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White Spirits and RTDs - UK - March 2012

“The new types of RTD have revived a flagging market and could potentially lead the overall RTD market back to the £1 billion mark. Its main obstacles at the moment are that people are put off by the lack of freshness inherent in this product and that – for older people in particular – its alcohol strength is predetermined.”

- Jonny Forsyth, Senior Drinks Analyst

Some questions answered in this report include:

  • How can the market maintain value growth against declining volume sales?
  • What are the main obstacles to and opportunities for the new RTD market’s growth?
  • How can gin finally turn its potential into sales?
  • Are dark spirits becoming the new white spirits?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Market size and forecast for the total UK white spirits and RTD market, by value, 2006-16
            • Market factors
              • Figure 2: Factors influencing the decision to drink alcohol at home, May 2011
            • Companies, brands and innovation
              • Figure 3: Top five off-trade brands in the RTD/white spirits categories by value sales in 2011, and year-on-year growth
            • The consumer
              • Figure 4: Which occasions people drink vodka, gin and the new RTDs on, January 2012
              • Figure 5: Proportion of drinkers per spirit that drink it on its own, with a mixer or as part of a cocktail, January 2012
              • Figure 6: Attitudes towards vodka, January 2012
            • What we think
            • Issues in the Market

                • How can the market maintain value growth against declining volume sales?
                  • What are the main obstacles to and opportunities for the new RTD market’s growth?
                    • How can gin finally turn its potential into sales?
                      • Are dark spirits becoming the new white spirits?
                      • Future Opportunities

                          • Patriot Games
                            • Home of the Senses
                            • Internal Market Environment

                              • Key points
                                • Trend towards in-home drinking picks up pace…
                                  • Different consumer mindset
                                    • Figure 7: Factors influencing the decision to drink alcohol at home, May 2011
                                  • Different drinking occasions
                                    • Figure 8: Most popular occasions for drinking alcohol at home and out of home, May 2011
                                  • …fuelling a rise of premiumisation in spirits...
                                      • Figure 9: Attitudes towards premiumisation and alcohol, by gender and age, December 2010
                                    • …as well as the importance of discounting
                                      • Figure 10: Index of changing grocery shopping habits, by gender, age and socio-economic group, November 2011
                                    • The challenge of making a profit in a high-tax market
                                      • Figure 11: Current UK excise duty rates for spirits/RTDs in their standard retail format compared to beer, cider and wine, February 2012
                                    • Capitalising on the trend towards local, small, artisan brands
                                    • Broader Market Environment

                                        • Consumer spend is under increasing pressure
                                          • Figure 12: Change in average weekly earnings compared to inflation and consumer confidence, January 2007-October 2011
                                        • 2012 will be a challenging trading environment
                                          • Rise in ABC1s underpins the continued importance of premiumisation
                                            • Figure 13: Forecast adult population trends, by socio-economic group, 2006-16
                                          • Impact of an ageing population
                                            • Figure 14: Forecast adult population trends, by age, 2006-16
                                        • Competitive Context

                                          • Key points
                                            • A declining pool of drinkers…
                                              • Figure 15: Proportion of UK population who drink alcohol, 2007-11
                                            • …who demand more choice and variety than before
                                              • Figure 16: Penetration of major alcohol types in order of popularity, 2007-11
                                            • Are white spirits starting to go out of fashion?
                                              • Consumers are gaining a sweeter tooth
                                              • Strengths and Weaknesses in the Market

                                                • Strengths
                                                  • Weaknesses
                                                  • Who’s Innovating?

                                                    • Key points
                                                      • RTDs dominate innovation
                                                        • Figure 17: Proportion of new product launches in the UK white spirits and RTDs market, by sub-category, 2007-11
                                                      • Experimenting around RTD cocktail formats
                                                        • Figure 18: Some examples of interesting innovation around RTD cocktail packaging, May 2011-January 2012
                                                      • Vodka flavour innovation is moving beyond fruit
                                                        • White spirits lead the way in stylish, standout packaging
                                                        • Market Size and Segmentation

                                                          • Key points
                                                            • Total white spirits/RTDs market declines by 89 million litres in six years
                                                              • Figure 19: Market size and forecast for the total UK white spirits and RTD market, by volume and value, 2006-16
                                                              • Figure 20: Market size and forecast for the total UK white spirits and RTD market, by value, 2006-16
                                                            • Premiumisation will help drive vodka sales to £2.6 million by 2016
                                                                • Figure 21: Market size and forecast for the UK vodka market, by volume and value, 2006-16
                                                                • Figure 22: Market size and forecast for the total UK vodka market, by value, 2006-16
                                                              • The gin revival fails to materialise
                                                                  • Figure 23: Market size and forecast for the UK gin market, by volume and value, 2006-16
                                                                  • Figure 24: Market size and forecast for the total UK gin market, by value, 2006-16
                                                                • White rum is performing steadily but tequila growth remains stunted
                                                                  • Figure 25: Market size and forecast for the UK other white spirits market, by volume and value, 2006-16
                                                                  • Figure 26: Market size and forecast for the total UK other white spirits market, by value, 2006-16
                                                                • New RTDs stem continued decline of alcopops
                                                                  • Figure 27: Market size and forecast for the UK RTD market, by volume and value, 2006-16
                                                                  • Figure 28: Market size and forecast for the total UK RTD market, by value, 2006-16
                                                                • Forecast methodology
                                                                • Market Share

                                                                  • Key points
                                                                    • Smirnoff consolidates its position as number one vodka
                                                                      • Figure 29: Market value and share of top five vodka brands in the off-trade, 2010 and 2011
                                                                    • Gin’s modest growth is being boosted by premium brands
                                                                      • Figure 30: Market value and share of top five other white spirits brands in the off-trade, 2010 and 2011
                                                                    • New breed of RTDs leads to first annual growth in off-trade for years
                                                                      • Figure 31: Market value and share of top five RTD brands in the off-trade, 2010 and 2011
                                                                  • Companies and Products

                                                                    • Key points
                                                                      • Brown-Forman
                                                                        • Bacardi-Martini
                                                                          • Diageo
                                                                            • First Drinks Brands
                                                                              • Pernod Ricard
                                                                                • Glen Catrine
                                                                                  • Global Brands Limited
                                                                                  • Brand Research

                                                                                        • Figure 32: Attitudes towards and usage of brands in the white spirits sector, January 2012
                                                                                        • Figure 33: Attitudes, by white spirit brand, January 2012
                                                                                      • Brand personality
                                                                                        • Figure 34: White spirit brand personality – macro image, January 2012
                                                                                        • Figure 35: White spirit brand personality – micro image, January 2012
                                                                                        • Figure 36: White spirit brand usage, January 2012
                                                                                        • Figure 37: Satisfaction with various white spirit brands, January 2012
                                                                                        • Figure 38: Consideration of white spirit brands, January 2012
                                                                                        • Figure 39: Consumer perceptions of current white spirits brand performance, January 2012
                                                                                        • Figure 40: White spirits brand recommendation – Net Promoter Score, January 2012
                                                                                        • Figure 41: White spirits brand index, January 2012
                                                                                        • Figure 42: White spirits brand index vs. recommendation, January 2012
                                                                                        • Figure 43: Target groups, January 2012
                                                                                        • Figure 44: White spirits brand usage, by target groups, January 2012
                                                                                      • Group One – Conformists
                                                                                        • Group Two – Simply the Best
                                                                                          • Group Four – Habitual Shoppers
                                                                                            • Group Five – Individualists
                                                                                            • Brand Communication and Promotion

                                                                                              • Key points
                                                                                                • Above-the-line marketing support remains strong
                                                                                                  • Figure 45: Topline above-the-line advertising spend in the UK white spirits and RTDs market, 2009-11
                                                                                                • Smirnoff’s investment is paying off
                                                                                                  • Figure 46: Highest-spending brands in the white spirits/RTD market in terms of advertising, January 2009-November 2011
                                                                                                • Diageo is driving ad investment
                                                                                                  • Figure 47: Highest-spending advertisers in the white spirits/RTD market, January 2009-November 2011
                                                                                              • Channels to Market

                                                                                                • Key points
                                                                                                  • Off-trade revenue now accounts for 46% of the total market
                                                                                                    • Figure 48: Value sales and share of white spirits/RTDs, in the on- and off-trade, 2006-11
                                                                                                  • Multiples see revenues increase by a fifth in the past three years
                                                                                                    • Figure 49: Value sales of white spirits/RTDs, by channel, 2009-11
                                                                                                  • The rise of online alcohol purchasing
                                                                                                  • Consumer Usage

                                                                                                    • Key points
                                                                                                      • Vodka remains comfortably the leading UK white spirit
                                                                                                          • Figure 50: Consumption of white spirits and RTDs, January 2012
                                                                                                        • New RTDs are continuing to attract new UK drinkers
                                                                                                            • Figure 51: Consumption of the new and RTDs, 2011 versus 2012
                                                                                                          • White spirits attract the young in droves
                                                                                                              • Figure 52: Indexed consumption of white spirits (in any format) by type, by gender and age, January 2012
                                                                                                            • Is there room for flavoured gin?
                                                                                                                • Figure 53: Proportion of drinkers per spirit that drink it on its own, with a mixer or as part of a cocktail, January 2012
                                                                                                              • A fifth of vodka drinkers drink it at least three times a week
                                                                                                                  • Figure 54: Proportion of drinkers of each product who consume it at least three times a week, 2011
                                                                                                              • Occasions for Drinking White Spirits and the New RTDs

                                                                                                                • Key points
                                                                                                                  • About partying more than relaxing
                                                                                                                    • Figure 55: Which occasions people drink vodka, gin or the new RTDs on, in order of popularity, January 2012
                                                                                                                  • Seven in ten 18-34s drink them before they go out
                                                                                                                    • Figure 56: Which occasions 18-34-year-olds drink vodka, gin or the new RTDs on, in order of popularity, January 2012
                                                                                                                  • Gin struggles to compete with vodka as a sociable/party choice
                                                                                                                      • Figure 57: Which occasions people drink vodka, gin and the new RTDs, January 2012
                                                                                                                    • New RTDs seen as ideal for outdoor meal occasions
                                                                                                                    • Consumer – Attitudes towards Vodka

                                                                                                                      • Key points
                                                                                                                        • Vodka’s mixability is its main strength
                                                                                                                          • Premiumisation is a key driver for consumers…
                                                                                                                              • Figure 58: Attitudes towards vodka, January 2012
                                                                                                                            • …especially male drinkers
                                                                                                                                • Figure 59: Net difference in attitudes towards vodka – women versus men, January 2012
                                                                                                                              • Flavoured vodka appeals to 18-24s by offering convenience and variety
                                                                                                                                  • Figure 60: Indexed attitudes towards vodka – 18-24-year-olds versus all, January 2012
                                                                                                                              • Consumer – Attitudes towards the New Type of RTDs

                                                                                                                                • Key points
                                                                                                                                  • Two major barriers are holding back RTDs...
                                                                                                                                      • Figure 61: Attitudes towards the new type of RTDs, January 2012
                                                                                                                                    • …but convenience is much more valued among the younger cohort
                                                                                                                                        • Figure 62: Net difference in attitudes towards the new RTDs – under-35s versus over-35s, January 2012
                                                                                                                                      • The importance of maintaining their distance from alcopops
                                                                                                                                      • Appendix – Internal Market Environment

                                                                                                                                          • Figure 63: Factors influencing the decision to drink alcohol at home, by demographics, May 2011
                                                                                                                                          • Figure 64: Next most popular factors influencing the decision to drink alcohol at home, by demographics, May 2011
                                                                                                                                          • Figure 65: Occasions when consumers have drunk alcohol at home, by demographics, May 2011
                                                                                                                                          • Figure 66: Changing grocery shopping habits, by gender, age and socio-economic group, November 2011
                                                                                                                                      • Appendix – Market Size and Forecast

                                                                                                                                          • Figure 67: Best- and worst-case forecast of total UK white spirits/RTD sales, by value, 2011-16
                                                                                                                                          • Figure 68: Best- and worst-case forecast of total UK white spirits/RTD sales, by volume, 2011-16
                                                                                                                                          • Figure 69: Best- and worst-case forecast of total UK vodka sales, by value, 2011-16
                                                                                                                                          • Figure 70: Best- and worst-case forecast of total UK vodka sales, by volume, 2011-16
                                                                                                                                          • Figure 71: Best- and worst-case forecast of total UK gin sales, by value, 2011-16
                                                                                                                                          • Figure 72: Best- and worst-case forecast of total UK gin sales, by volume, 2011-16
                                                                                                                                          • Figure 73: Best- and worst-case forecast of total UK other white spirits sales, by value, 2011-16
                                                                                                                                          • Figure 74: Best- and worst-case forecast of total UK other white spirits sales, by volume, 2011-16
                                                                                                                                          • Figure 75: Best- and worst-case forecast of total UK RTD sales, by value, 2011-16
                                                                                                                                          • Figure 76: Best- and worst-case forecast of total UK RTD sales, by volume, 2011-16
                                                                                                                                          • Figure 77: Market size and forecast for the total UK white spirits and RTD market, by volume (litres), 2006-16
                                                                                                                                          • Figure 78: Market size and forecast for the total UK vodka market, by volume (litres), 2006-16
                                                                                                                                          • Figure 79: Market size and forecast for the total UK gin market, by volume (litres), 2006-16
                                                                                                                                          • Figure 80: Market size and forecast for the total UK other white spirits market, by volume (litres), 2006-16
                                                                                                                                          • Figure 81: Market size and forecast for the total UK RTDs market, by volume (litres), 2006-16
                                                                                                                                      • Appendix – Brand Research

                                                                                                                                          • Figure 82: Brand usage, January 2012
                                                                                                                                          • Figure 83: Brand commitment, January 2012
                                                                                                                                          • Figure 84: Brand momentum, January 2012
                                                                                                                                          • Figure 85: Brand diversity, January 2012
                                                                                                                                          • Figure 86: Brand satisfaction, January 2012
                                                                                                                                          • Figure 87: Brand recommendation, January 2012
                                                                                                                                          • Figure 88: Brand attitude, January 2012
                                                                                                                                          • Figure 89: Brand image – macro image, January 2012
                                                                                                                                          • Figure 90: Brand image – micro image, January 2012
                                                                                                                                          • Figure 91: Profile of target groups, by demographics, January 2012
                                                                                                                                          • Figure 92: Psychographic segmentation, by target group, January 2012
                                                                                                                                          • Figure 93: Brand usage, by target group, January 2012
                                                                                                                                        • Brand index
                                                                                                                                          • Figure 94: Brand index, January 2012
                                                                                                                                      • Appendix – Consumer Usage

                                                                                                                                          • Figure 95: Consumption of vodka, and how it was consumed, by demographics, January 2012
                                                                                                                                          • Figure 96: Consumption of gin, and how it was consumed, by demographics, January 2012
                                                                                                                                          • Figure 97: Consumption of tequila, and how it was consumed, by demographics, January 2012
                                                                                                                                          • Figure 98: Consumption of white rum, and how it was consumed, by demographics, January 2012
                                                                                                                                          • Figure 99: Consumption of any of the new RTDs, by demographics, January 2012
                                                                                                                                          • Figure 100: Consumption of RTD spirits with mixer in a can, by demographics, January 2012
                                                                                                                                          • Figure 101: Consumption of RTD cocktails, by demographics, January 2012
                                                                                                                                      • Appendix – Occasions for Drinking White Spirits and the New RTDs

                                                                                                                                          • Figure 102: Most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 103: Next most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 104: Most popular occasions for drinking vodka, by demographics, January 2012
                                                                                                                                          • Figure 105: Next most popular occasions for drinking vodka, by demographics, January 2012
                                                                                                                                          • Figure 106: Most popular occasions for drinking gin, by demographics, January 2012
                                                                                                                                          • Figure 107: Next most popular occasions for drinking gin, by demographics, January 2012
                                                                                                                                          • Figure 108: Most popular occasions for drinking ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 109: Next most popular occasions for drinking ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 110: Most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 111: Next most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 112: Most popular occasions for drinking vodka, by demographics, January 2012
                                                                                                                                          • Figure 113: Next most popular occasions for drinking vodka, by demographics, January 2012
                                                                                                                                          • Figure 114: Most popular occasions for drinking gin, by demographics, January 2012
                                                                                                                                          • Figure 115: Next most popular occasions for drinking gin, by demographics, January 2012
                                                                                                                                          • Figure 116: Occasions for drinking ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 117: Most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 118: Next most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 119: Most popular occasions for drinking vodka, by demographics, January 2012
                                                                                                                                          • Figure 120: Next most popular occasions for drinking vodka, by demographics, January 2012
                                                                                                                                          • Figure 121: Occasions for drinking gin, by demographics, January 2012
                                                                                                                                          • Figure 122: Most popular occasions for drinking ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 123: Next most popular occasions for drinking ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 124: Most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 125: Next most popular occasions for drinking vodka, gin and ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 126: Most popular occasions for drinking vodka, by demographics, January 2012
                                                                                                                                          • Figure 127: Next most popular occasions for drinking vodka, by demographics, January 2012
                                                                                                                                          • Figure 128: Most popular occasions for drinking gin, by demographics, January 2012
                                                                                                                                          • Figure 129: Next most popular occasions for drinking gin, by demographics, January 2012
                                                                                                                                          • Figure 130: Most popular occasions for drinking ready-to-serves, by demographics, January 2012
                                                                                                                                          • Figure 131: Next most popular occasions for drinking ready-to-serves, by demographics, January 2012
                                                                                                                                      • Appendix – Attitudes towards Vodka

                                                                                                                                          • Figure 132: Most popular attitudes to vodka, by demographics, January 2012
                                                                                                                                          • Figure 133: Next most popular attitudes towards vodka, by demographics, January 2012
                                                                                                                                      • Appendix – Attitudes towards the New Type of RTDs

                                                                                                                                          • Figure 134: Most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
                                                                                                                                          • Figure 135: Next most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
                                                                                                                                          • Figure 136: Most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
                                                                                                                                          • Figure 137: Next most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
                                                                                                                                          • Figure 138: Most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012
                                                                                                                                          • Figure 139: Next most popular attitudes towards ready-mixed spirits/cocktails, by demographics, January 2012

                                                                                                                                      Companies Covered

                                                                                                                                      • Absolut Spirits Company (USA)
                                                                                                                                      • Bacardi & Company Limited
                                                                                                                                      • Bacardi-Martini Ltd
                                                                                                                                      • Beefeater
                                                                                                                                      • Diageo UK
                                                                                                                                      • Facebook, Inc.
                                                                                                                                      • First Drinks
                                                                                                                                      • Global Brands, Inc.
                                                                                                                                      • Guinness
                                                                                                                                      • Loch Lomond Distillers
                                                                                                                                      • Pernod Ricard
                                                                                                                                      • Russian Standard
                                                                                                                                      • Tesco Plc
                                                                                                                                      • Whyte & Mackay Ltd
                                                                                                                                      • William Grant and Sons Distillers Ltd

                                                                                                                                      White Spirits and RTDs - UK - March 2012

                                                                                                                                      £1,750.00 (Excl.Tax)