The spirit of a generation

29 October, 2010

The spirits category, loosely defined as “speciality” by Nielsen, might just as easily be called “other”.

The catch-all term has come to mean any spirits that don’t conveniently fit into one of the other main pigeonholes – so speciality means anything that is not a whisky, gin, vodka, rum, brandy or a liqueur.

Historically, it’s been a random, problematic category for retailers and suppliers – hard to pin down, containing as it does everything from 15% abv shooters to full-strength cachaça.

For every trendy brand, there have usually been half a dozen has-beens or never-will-bes cluttering up the fixture, just there to plug demand from people with unconventional tastes.

But Nielsen figures, which show the speciality spirits category up by 12% in value in the year to August 7, suggest it’s a market that retailers need to take a little more seriously these days.

As a whole, speciality spirits sales outstrip those of cream liqueurs, white rum and imported whiskey. The growth is impressive but the take-home market still only has a 27% share, compared with 66% for cream liqueurs or blended whisky, indicating there’s potential for yet more growth.

In part, off-trade growth has been driven by the burgeoning top-end cocktail bar scene in recent years, which has inspired consumers to experiment in making their own exotic drinks at home now that times are hard.

Ron Frith, brand ambassador for the 35% abv Bacardi-owned mixable spirit Tuaca, says: “People are very comfortable ordering and drinking cocktails in the on-trade, and are now gaining the confidence to experiment in their own homes.” Other cultural factors are making an impact too, says Andrea Baumgartner, marketing manager for Pitu Cachaça at Halewood International.

“Cocktail culture has undoubtedly helped drive awareness of speciality spirits,” she says, “but with 20-somethings more tuned into gastronomy than previous generations, speciality spirits are also coming into their own as a pre or after-dinner drink.”?Lighter drinks trend?The wider trend to lower-abv drinks has also contributed to a surge in sales of speciality spirits, many of which compete in the 15%-25% abv bracket.

“The trend towards lighter-abv drinks has helped drive sales in the speciality spirits category,” Frith adds. “They retain their distinctive flavour when mixed with a soft drink or as part of a cocktail, and can offer the consumer a drink with a great taste but a lower abv than wine or premium lager.”?Halewood has recognised the potential for lower-strength spirits with a 22% abv sambuca called Ponticelli. Senior brand manager Sue Beck says retailers need to give consumers reasons to drink speciality products.

“Retailers should be looking to promote them as a part of a cocktail, giving consumers ideas of what to do with them,” says Beck. “Positioning key ingredients together on the end of an aisle with cocktail ideas develops a focus point, which can inspire consumers to buy the spirit to create the cocktail.”?The recession has poured petrol on the flames for lighter spirits, with a lower abv attracting less duty and usually more attractive price points against 40% abv mainstream spirits.

John Mills is managing director of Intercontinental Brands, which has made speciality spirits, ahem, a speciality, with lower-abv products such as Vodkat, Zamaretto and Cactus Jack’s.

“There’s room for retailers to start thinking about what consumers are doing and laying out the fixture in a way that helps them make an informed choice,” says Mills.

“Consumers are increasingly abv-?conscious, but you still see fixtures that have products like Cactus Jack’s at 15% abv alongside full-strength sambuca at 38%.”?Mills advocates a light spirits fixture, in which miscellaneous brands at 15%-25% would be merchandised alongside similar strength products from overlapping categories.

“Into that you would put Archers, Disaronno, Baileys, Malibu and Pimm’s, but not Tia Maria, tequila or higher-strength liqueurs like Glayva or Drambuie,” he adds. “There’s a need to help consumers understand the difference between these products. Gordon’s sloe gin sits in the gin fixture but it’s only 26% abv, so you could argue it should be with other light spirits.” Asda revamped its speciality spirits bay in April to make it simpler to shop, and has seen a value sales increase of 32% year-on-year, according to spirits buyer Chris Brooks.

He adds: “With a large number of SKUs from so many different categories in one bay, it can be a confusing part of the spirits fixture for shoppers.

“Simply by reducing the range and merchandising it by shopper-led segmentation into liqueurs, cocktail ingredients, ‘with mixers’, ‘drunk neat’ and pre-mixed, unit sales increased.

“It’s important, however, to remember that the speciality bay is fundamentally a choice bay and you can go too far when rationalising the range.”?Getting the fixture right is one thing, but getting bottles off the shelves and into customers’ shopping baskets is harder than for more mainstream categories.Most people know what to do with gin or vodka, but relatively few are familiar with the optimal serves of cachaça or Tuaca.

“Off-trade retailers should promote the versatility of speciality spirits, but focus on simple recipes that are easy for at-home consumers to replicate,” advises Frith at Tuaca. “Tuaca tastes especially great with cola, ginger ale or apple juice, which are all mixers that are easily accessible for consumers, and not too scary.”?Education initiatives?Patrick Venning, head of marketing for Malibu at Pernod Ricard UK, adds: “Mixability knowledge and expertise are crucial in the on-trade, and educational initiatives, like providing perfect-serve recipes, should not be neglected in the off-trade.

“Taking advantage of supplier education initiatives, such as Malibu’s Christmas neck-tag cocktail recipe booklet, is a good way to inform consumers about how to mix their speciality spirits. Short shelf-barker recipes are also effective.”?Perhaps what retailers really need is a friendly cocktail bar in the neighbourhood. That’s the happy state award-winning spirits retailer the Whisky Exchange is in with its location in the Vinopolis tourist attraction in London.

Co-manager Alex Huskinson says: “It means when we get something new we can get them to rustle something up that will show what it’s actually supposed to taste like and the way it’s supposed to be drunk, rather than just trying it neat.”?The shop has also invested in a pop-up bar to offer customers tastings of more simple mixed serves.

Sales adviser Chris Bolton adds: “Nine times out of 10 it will convert into extra sales. You need to go that extra mile to market products in-store.”




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