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Alcoholic Drinks Review - UK - February 2018

“Many consumers are moderating their alcohol intake, putting pressure on the industry. However, consumer interest in low- and non-alcoholic drinks and widespread quality over quantity mindset suggest opportunities for brands to stay on the menu.”
– Kiti Soininen, Category Director, Food & Drink

This report looks at the following areas:

  • Low- and non-alcoholic drinks can keep brands on the menu as people moderate drinking
  • Quality over quantity mindset continues to lend opportunities for premium proposition
  • Further scope to build social media interaction with drinkers

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • 2017 sees an uplift in alcoholic drink sales
              • Figure 1: Forecast of value sales of the alcoholic drinks market, at current prices, 2012-22
            • Beer values forge ahead in 2017
              • The wine market also returned to growth in 2017
                • Figure 2: Total UK value sales of alcoholic drinks, by segment, 2012, 2017 and 2022
              • Many consumers are limiting alcohol intake
                • Alcohol duty has driven up drink prices
                  • Companies and brands
                    • Beer brands dominate the off-trade top five
                      • Leading off-trade brands post mixed growth
                        • Premiumisation prevalent across different categories
                          • Fruit and flavoured launches continue to be explored
                            • Low-alcohol/alcohol-free launches come to the fore in beer and wine
                              • Advertising on alcoholic drinks has fallen but steadied in 2017
                                • Heineken and Diageo are largest advertisers over 2013-17
                                  • The consumer
                                    • 82% of adults drink alcoholic drinks
                                      • Figure 3: Usage of types of alcoholic drinks, November 2017
                                    • Many Brits moderate their drinking
                                      • Figure 4: Alcohol units consumed in a typical week, November 2017
                                    • In-store purchases remain key for alcoholic drinks
                                      • Figure 5: Locations for buying alcoholic drinks (overall nets), November 2017
                                    • Flavour is key for drinkers
                                      • Figure 6: Choice factors when buying alcoholic drinks, November 2017
                                    • A quality over quantity mindset prevails…
                                      • …while binge drinking is deemed uncool
                                        • Figure 7: Attitudes towards alcoholic drinks, November 2017
                                      • What we think
                                      • Issues and Insights

                                        • Low- and non-alcoholic drinks can keep brands on the menu as people moderate drinking
                                          • The facts
                                            • The implications
                                              • Quality over quantity mindset continues to lend opportunities for premium proposition
                                                • The facts
                                                  • The implications
                                                    • Further scope to build social media interaction with drinkers
                                                      • The facts
                                                        • The implications
                                                        • The Market – What You Need to Know

                                                          • 2017 sees an uplift in alcoholic drink sales
                                                            • Beer volumes bounce back and values forge ahead in 2017
                                                              • The wine market also returned to growth in 2017
                                                                • Many consumers are limiting alcohol intake
                                                                  • Alcohol duty has driven up drink prices
                                                                  • Market Size and Channels to Market

                                                                    • 2017 sees an uplift in alcoholic drink sales
                                                                      • Figure 8: Total UK value and volume sales of alcoholic drinks, by segment, 2012-22
                                                                      • Figure 9: Forecast of value sales of the alcoholic drinks market, at current prices, 2012-22
                                                                      • Figure 10: Forecast of volume sales of the alcoholic drinks market, 2012-22
                                                                    • Forecast methodology
                                                                      • On-trade drink sales lag behind the off-trade
                                                                        • Online retailers growing in popularity to boost off-trade numbers
                                                                        • Market Segmentation

                                                                          • Beer volumes bounce back and values forge ahead in 2017
                                                                            • Lager sales propped up by the off-trade
                                                                              • The wine market also returned to growth in 2017
                                                                                • Still wine volumes continue to slide
                                                                                  • Cider volume sales enjoy modest growth in 2017
                                                                                    • Vodka and gin drive white spirits growth
                                                                                      • Inflation drives dark spirits and liqueurs growth
                                                                                        • Value sales by segment
                                                                                          • Figure 11: Total UK value sales of alcoholic drinks, by segment, 2012-22
                                                                                          • Figure 12: Value sales of alcoholic drinks, by channel, 2015-17
                                                                                        • Volume sales by segment
                                                                                          • Figure 13: Total UK volume sales of alcoholic drinks, by segment, 2012-22
                                                                                          • Figure 14: Volume sales of alcoholic drinks, by channel, 2015-17
                                                                                      • Market Drivers

                                                                                        • Many consumers are limiting alcohol intake
                                                                                          • Income squeeze and price rises
                                                                                            • Figure 15: Annual exchange rates for Sterling against key currencies, 2012-17
                                                                                          • Reduced guidelines on alcohol intake in 2016
                                                                                            • Minimum unit pricing gains Supreme Court backing
                                                                                              • Alcohol duty has driven up drink prices
                                                                                                • Figure 16: UK excise duty rates for alcoholic drinks, 2007-17
                                                                                              • Pub closures remain commonplace
                                                                                                • Weather shapes consumption trends
                                                                                                  • An ageing population could pose a threat to alcoholic drink sales
                                                                                                    • Figure 17: Change in age structure of the over-20 UK population, 2012-17 and 2017-22
                                                                                                • Companies and Brands – What You Need to Know

                                                                                                  • Beer brands dominate the off-trade top five
                                                                                                    • Leading off-trade brands post mixed growth
                                                                                                      • Premiumisation prevalent across different categories
                                                                                                        • Fruit and flavoured launches continue to be explored
                                                                                                          • Low-alcohol/alcohol-free launches come to the fore in beer and wine
                                                                                                            • Advertising on alcoholic drinks has fallen but steadied in 2017
                                                                                                              • Heineken and Diageo are largest advertisers over 2013-17
                                                                                                              • Market Share

                                                                                                                • Beer brands dominate the off-trade top five
                                                                                                                  • Figure 18: UK retail value sales of the top 20 alcoholic drink brands, 2015-2017
                                                                                                                • Foster’s and Carlsberg face challenges from delistings
                                                                                                                  • Fruit ciders continue to soar
                                                                                                                    • Smirnoff and Gordon’s grow in white spirits
                                                                                                                      • Famous Grouse returns to growth
                                                                                                                        • Leading wine brands struggle
                                                                                                                        • Launch Activity and Innovation

                                                                                                                          • Alcohol brands continue to invest in NPD
                                                                                                                            • Premiumisation prevalent across different categories
                                                                                                                              • Craft drives premium beer NPD
                                                                                                                                • Premium cider launches emphasise their heritage
                                                                                                                                  • Retailers push premiumisation in wine
                                                                                                                                    • Premium launches prevalent within dark spirits and liqueurs…
                                                                                                                                      • …while white spirit brands focus on ingredients such as botanicals
                                                                                                                                        • Fruit and flavoured launches continue to be explored
                                                                                                                                          • Further growth in flavoured ciders
                                                                                                                                            • Blossom Hill looks to tap into the growth of fruit wine
                                                                                                                                              • Diageo also targets Millennials with pink gin
                                                                                                                                                • Low-alcohol/alcohol-free launches come to the fore in beer and wine
                                                                                                                                                  • Two high-profile beer launches in 2017
                                                                                                                                                    • Lower-alcohol wine launches on the up
                                                                                                                                                      • Crossover brands blur category boundaries
                                                                                                                                                        • Packaging innovation focuses on smaller cans and pouches
                                                                                                                                                        • Advertising and Marketing Activity

                                                                                                                                                          • Advertising on alcoholic drinks in decline in recent years
                                                                                                                                                            • Figure 19: Total above-the-line, online display and mail advertising spend on alcoholic drinks, 2013-17
                                                                                                                                                            • Figure 20: Total above-the-line, online display and mail advertising spend on alcoholic drinks, by category, 2013-17
                                                                                                                                                          • TV still leads the way but appears to be falling out of favour
                                                                                                                                                            • Figure 21: Total above-the-line, online display and mail advertising spend on alcoholic drinks, by media type, 2013-17
                                                                                                                                                          • Heineken remains the largest advertiser over the 2013-17 period
                                                                                                                                                            • AB InBev ups support for Budweiser, Carlsberg invests in San Miguel
                                                                                                                                                              • Diageo maintains strong backing for Guinness and boosts spirit support
                                                                                                                                                                • Figure 22: Total above-the-line, online display and mail advertising spend on alcoholic drinks, by company, 2013-17 (sorted by 2013-17 total)
                                                                                                                                                                • Figure 23: Total above-the-line, online display and mail advertising spend on alcoholic drinks, by brand, 2013-17 (sorted by 2013-17)
                                                                                                                                                              • Nielsen Ad Intel coverage
                                                                                                                                                              • The Consumer – What You Need to Know

                                                                                                                                                                • 82% of adults drink alcoholic drinks
                                                                                                                                                                  • Many Brits moderating their drinking
                                                                                                                                                                    • In-store channel still top for alcoholic drinks
                                                                                                                                                                      • Flavour is key for drinkers
                                                                                                                                                                        • A quality over quantity mindset prevails
                                                                                                                                                                          • 61% of drink buyers agree that getting drunk is uncool
                                                                                                                                                                          • Usage of Alcoholic Drinks

                                                                                                                                                                            • 82% of adults drink alcoholic drinks
                                                                                                                                                                              • Figure 24: Usage of alcoholic drinks (nets), November 2017
                                                                                                                                                                              • Figure 25: Repertoire of usage of types of alcoholic drinks, November 2017
                                                                                                                                                                            • Still wine and lager are the most popular drinks types
                                                                                                                                                                              • Figure 26: Usage of alcoholic drinks by type, November 2017
                                                                                                                                                                            • Cider’s high penetration belies a category with issues
                                                                                                                                                                              • Different spirits appeal to different groups
                                                                                                                                                                                • Prosecco continues to fizz
                                                                                                                                                                                • Weekly Alcohol Intake

                                                                                                                                                                                  • Less than one in five drinkers exceeds recommended weekly intake
                                                                                                                                                                                    • Figure 27: Alcohol units consumed in a typical week, November 2017
                                                                                                                                                                                  • Women are less likely weekly drinkers than men
                                                                                                                                                                                    • Figure 28: Alcohol units consumed in a typical week, by gender, November 2017
                                                                                                                                                                                • Locations for Buying Alcoholic Drinks

                                                                                                                                                                                  • In-store purchases are key for alcoholic drinks
                                                                                                                                                                                    • Figure 29: Locations for buying alcoholic drinks (overall nets), November 2017
                                                                                                                                                                                  • In-store purchases driven by supermarkets
                                                                                                                                                                                    • Discounters do better on grocery than drinks
                                                                                                                                                                                      • Leisure activities remain popular
                                                                                                                                                                                        • Figure 30: Locations for buying alcoholic drinks (nets by type of drink), November 2017
                                                                                                                                                                                      • Online buying still niche in drinks
                                                                                                                                                                                        • 25-34-year-olds drive online buying
                                                                                                                                                                                          • Figure 31: Locations for buying alcoholic drinks, November 2017
                                                                                                                                                                                      • Choice Factors

                                                                                                                                                                                        • Flavour is key for drinkers, ABV matters to two in five
                                                                                                                                                                                          • Figure 32: Choice factors when buying alcoholic drinks, November 2017
                                                                                                                                                                                        • Brand size influences one in five, production method just 6%
                                                                                                                                                                                          • Packaging factors are peripheral
                                                                                                                                                                                            • Little reported interest in packaging materials
                                                                                                                                                                                              • …and even less in packaging styles
                                                                                                                                                                                                • Figure 33: Style of packaging as a choice factor, by age, November 2017
                                                                                                                                                                                              • Country of production influences one in five over-55s
                                                                                                                                                                                              • Attitudes towards Alcoholic Drinks

                                                                                                                                                                                                • A quality over quantity mindset prevails
                                                                                                                                                                                                  • Figure 34: Attitudes towards the price/quality of alcoholic drinks, November 2017
                                                                                                                                                                                                • Rising prices leading many to moderate pub visits
                                                                                                                                                                                                  • Supermarket multibuys appeal widely
                                                                                                                                                                                                    • Health factors are also contributing towards moderation
                                                                                                                                                                                                      • Calorie and alcohol unit details can help assuage health concerns
                                                                                                                                                                                                        • Figure 35: Attitudes towards health and alcoholic drinks, November 2017
                                                                                                                                                                                                      • Low- and non-alcoholic drinks on the rise
                                                                                                                                                                                                        • Collaboration drinks appeal to one in three
                                                                                                                                                                                                          • Figure 36: Attitudes towards alcoholic drink brands and producers, November 2017
                                                                                                                                                                                                        • British-made drinks appeal to one in four
                                                                                                                                                                                                          • Social media can resonate with 25-34s
                                                                                                                                                                                                          • Further Attitudes towards Alcoholic Drinks

                                                                                                                                                                                                            • Three in five drinkers think than getting drunk is uncool
                                                                                                                                                                                                              • Figure 37: Agreement with the statement “Getting drunk is uncool”, November 2017
                                                                                                                                                                                                            • Confusion around craft continues
                                                                                                                                                                                                              • Figure 38: Agreement with the statement “It’s hard to tell which brands are craft”, November 2017
                                                                                                                                                                                                            • Streamlined drinks ranges could benefit retailers
                                                                                                                                                                                                              • Figure 39: Agreement with the statements “The amount of choice in supermarkets can make it hard to choose a drink” and “It’s difficult to find information on packaging about the calorie content”, November 2017
                                                                                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                              • Abbreviations
                                                                                                                                                                                                                • Consumer research methodology
                                                                                                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                                                                                                  • Forecast methodology
                                                                                                                                                                                                                    • Best- and worst-case forecast data
                                                                                                                                                                                                                      • Figure 40: Total UK value sales of alcoholic drinks, best- and worst-case forecast, 2017-22
                                                                                                                                                                                                                      • Figure 41: Total UK volume sales of alcoholic drinks, best- and worst-case forecast, 2017-22

                                                                                                                                                                                                                  Alcoholic Drinks Review - UK - February 2018

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