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Innovations in Spirits: Key Product Trends, Growth Strategies and Forecasts to 2012
Business Insights, April 2010, Pages: 103
Alcoholic drinks were previously considered by many to be relatively immune from recessions. This is not the case upon closer investigation of the spirits market, which by its nature, is a more premium sector than beer or wine. The processing, the ingredients, the high alcohol by volume content, all contribute to a more expensive product in general. Clearly, there are economy variants available on the market, but this has only led to a trend towards high volume & low value sales growth – which is not favoured by spirits producers or retailers.
Every year thousands of new products in the spirits industry are launched by manufacturers hoping to gain consumers interest with innovative developments. The industry must now tackle head-on the issues surrounding responsible drinking, demand for high-quality at a lower price, and rising costs of raw materials/ingredients.
What’s more, the industry faces a major challenge after years of seeking the premium and super-premium dollar, consumer shopping and drinking habits have changed quickly – in response to the global economic meltdown – leaving many players reporting a fall in sales in their 2009 results. They must consider how to ride out the storm, prepare for a time when spending is up again and when the on-trade is no longer suffering quite so dramatically. Monitoring consumer habits, financial data and investing in continued NPD, marketing and sales are all vital to success.
This report provides timely insight into the spirits market in developed markets such as the US and emerging regions such as Latin America and Central and Eastern Europe. This report is written with a focus on the next two years, following in-depth analysis of NPD, branding and marketing activity that has occurred in the global spirits market over the past three to four years. The report offers actionable strategies for spirits brands with insight into new product launches, marketing campaigns and flavours/ingredients developments. The report analyzes activity by sub-category (brandy, gin, liqueurs, rum, specialty spirits, tequila & mescal, vodka and whisky) and region (Asia Pacific, Europe, Latin America, Middle East & Africa, North America and multi-region).
The unrivalled high-level qualitative and quantitative research puts this report leagues ahead of competitor reports which tend to focus on one particular region and/or category. This off-the-shelf market outlook report provides invaluable and in-depth research and analysis alongside future forecasts based on lengthy analysis and investigation into the market.
Key features of this report
- Analysis of sales values and volumes for individual spirits categories as well as the overall market in France, Germany, Italy, Netherlands, Sweden, Spain, UK, Rest of Europe, Europe overall, US and Japan.
- Evaluation of the drivers behind the changing share of throat held by beer, wine and spirits and their key segments. The influence of the other alcoholic drinks sectors is discussed on a regional basis, as well as from the perspective of share of NPD.
- Draws on thousands of spirits product launches that took place globally between 2006 and 2009.
- Illustrated overviews of the key product introductions and innovations, drawing on data from the ProductScan Online NPD tracking service.
Scope of this report
- Understand each regional market in terms of absolute size as well as the future potential of each category.
- Inform your sales team and/or export department by prioritising the geographical markets best suited to your current range of products.
- Understand the response of leading spirits producers to the recession, the impact on NPD and its effect on premiumization.
- Evaluate whether you should be looking beyond your current product portfolio for future opportunities – whether the time is right, which categories perform well in which countries (there’s a huge disparity between sales in countries, regions and categories).
Key Market Issues
- Beer and wine threaten spirits’ share of throat in many regions around the world – brands are not just competing with other spirits products but with the overall alcoholic drinks market.
- The recession has had a negative impact on the on-trade and spirits sales in bars/clubs/pubs. This has had a knock-on effect on retail sales and brand strategies.
- Provenance, the production process and the quality/sourcing of ingredients are all more important for spirits than ever before – consumers are interested in the entire process and showing greater interest in the differences between products i.e. The smoothness of expensive versus cheap vodkas.
- First Fairtrade vodka and then liqueur have been launched – this is likely to prompt further ethical NPD as manufacturers aim to enhance CSR and ethical appeal.
Key findings from this report
- The US is by far the largest spirits market by value at a forecast US$48,147.0mn by 2012 following growth of 8.1% from 2008. This is a significantly higher forecast value and growth rate than the majority of the European countries analyzed and starkly contrasts against the Japanese market, which is set for a decline in value.
- In Europe and the US, the majority of spirits categories are predicted to experience higher value than volume growth.
- Beer has posed the biggest threat to spirits in Europe, Japan and the US for many years - and will continue to do so over the forecast period. Only France and Italy, known for their production and passion for wine and viniculture, have wine taking the largest share of throat rather than beer.
- Premiumization is the number one product tag (upscale) at 45.7% of spirits NPD in 2009 and its share of NPD has grown over the years from 36.1% in 2006.
- The first Fairtrade vodka was launched in the UK in 2009 imported by Ehrmanns.
Key questions answered
- Which country will have the most successful spirits market by 2012? The US is by far the largest spirits market by value at a forecast US$48,147.0mn by 2012 following growth of 8.1% from 2008.
- Which European country will have the most successful spirits market by 2012? The overall European market value for spirits is expected to increase at a compound annual growth rate of 1.5% between 2008 and 2012. The UK is no longer the most successful spirits market in Europe - Germany has taken over and is set to reach US$23,962.4mn by 2012.
- Does beer or wine pose a threat to spirits’ share of throat globally? Yes! Beer has posed the biggest threat to spirits in Europe, Japan and the US for many years - and will continue to do so over the forecast period. Only France and Italy, known for their production and passion for wine and viniculture, have wine taking the largest share of throat rather than beer.
- Is there a surprising rise in sales of one particular type of spirit? Yes – in Japan whiskey is set for huge growth after 2011/12 – there is a growing ‘underground’ whiskey market in the on-trade which will have an impact on retail sales. Also, Germany is the third biggest market for tequila (after the US and Mexico)!
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