4.5% in 2014 while volumes remained stagnant
                                                                            • Figure 11: UK value and volume sales of white spirits and RTDs, 2009-19
                                                                            • Figure 12: Forecast UK value sales of white spirits and RTDs, 2009-19
                                                                            • Figure 13: Forecast UK volume sales of white spirits and RTDs, 2009-19
                                                                            • Figure 14: UK value sales of white spirits and RTDs in the on- and off-trade, by product category, 2012-14
                                                                            • Figure 15: UK volume sales of white spirits and RTDs in the on- and off-trade, by product category, 2012-14
                                                                          • Vodka remains the leading segment by some distance
                                                                            • Figure 16: UK value and volume sales of white spirits and RTDs, at current and constant prices, 2009-19
                                                                            • Figure 17: Forecast UK value sales of vodka, 2009-19
                                                                            • Figure 18: Forecast UK volume sales of vodka, 2009-19
                                                                          • Gin category continues to prosper
                                                                            • Figure 19: UK value and volume sales of gin, at current and constant prices, 2009-19
                                                                            • Figure 20: Forecast UK value sales of gin, 2009-19
                                                                            • Figure 21: Forecast UK volume sales of gin, 2009-19
                                                                          • White rum sales set to be surpassed by dark/golden/spiced rum in 2015
                                                                            • Figure 22: UK value and volume sales of white rum, at current and constant prices, 2009-19
                                                                            • Figure 23: Forecast UK value sales of white rum, 2009-19
                                                                            • Figure 24: Forecast UK volume sales of white rum, 2009-19
                                                                          • RTDs see further decline
                                                                            • Figure 25: UK value and volume sales of RTDs, at current and constant prices, 2009-19
                                                                            • Figure 26: Forecast UK value sales of RTDs, 2009-19
                                                                            • Figure 27: Forecast UK volume sales of RTDs, 2009-19
                                                                          • Tequila set for further growth
                                                                            • Figure 28: UK value and volume sales of RTDs, at current and constant prices, 2009-19
                                                                            • Figure 29: Forecast UK value sales of Tequila, 2009-19
                                                                            • Figure 30: Forecast UK volume sales of Tequila, 2009-19
                                                                          • Forecast methodology
                                                                          • Market Share

                                                                            • Key points
                                                                              • Russian Standard’s ascent continues as Smirnoff cements lead
                                                                                • Figure 31: Value sales of top-selling white spirit and RTD brands* in the off-trade 2012/13 and 2013/14
                                                                              • Bombay Sapphire, Tanqueray and Hendrick’s perform strongly in gin
                                                                                • Bacardi and Malibu both see their share decline marginally
                                                                                • Companies and Products

                                                                                  • Bacardi-Martini
                                                                                    • Company overview and brand portfolio
                                                                                      • Recent activity, brand communication and promotion
                                                                                        • Brown-Forman
                                                                                          • Company overview and brand portfolio
                                                                                            • Recent activity, brand communication and promotion
                                                                                              • Diageo
                                                                                                • Company overview and brand portfolio
                                                                                                  • Recent activity, brand communication and promotion
                                                                                                    • William Grant & Sons
                                                                                                      • Company overview and brand portfolio
                                                                                                        • Recent activity, brand communication and promotion
                                                                                                          • Pernod Ricard
                                                                                                            • Company overview and brand portfolio
                                                                                                              • Recent activity, brand communication and promotion
                                                                                                              • Brand Communication and Promotion

                                                                                                                • Key points
                                                                                                                  • Pernod Ricard cutbacks severely impact total market adspend
                                                                                                                    • Figure 32: Topline above-the-line advertising spend in the UK white spirits and RTDs market, 2011-14
                                                                                                                  • Diageo continues to invest heavily in its brands
                                                                                                                    • Figure 33: Highest-spending companies for above-the-line advertising in the white spirits/RTD market, 2011-14
                                                                                                                    • Figure 34: Highest-spending brands in above-the-line advertising in the white spirits/RTDs market, 2011-14
                                                                                                                  • Bacardi-Martini advertising spend falls by almost half in 2013
                                                                                                                    • Belvedere launches its first cinema campaign
                                                                                                                    • Brand Research

                                                                                                                      • Brand map
                                                                                                                          • Figure 35: Attitudes towards and usage of brands in the white spirits sector, September 2014
                                                                                                                        • Correspondence analysis
                                                                                                                          • Brand attitudes
                                                                                                                            • Figure 36: Attitudes, by white spirits brand, September 2014
                                                                                                                          • Brand personality
                                                                                                                            • Figure 37: White spirits brand personality – macro image, September 2014
                                                                                                                            • Figure 38: White spirits brand personality – micro image, September 2014
                                                                                                                          • Brand experience
                                                                                                                            • Figure 39: White spirits brand usage, September 2014
                                                                                                                            • Figure 40: Satisfaction with various white spirits brands, September 2014
                                                                                                                            • Figure 41: Consideration of white spirits brands, September 2014
                                                                                                                          • Brand recommendation
                                                                                                                            • Figure 42: Recommendation of selected white spirits brands, September 2014
                                                                                                                        • The Consumer – Usage of White Spirits

                                                                                                                          • Key points
                                                                                                                            • Vodka remains the nation’s favourite white spirit
                                                                                                                              • Figure 43: Usage of white spirits, September 2014
                                                                                                                            • Premium brands could focus on promoting neat drink
                                                                                                                                • Figure 44: Usage of white spirits neat, with a mixer, or as part of a cocktail, by category, September 2014
                                                                                                                              • Just over a third of adults drink pre-mixes
                                                                                                                                • Figure 45: Usage of pre-mixed drinks in a bottle/can, September 2014
                                                                                                                            • The Consumer – Attitudes towards Premium White Spirits

                                                                                                                              • Key points
                                                                                                                                • Quality of ingredients is key for brands targeting the premium tier
                                                                                                                                  • Figure 46: Important factors in defining a premium white spirit, September 2014
                                                                                                                                • Specific country or region of origin matters to only 23% of drinkers
                                                                                                                                  • Taste and traditional production methods appeal to older drinkers
                                                                                                                                  • The Consumer – General Attitudes towards White Spirits

                                                                                                                                    • Key points
                                                                                                                                      • Older consumers more likely to be loyal to their favourite white spirit
                                                                                                                                        • Figure 47: Attitudes towards white spirits, September 2014
                                                                                                                                      • Sophisticated flavours can help attract older drinkers to flavoured vodka
                                                                                                                                        • Tequila’s shot reputation is preventing increased usage among 18-24s
                                                                                                                                        • The Consumer – Attitudes towards Craft White Spirits

                                                                                                                                          • Key points
                                                                                                                                            • ‘Craft’ is undefined and misunderstood, but this is irrelevant to many
                                                                                                                                              • Figure 48: Attitudes towards craft white spirits, September 2014
                                                                                                                                            • Brands should focus on production methods and ingredients before ‘craft’
                                                                                                                                              • Transparency of ownership matters
                                                                                                                                              • The Consumer – Attitudes towards RTDs

                                                                                                                                                • Key points
                                                                                                                                                  • Flavoured ciders are taking the place of alcopops
                                                                                                                                                    • Figure 49: Attitudes towards pre-mixed drinks in cans or bottles, September 2014
                                                                                                                                                  • RTDs are failing to win over consumers on value and convenience
                                                                                                                                                    • Quality is not an issue for most
                                                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                                                        • Figure 50: Best and worst case forecasts for the white spirits and RTDs market, by value, 2014-19
                                                                                                                                                        • Figure 51: Best and worst case forecasts for the white spirits and RTDs market, by volume, 2014-19
                                                                                                                                                        • Figure 52: Best and worst case forecasts for the vodka market, by value, 2014-19
                                                                                                                                                        • Figure 53: Best and worst case forecasts for the vodka market, by volume, 2014-19
                                                                                                                                                        • Figure 54: Best and worst case forecasts for the white rum market, by value, 2014-19
                                                                                                                                                        • Figure 55: Best and worst case forecasts for the white rum market, by volume, 2014-19
                                                                                                                                                        • Figure 56: Best and worst case forecasts for the gin market, by value, 2014-19
                                                                                                                                                        • Figure 57: Best and worst case forecasts for the gin market, by volume, 2014-19
                                                                                                                                                        • Figure 58: Best and worst case forecasts for the tequila market, by value, 2014-19
                                                                                                                                                        • Figure 59: Best and worst case forecasts for the tequila market, by volume, 2014-19
                                                                                                                                                        • Figure 60: Best and worst case forecasts for the RTD market, by value, 2014-19
                                                                                                                                                        • Figure 61: Best and worst case forecasts for the RTD market, by volume, 2014-19
                                                                                                                                                    • Appendix – Market Share

                                                                                                                                                        • Figure 62: Value sales of top-selling vodka brands in the off-trade 2012/13 and 2013/14
                                                                                                                                                        • Figure 63: Value sales of top-selling gin brands in the off-trade 2012/13 and 2013/14
                                                                                                                                                        • Figure 64: Value sales of top-selling RTD brands in the off-trade 2012/13 and 2013/14
                                                                                                                                                        • Figure 65: Volume sales of top-selling white spirit and RTD brands in the off-trade 2012/13 and 2013/14
                                                                                                                                                        • Figure 66: Volume sales of top-selling vodka brands in the off-trade 2012/13 and 2013/14
                                                                                                                                                    • Appendix – Prices of white spirits and RTDs

                                                                                                                                                        • Figure 67: Retail prices of selected vodkas, per 70cl bottle, December 2014
                                                                                                                                                        • Figure 68: Retail prices of selected gins, per 70cl bottle, December 2014

                                                                                                                                                    Companies Covered

                                                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                                                    White Spirits and RTDs - UK - December 2014

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