Discounting bruised some famous names over Christmas, but many brands could drink to great sales hikes, says Sonya Hook
Christmas is traditionally a period of ruthless price wars in the booze aisles. But many of the big brands emerged unscathed in this year’s battle, which claimed only three big scalps: Baileys, Stella Artois and The Famous Grouse.
Of the top 10 brands, these were the only ones to drop in value in the four weeks to Christmas compared with the same period in 2004.
Most categories had an overall increase in sales - if only slight - compared with last year, with beer and spirits up 1% and wine up 5% in the four weeks to Christmas Eve.
Research carried out exclusively for The Grocer by ACNielsen reveals that the total alcohol market generated sales of £1.5bn over the four-week period, up 1% on last year’s figures - albeit less than 2004’s 6% increase on the previous year.
The rise is in line with ongoing cultural changes in the UK, with the off-trade continuing to steal share from the on-trade as consumers choose to drink at home more.
Value growth across all categories paints a better-than-expected picture for the alcohol industry this year, but many drinks producers, particularly those in the beer market, feel the heavy discounting tactics operated by the multiples depressed their value sales figures over this key period.
Stuart MacFarlane, MD for take home at Inbev UK, the producer of Stella, says: “We witnessed the heaviest value destruction in recent years over the Christmas period - certainly since 2001, which broke the mould in terms of low pricing.”
InBev UK does not yet have full figures for the Christmas period, but MacFarlane says that while the total value of beer sales was static, volume was up. “It means that once again millions of pounds have been stripped out of the category at the time of heaviest consumer demand. Such short-term discounting does not drive consumption and undermines consumers’ pricing perceptions of beer, which impact on sales throughout the year,” he says.
Like Stella, a number of top 10 beer brands struggled. Guinness, Kronenbourg 1664 and Grolsch all fell in sales compared with 2004.
Others, however, had greater success. Foster’s was up 24% and Budweiser 10%, the latter aided by a wide variety of multipacks, according to brand owner Anheuser-Busch’s UK sales director, Andrew Nethercott.
One of the lowest prices recorded for beer was in Asda, where two cases of 20 x 330ml cans of Stella were on sale for £16. Others offered deals on mixed cases of brands or single case reductions. The logic of so many different deals is questionable, but bulk-buy beer promotions are likely to have put more sales in the direction of the multiple retailers, which achieved a 4.2% sales increase on last year, while smaller impulse stores struggled and saw a decline.
MacFarlane says: “The indications at this stage are that small stores have taken a hit, with most of the extra volume going through multiple retailers. Small stores did well early on because they upped their game in November but lost out later. There was a tranche of multi-case deals early on, which switched to single case promotions nearer Christmas.”
Some of the heaviest discounting over the period was on one-litre bottles of Diageo’s Baileys.
Baileys has always been the target of aggressive discounting and is often used as a footfall driver in the multiples over Christmas. Its lowest price of £9.84 for one litre, seen in Tesco, was its lowest ever. But despite taking the number two spot behind Stella in the top 10 Christmas drinks brands, it lost 5% in value compared with the same four weeks last year, a big disappointment for Diageo after last year’s 28% increase on 2003.
Andrew Grant, head of beers, wines and spirits at Somerfield, says: “Baileys is a key product at Christmas so retailers watch the price carefully. Pricing for Baileys was very keen across the marketplace this season.”
Other spirit brands fared better with a massive 31% uplift in sales for Smirnoff Red Label, another Diageo brand, and 37% for Bell’s 8-year-old.
Both brands were subject to multi-bottle deals on one-litre bottles of spirits, such as a three-for-£25 deal seen in Somerfield. But unlike the beer deals, these promotions ran for just a few days and were aimed at attracting new consumers.
On the whole, wine brands had a more successful Christmas and the total category saw a value increase of 5% over the four-week period.
Category leaders Hardys and Blossom Hill grew sales by 19% and 11% respectively, and brands such as Kumala and Banrock Station produced sparkling results with increases of 78% and 296% respectively compared with 2004.
The timely launch of Banrock Station’s Reserve range, priced at £7.99 a bottle compared with its standard £4.99, is a likely contributor to its success over this period.
While the wine category often struggles to push consumers over the £5 per bottle mark, a task made more difficult by heavy discounting, promotions on wine were generally no more aggressive than usual, although some half-price activity occurred for short-term periods.
In The Grocer’s own Pricewatch survey over the eight weeks leading up to Christmas, the price of a bottle of Hardys in the multiple grocers rarely dropped more than a few pence each week and deals were often limited to one week only.
But regardless of deals, growing consumer interest in wine is naturally boosted during the festive period.
Wine also showed most movement in ranking in its top 10 brand table compared with last year, showing that getting the type and timing of brand activity right can have a big effect. E&J Gallo overtook Jacob’s Creek this Christmas to take third place, while Lindemans fell from sixth to ninth.
Top 10 brands
BY VALUE (£M)
4 w/e DEC 25 20044 w/e DEC 24 2005% CHANGE
1Stella Artois65.361.7-6
2Baileys43.241.2-5
3Carling34.536.35
4Smirnoff Red Label26.034.231
5Hardys27.833.019
6Foster’s24.430.124
7Bell’s 8-year-old17.924.637
8Blossom Hill20.522.811
9E&J Gallo17.922.123
10The Famous Grouse23.122.0-5
Top 10 beers, wines and spirits brands
BY VALUE (£M)
BEERS% CHANGE
1Stella Artois-6
2Carling5
3Foster’s24
4Budweiser10
5Carlsberg6
6Kronenbourg 1664-1
7Total Guinness-3
8John Smith’s4
9Grolsch-30
10Carlsberg Export32
WINES% CHANGE
1Hardys19
2Blossom Hill11
3E&J Gallo23
4Jacob’s Creek-4
5Stowells3
6Kumala78
7Banrock Station296
8Wolf Blass34
9Lindemans-22
10Echo Falls99
SPIRITS% CHANGE
1Baileys-5
2Smirnoff Red Label31
3Bell’s 8-year-old37
4The Famous Grouse-5
5Gordon’s22
6Bacardi16
7Jack Daniel’s9
8Teacher’s-1
9Courvoisier VS12
10Glen’s Vodka6
Sales by category
BY VALUE (£M)
4 w/e DEC 25 20044 w/e DEC 24 2005% CHANGE
Total alcohol1,462.01,483.71.5
Beer330.5333.50.9
Spirits427.3431.20.9
Light wine (exc British)449.5470.44.6
Champagne & sparkling wine104.7105.40.7
Fortified wine68.064.8-4.6
RTDs36.630.1-17.8
Cider and perry37.440.58.2
Sales by channel
BY VALUE (£M)
4 w/e DEC 25 20044 w/e DEC 24 2005% CHANGE
TOTAL ALCOHOL
Total coverage GB1,462.01,483.71.5
Grocery multiples GB1,052.61,097.04.2
Impulse GB409.9387.2-5.5
Impulse channels include: Convenience multiples, Multiple forecourts, Multiple specialist off-trade, Independents
METHODOLOGY: All market data for the Christmas Bestsellers is sourced from ACNielsen, a VNU company, the world’s leading marketing information company. Offering services in more than 100 countries, the company provides measurement and analysis of marketplace dynamics and consumer attitudes and behaviour. Clients rely on ACNielsen’s market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns. ACNielsen is the recognised authority of the alcoholic drinks trade in the UK.
Retail measurement data is provided from ACNielsen’s Retail Measurement Services, which monitor weekly data from EPoS checkout scanners. Sales figures are quoted in £m sterling and cover the four-week period to December 24, 2005 compared with the four weeks to December 25, 2004. Market coverage includes Total Market GB coverage, including grocery multiples, convenience multiples, independents, multiple forecourts, impulse multiples, Co-ops and symbol stores. A brand is defined as a collection of products, comprising all pack sizes within the product range, in the same product field. ACNielsen’s Retail Measurement Services provide comprehensive information on actual purchases, market shares, distribution, pricing and merchandising and promotional activities - and are the fastest and most accurate monitor of consumer sales in Europe. Consumer data is provided through ACNielsen Homescan, which tracks the buying behaviour and demographics of more than 10,500 households in the UK and Ireland, primarily through hand-held, in-home scanners.
Christmas is traditionally a period of ruthless price wars in the booze aisles. But many of the big brands emerged unscathed in this year’s battle, which claimed only three big scalps: Baileys, Stella Artois and The Famous Grouse.
Of the top 10 brands, these were the only ones to drop in value in the four weeks to Christmas compared with the same period in 2004.
Most categories had an overall increase in sales - if only slight - compared with last year, with beer and spirits up 1% and wine up 5% in the four weeks to Christmas Eve.
Research carried out exclusively for The Grocer by ACNielsen reveals that the total alcohol market generated sales of £1.5bn over the four-week period, up 1% on last year’s figures - albeit less than 2004’s 6% increase on the previous year.
The rise is in line with ongoing cultural changes in the UK, with the off-trade continuing to steal share from the on-trade as consumers choose to drink at home more.
Value growth across all categories paints a better-than-expected picture for the alcohol industry this year, but many drinks producers, particularly those in the beer market, feel the heavy discounting tactics operated by the multiples depressed their value sales figures over this key period.
Stuart MacFarlane, MD for take home at Inbev UK, the producer of Stella, says: “We witnessed the heaviest value destruction in recent years over the Christmas period - certainly since 2001, which broke the mould in terms of low pricing.”
InBev UK does not yet have full figures for the Christmas period, but MacFarlane says that while the total value of beer sales was static, volume was up. “It means that once again millions of pounds have been stripped out of the category at the time of heaviest consumer demand. Such short-term discounting does not drive consumption and undermines consumers’ pricing perceptions of beer, which impact on sales throughout the year,” he says.
Like Stella, a number of top 10 beer brands struggled. Guinness, Kronenbourg 1664 and Grolsch all fell in sales compared with 2004.
Others, however, had greater success. Foster’s was up 24% and Budweiser 10%, the latter aided by a wide variety of multipacks, according to brand owner Anheuser-Busch’s UK sales director, Andrew Nethercott.
One of the lowest prices recorded for beer was in Asda, where two cases of 20 x 330ml cans of Stella were on sale for £16. Others offered deals on mixed cases of brands or single case reductions. The logic of so many different deals is questionable, but bulk-buy beer promotions are likely to have put more sales in the direction of the multiple retailers, which achieved a 4.2% sales increase on last year, while smaller impulse stores struggled and saw a decline.
MacFarlane says: “The indications at this stage are that small stores have taken a hit, with most of the extra volume going through multiple retailers. Small stores did well early on because they upped their game in November but lost out later. There was a tranche of multi-case deals early on, which switched to single case promotions nearer Christmas.”
Some of the heaviest discounting over the period was on one-litre bottles of Diageo’s Baileys.
Baileys has always been the target of aggressive discounting and is often used as a footfall driver in the multiples over Christmas. Its lowest price of £9.84 for one litre, seen in Tesco, was its lowest ever. But despite taking the number two spot behind Stella in the top 10 Christmas drinks brands, it lost 5% in value compared with the same four weeks last year, a big disappointment for Diageo after last year’s 28% increase on 2003.
Andrew Grant, head of beers, wines and spirits at Somerfield, says: “Baileys is a key product at Christmas so retailers watch the price carefully. Pricing for Baileys was very keen across the marketplace this season.”
Other spirit brands fared better with a massive 31% uplift in sales for Smirnoff Red Label, another Diageo brand, and 37% for Bell’s 8-year-old.
Both brands were subject to multi-bottle deals on one-litre bottles of spirits, such as a three-for-£25 deal seen in Somerfield. But unlike the beer deals, these promotions ran for just a few days and were aimed at attracting new consumers.
On the whole, wine brands had a more successful Christmas and the total category saw a value increase of 5% over the four-week period.
Category leaders Hardys and Blossom Hill grew sales by 19% and 11% respectively, and brands such as Kumala and Banrock Station produced sparkling results with increases of 78% and 296% respectively compared with 2004.
The timely launch of Banrock Station’s Reserve range, priced at £7.99 a bottle compared with its standard £4.99, is a likely contributor to its success over this period.
While the wine category often struggles to push consumers over the £5 per bottle mark, a task made more difficult by heavy discounting, promotions on wine were generally no more aggressive than usual, although some half-price activity occurred for short-term periods.
In The Grocer’s own Pricewatch survey over the eight weeks leading up to Christmas, the price of a bottle of Hardys in the multiple grocers rarely dropped more than a few pence each week and deals were often limited to one week only.
But regardless of deals, growing consumer interest in wine is naturally boosted during the festive period.
Wine also showed most movement in ranking in its top 10 brand table compared with last year, showing that getting the type and timing of brand activity right can have a big effect. E&J Gallo overtook Jacob’s Creek this Christmas to take third place, while Lindemans fell from sixth to ninth.
Top 10 brands
BY VALUE (£M)
4 w/e DEC 25 20044 w/e DEC 24 2005% CHANGE
1Stella Artois65.361.7-6
2Baileys43.241.2-5
3Carling34.536.35
4Smirnoff Red Label26.034.231
5Hardys27.833.019
6Foster’s24.430.124
7Bell’s 8-year-old17.924.637
8Blossom Hill20.522.811
9E&J Gallo17.922.123
10The Famous Grouse23.122.0-5
Top 10 beers, wines and spirits brands
BY VALUE (£M)
BEERS% CHANGE
1Stella Artois-6
2Carling5
3Foster’s24
4Budweiser10
5Carlsberg6
6Kronenbourg 1664-1
7Total Guinness-3
8John Smith’s4
9Grolsch-30
10Carlsberg Export32
WINES% CHANGE
1Hardys19
2Blossom Hill11
3E&J Gallo23
4Jacob’s Creek-4
5Stowells3
6Kumala78
7Banrock Station296
8Wolf Blass34
9Lindemans-22
10Echo Falls99
SPIRITS% CHANGE
1Baileys-5
2Smirnoff Red Label31
3Bell’s 8-year-old37
4The Famous Grouse-5
5Gordon’s22
6Bacardi16
7Jack Daniel’s9
8Teacher’s-1
9Courvoisier VS12
10Glen’s Vodka6
Sales by category
BY VALUE (£M)
4 w/e DEC 25 20044 w/e DEC 24 2005% CHANGE
Total alcohol1,462.01,483.71.5
Beer330.5333.50.9
Spirits427.3431.20.9
Light wine (exc British)449.5470.44.6
Champagne & sparkling wine104.7105.40.7
Fortified wine68.064.8-4.6
RTDs36.630.1-17.8
Cider and perry37.440.58.2
Sales by channel
BY VALUE (£M)
4 w/e DEC 25 20044 w/e DEC 24 2005% CHANGE
TOTAL ALCOHOL
Total coverage GB1,462.01,483.71.5
Grocery multiples GB1,052.61,097.04.2
Impulse GB409.9387.2-5.5
Impulse channels include: Convenience multiples, Multiple forecourts, Multiple specialist off-trade, Independents
METHODOLOGY: All market data for the Christmas Bestsellers is sourced from ACNielsen, a VNU company, the world’s leading marketing information company. Offering services in more than 100 countries, the company provides measurement and analysis of marketplace dynamics and consumer attitudes and behaviour. Clients rely on ACNielsen’s market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns. ACNielsen is the recognised authority of the alcoholic drinks trade in the UK.
Retail measurement data is provided from ACNielsen’s Retail Measurement Services, which monitor weekly data from EPoS checkout scanners. Sales figures are quoted in £m sterling and cover the four-week period to December 24, 2005 compared with the four weeks to December 25, 2004. Market coverage includes Total Market GB coverage, including grocery multiples, convenience multiples, independents, multiple forecourts, impulse multiples, Co-ops and symbol stores. A brand is defined as a collection of products, comprising all pack sizes within the product range, in the same product field. ACNielsen’s Retail Measurement Services provide comprehensive information on actual purchases, market shares, distribution, pricing and merchandising and promotional activities - and are the fastest and most accurate monitor of consumer sales in Europe. Consumer data is provided through ACNielsen Homescan, which tracks the buying behaviour and demographics of more than 10,500 households in the UK and Ireland, primarily through hand-held, in-home scanners.
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