Chasing the top spot?

19 February, 2010

Vodka brands are losing out to gin in a big way, according to industry observers who are detecting signs of vodka fatigue setting in.

The consumer, if such commentators are to be believed, is tired of finding the same boring vodka proposition replicated countless times on supermarket shelves.

With such boredom comes the inevitable migration from vodka – which is where gin steps in.

“There’s no question that consumers have tired of some of the recent hot categories, such as vodka,” says Tim Dewey, head of marketing at G&J Greenall?. “So when gin producers respond with quality innovations – such as our new super-premium gin Bloom?? – this will accelerate consumers to move into the market.”?The onset of vodka fatigue has corresponded with a move by gin makers to “re-assert the values that have made gin a popular spirit for hundreds of years, as well as finding new ways to develop different character?”, he adds.

It has also tied in with the introduction of more sophisticated ad campaigns, believes Chris Parker, managing director of Organic Spirits?, which owns Juniper Green gin.

“The increase in gin sales is due to better gin marketing, which is attracting 30 to 40? year? olds to the category,” he says.

The latest Nielsen stats ?back up the assertion that gin is benefiting from consumer disenchantment with vodka. Value sales of gin were up 9% in the year to December 26, compared to vodka’s more modest 6% growth. Gin’s volumes also rose by 5%, against vodka’s 1% increase.

But what else has contributed to gin’s recent rise in fortune????“Consumers are becoming more aware there can be a huge difference in quality and taste with gin,” says Henrik Hammer, creator and producer of new? Geranium Gin – a 44% abv London dry gin made from 10 fresh botanicals including geranium and lemon.

“Since most established brands are quite stereotypical, the appearance of products with more exciting taste and flavours will appeal to the gin drinkers.

“In gin cocktails, it’s very important that you can actually taste the spirit.

Since most of the significant cocktails are made with gin, I believe it is about to regain its position as the most used white spirit in cocktail making,” he says.

Targeting the off-trade?Vital to the acceleration of gin sales in the past year has been “line extensions and innovations from existing brands”, according to Dewey, who high-lights Greenall’s ready-to-serve G&T in a can as an example of a successful brand extension.

“Such products can usually be placed in the off-premise early and establish a rate of sale quickly because of consumer trust in the brand,” he says.

Brands which are seeing an uplift in sales are th?ose that assert gin’s distinct taste, rather than attempting to replicate vodka’s more neutral flavour and mixable style, according to Martin Price, managing director of SW4?.

He describes SW4 ?as “big?, complex and made in the style of the original London dry gins?”.

“Many new gins are extremely light and some veer into a territory that lies between vodka and gin,” he says. “The vast majority is consumed at home mixed with tonic, and that deserves a full?-flavoured gin.”?The recent proliferation of new gins in the off-trade is both a response to market demand? and creating increased demand, he adds.

“Within a generation the spirits market has massively switched the consumption trend from brown to white spirits, and that in itself was always going to reignite interest in gin.

“At the same time, new brands like SW4 help to increase the interest and maintain momentum, because consumers see the activity? and want to discover new tastes?.”?For Parker?, the sudden surge of new gins hitting retailers’ shelves is also down to producers realising they can achieve quicker commercial success in the take-home arena.

“?Major retailers will list highly innovative new products or heavily promoted ones because they know success in the take-home market can be much quicker and more profitable?,” he says.

The finer things in lifeGrowth in the gin category is coming from “the premium end of the market”, according to Parker, who predicts “the budget end will continue to lose volume in the next 12 months”.

Patrick Venning, head of marketing for gin at Pernod Ricard, cites “an international growing demand from consumers for super?-premium, quality gin” as a factor that’s boosting sales.

In an attempt to tap into the popularity of luxury gins, Pernod launched slow-?distilled Beefeater 24 last year, which contains 12 natural botanicals including a rare blend of tea.

“We see Beefeater 24 entering people’s repertoire in the same way as premium vodkas and wines – a product for people who enjoy the finer things in life, not just good gin,” Venning says.

This year the brand is “looking to explore different seasonal flavours with the aid of new botanicals”, he adds.

SW4’s Price speculates that gins at both the budget and top end of the market will flourish in the coming year in the face of continued economic troubles.

“Other spirit categories have seen heavy polarisation, growth at the budget end and the top end, with brands in the middle that don’t have a serious price or product edge? being squeezed. That’s the most likely scenario,” he says.

At the luxury end there will be a growth in small-batch, craft distillation, which is undergoing a revival, Price adds.

“There will always be people who are inspired to buy products that are made by enthusiasts and innovators rather than by accountants. If small players like SW4 can deliver products that are consistently different and better, they will prosper.”?But despite talk of mounting demand for specialist, niche gins, it’s the big spirits players that will continue to exert control over the market, Hammer warns.

“And when a specialist gin is catching the interest of the consumer, the big players will either calculate in copying or buying the smaller brand. This way the premium market will continue to be dominated by the big guys in terms of sales figures.”

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