Shoppers seeking moments of affordable indulgence from spirits

Cash-conscious drinkers seeking “moments of affordable indulgence – drinking less, but spending more when they do”

The likes of Diageo, Pernod Ricard and LVMH are struggling in some of their most important global markets. And at first glance the picture in the UK seems similar with a 7.9% decline in volume sales of branded spirits and £192.3m fall in value sales.

But the picture is more nuanced. As well as the cost of living crisis NIQ analyst Graeme Taylor notes “a reduction in support within the retailers, with the category losing share of distribution and secondary display space”.

And when compared to the figures we reported in 2022, the picture isn’t so bad. This time last year, volumes had plummeted 9.8% on a value loss of £503.4m.

Premium spirits show stronger sales

This revival of sorts is down in part to cash-conscious drinkers seeking “moments of affordable indulgence – drinking less, but spending more when they do”, claims Lauren Priestley, Diageo head of off-trade category development.

That’s good news for posher tipples like Absolut and Jameson – which have both grown value and volume. But it’s also left some of Diageo’s more affordable brands in a bad way. Gordon’s and Bell’s have seen value and volumes fall faster than last year down £49.3m and 3.4 million litres between them.

Their top 30 stablemates have done better in terms of value performance, though only Baileys has managed to grow volumes. And to reinvigorate its portfolio, Diageo is looking to alcohol-free, which is a “huge growth area”, Priestley claims.

That explains the summer team-up with Waitrose to grow the amount of space across the retailer’s estate  dedicated to alcohol-free drinks – such as Diageo’s 0% abv Captain Morgan rum launched in August.

The original variant is up 2.1% in value, but that’s entirely due to a 6% rise in average price. Volumes are down 3.7%.

Scotch, rum and vodka perform well in 2023

Many other branded prices have risen, but own label spirits have remained steady. This helped grow volumes by 1.9% – enough to add £11.1m as shoppers traded down to save money. Taylor points to scotch, rum and vodka as standout performers in own label.

However, this success has not been repeated in RTDs, where own label lines are, surprisingly, 20.1% pricier on average than brands. As such, own label volumes have fallen 10.5% – markedly faster than the sector’s overall 6.2% decline – albeit from a much smaller base than brands.

“It’s a category in which consumers prefer branded,” explains Alison Gray, WKD head of brand. And the ultimate expression of that was Brown-Forman replacing its Jack Daniel’s & Coke in March with Jack Daniel’s & Coca-Cola (see below), in a team-up with the world’s best-known soft drinks brand.

Top Launch 2023

Jack Daniel’s & Coca-Cola | CCEP

JD & Coke cheers

Jack Daniel’s & Coca-Cola made a big splash, bagging almost £17m since its spring launch. Comprising regular and Zero Sugar lines (rsp: £2.30/330ml), the 5% abv duo is co-branded, featuring JD’s and Coke’s logos prominently on front of pack. The new RTDs replaced the own-label ‘cola’ range that debuted in 1991. Brits would be “more likely to pick up the new Coca-Cola co-branded RTD SKU” than the original canned cocktail, distributor CCEP said in March. It’s hard to argue with that.

Face off: Top Products Survey 2023 pits brands vs own-label