Premium spirits are driving growth in the on-trade spirits category, fuelled by a growth in cocktails and premium drinking venues and the continued rise of the ‘weekend millionaire’.
Those are key findings of First Drinks’ Market Report 2011, which examines trends in the spirits and Champagne market using data from CGA Strategy and other sources. The report also highlights the switch from the on-trade to home drinking, with the off-trade now accounting for 80% of spirit volume sales.
Among the categories experiencing the fastest growth in the on-trade in the past year are flavoured vodka (up 103% by value and 112% by volume), golden rum (+24% by value, +19% by volume) and cream liquors (+20% by value, +11% by volume).
In contrast, traditionally strong categories performed far less well. Vodka, which accounts for more than one in three spirits sold in the on-trade, saw its value decline by 2% and volume by 1%. Gin fell 2% by value and volumes were static.
The premium spirits category is now worth £234m in the on-trade, up 11%.
The report notes a rise in premium drinking venues such as cocktail and wine bars, while traditional venues have evolved to embrace cocktail menus and Champagne by the glass. There’s been a 36% increase in outlets selling cocktails and sales of Champagne by the glass are up almost 24%.
While people are drinking out less, they spend more when they do go out - the proportion of 18-24 year-olds who go out once a week increased from 38% in 2005 to 70% today. This has seen the rise of the so-called “weekend millionaire” who is willing to pay more, which has also helped increase premium spirit sales.
Overall, the on-trade spirit market is worth over £4.3bn, up 3%. Within this, pubs and clubs are worth £3.5bn, with restaurants and hotels worth £758m; both represent a rise of 3%.
Meanwhile, the report highlights the impact of special events on sales. Spirit sales in the on-trade increased 13% during the royal wedding.
CGA Strategy chief executive Jon Collins said: “Consumers are looking for something different from the drink at home experience. Unique flavour combinations, theatre of serve and the ‘treat’ aspect of cocktails all support the continued growth of this category.
“Pubs and bars must give people a reason to get off the sofa and out of the house. CGA research shows that bank holidays or events can increase sales by up to 18%. The need to maximise - and on a local level, actually create - events that drive footfall is a no brainer.
“Supporting retailers, especially in independent free trade, with innovative and retailer sensitive trade marketing definitely reaps rewards.”
CGA predicts the on-trade will have stabilised by 2015, although 5% of outlets would have closed by the time the economy stabilises in 2014.
The report says that outlets offering a premium experience in terms of brands, service and entertainment will gain market share.
