The Future of Spirits: Capitalizing on New Opportunities and Preferences

Published by	Datamonitor
Published	February, 2010	Product code	114609
Content info	Pages: 144
Price	US $ 2995 PDF by E-mail (Single User License) US $ 7488 PDF by E-mail (Global Site License)

Introduction
Related Reports

The Future of Spirits: Capitalizing on New Opportunities and Preferences published by Datamonitor in February, 2010. This report consists of Pages: 144 and the price starts from US $ 2995.

Introduction

Abstract

Introduction

The spirits market has benefited from consumers' shifts away from beer and their trading up tendencies. However, this does not mean that the category has been immune from the economic downturn. Success is increasingly dependent on balancing traditional values that characterize quality with positioning that takes advantage of the category' s renewed social currency among newer consumers.

Scope of this research

Detailed insights and analysis documenting the drivers and inhibitors of the spirits market
Exclusive occasions, market and consumer survey data and analysis covering each category
Strategic conclusions combined with actionable recommendations for all industry players looking to fully capitalize on this market
Countries covered: France, Germany, Italy, the Netherlands, Spain, Sweden, UK, US, Australia, Japan, South Korea, China, India, Brazil, and Russia

Research and analysis highlights

Alcohol sales growth is suffering from the affects of the global downturn, but longer term trends such as moderation for health or expenditure reasons are well established threats. The shift towards premiumization and a higher value/lower volume consumption pattern is set to continue but has lost momentum and is not forestalling the sales decline

Price and value-for-money are growing as influencing factors in what drinkers consume, where they consume and in what volume. The negative economic backdrop has clearly been a major motivator in this, and has further favored the off-trade over the on-trade.

The spirits category is in relatively good health in the context of the overall alcohol market. Spirits could also have an advantage in some emerging markets where the category is well established compared to beer and wine based on the strength of domestic/traditional spirits products and also an interest in global products such as whiskey.

Key reasons to purchase this research

Consumer understanding: obtain a detailed understanding of consumer attitudes and behaviors towards spirits
Market understanding: identify the key spirits markets and product innovation trends in 15 countries across four territories
Ideation: find inspiration for innovative formulations and positioning that takes advantage of consumers' desires for premium and health attributes

OVERVIEW

Catalyst
Summary

THE FUTURE DECODED

INTRODUCTION: Spirits is a major component of the overall alcoholic drinks market
TREND: The overall alcoholic beverage market is defined by its maturity and the moderate consumption behaviors of consumers
- Sales performance in the alcoholic beverages market highlights the contrast between the saturated, static markets of the West and the developing potential of key emerging markets
- Trends in consumers' consumption occasions mirror the flat performance in sales volumes
- Moderation, driven by rising attentiveness to health issues, is increasingly characterizing many consumers' alcoholic beverage consumption behaviors
- Alcohol abstainers: although a minority, those that never drink account for a sizeable share of LDA consumers
- Key takeouts and implications: growth potential in the alcohol market will be centered on tapping new consumer groups and the sustenance of trading up behavior

TREND: The spirits category is subject to high levels of regional variation, but the overall market sees steady if unspectacular growth
- Sales in the spirits category are increasing in many featured countries
- The number of spirits occasions is increasing in most featured countries
- The spirits category overall exhibits a high degree of male dominance
- Spirits occasions are generally more common among older age groups although the industry is showing greater success at tapping into demand among younger age cohorts
- Key takeouts and implications: variation seen in spirits markets between countries and segments emphasizes the advantages of diverse product portfolios and the need for nuanced targeting

TREND: On and off-trade dynamics in the spirits market: national variations in drinking culture dictate the bias in spirits consumption by channel
- The shift in alcohol sales from the on-trade to the off-trade reflects a trend predating the global economic downturn
- The economic climate is influencing consumers' propensity to consume on-trade and also their product choices
- Time scarcity and related external pressures on alcohol consumption occasions adds impetus to the move to the off-trade
- Brand choice is being influenced by price both on- and off-trade, although this is, perhaps surprisingly, more marked off-trade
- By consumption location, the spirits market shows less predictability on a country by country basis than is true of other alcohol categories
- Certain spirits segments have defining impacts upon the on and off-trade
- Key takeouts and implications: the rise of the off-trade is a doubled-edged sword for the spirits market

INSIGHT: Changing consumer preferences in spirits: spirits continue to benefit from consumers' premiumization tendencies but face challenges due to price sensitivity and healthy positioning
- (Untitled sub-section)
- The revitalization of the spirits market is demonstrated through consumers' association of them with high energy drinking occasions
- The influence of health on alcohol choice: while proving advantageous for other categories, spirits face greater challenges in effectively laying claim to healthy positioning
- The popularity of lower alcohol versions of brands reflects both health awareness and the general trend for moderation, but this is a difficult trend for the spirits industry to harness
- Authenticity cues have widened beyond heritage to include purity as a leading judge of quality in spirits
- Key takeouts and implications: changing consumer perceptions of the suitability of spirits by occasion have important consequences for the industry

INSIGHT: Innovation trends in spirits: upscale claims and guarantors of quality dominate innovation
- Premiumization is still the most common trend seen in new releases in the spirits industry
- Natural and organic spirits have begun to increase in number
- Private label tags have not been common in spirits compared to the beer and wine markets
- Micro brewing has previously seen success in beer and wine and the trend is also gathering pace in the spirits category
- Key takeouts and implications: maintaining the emphasis on upscale releases

ACTION POINTS

ACTION: Build a compelling case for brand loyalty in the off-trade
ACTION: Promote the connection of spirits with food
ACTION: Maintain investment in, and exploitation of opportunities within the healthy alcohol market
ACTION: Continue to invest in product differentiation through packaging innovation
ACTION: Be ready for renewed trading up opportunities during the post-recessionary period
- Maintain a strong focus on innovation and R&D during times of economic uncertainty
- Start planning for the longer term by continually tracking consumers as an economic recovery begins to become a reality

APPENDIX

Definitions
Methodology
Further reading and references
Ask the analyst
Datamonitor consulting
Disclaimer

FIGURES

Figure: Alcoholic beverages market value and growth, 15 countries, across Europe, North and South America, and Asia Pacific
Figure: Alcoholic beverages market value (US$ millions) and volume (million liters), by country, Europe, 2003 - 13
Figure: Alcoholic beverages market value (US$ millions) and market volume (million liters), Brazil and the US, 2003 - 13
Figure: Alcoholic beverages market value (US$ millions) and market volume (million liters) by country, Asia Pacific, 2003 - 13
Figure: Number of alcoholic beverage occasions (millions), in 15 countries across Europe, the Americas and Asia Pacific, 2004 - 14
Figure: Number of LDA per capita alcoholic beverage occasions, in 15 countries across Europe, the Americas and Asia, 2004 - 14
Figure: Male dominance in expenditure on alcohol mirrors that seen in occasion numbers
Figure: Number of alcoholic beverage occasions (millions), Europe, comparison by gender, 2009
Figure: Number of alcoholic beverage occasions (millions), Europe, by gender, 2004 - 14
Figure: Number of alcoholic beverage occasions (millions), US and Brazil, comparison by gender, 2009
Figure: Number of alcoholic beverage occasions (millions), US and Brazil, by gender, 2004 - 14
Figure: Number of alcoholic beverage occasions (millions), Asia Pacific, comparison by gender, 2009
Figure: Number of alcoholic beverage occasions (millions), Asia Pacific, by gender, 2004 - 14
Figure: Number of alcoholic beverage consumption occasions (millions), by age, in 15 countries across Europe, the US, South America and Asia Pacific, 2004 - 14
Figure: Number of per capita alcoholic beverage consumption occasions, by age, in 15 countries across Europe, the US, South America and Asia Pacific, 2004 - 14
Figure: Consumer Survey: the level of attention given to ‘ensuring you do not drink too much alcohol in general' , by age, in 15 countries across Europe, the Americas, and Asia Pacific, 2008
Figure: Consumer Survey: How much attention do you give towards the following? Potential weight gain from drinking alcohol
Figure: In Europe, Italians are showing the highest overall commitment to consciously moderating their alcohol consumption
Figure: Over a quarter of US drinkers strongly agree that they are making an effort to moderate consumption
Figure: Asia Pacific consumers, compared to consumers globally, are less committed to moderating their alcohol intake, despite relatively high overall levels of interest in restraint
Figure: Consumer Survey: Please indicate to what extent you agree or disagree with the following statements: I make a conscious effort not to drink too much alcohol
Figure: Europeans are highly attentive to alcohol spend, but its impact on overall consumption is limited
Figure: Brazilians and Americans show a greater likelihood to cut consumption and are more attentive than Europeans, but a stark gap is still apparent
Figure: Asia Pacific exhibits a similar attentiveness/behavior gap in their alcohol consumption
Figure: Consumer Survey: How much attention do you give toward the following? The amount of money you spend on alcohol
Figure: Consumer Survey: Please indicate to what extent you have done the following more or less frequently in the past six months: Cut down on the overall amount of alcohol you buy/consume
Figure: Rate of alcohol abstention (% of LDA population and number of abstainers, millions), in 15 countries across Europe, the Americas, and Asia Pacific, 2009
Figure: Rate of alcohol abstention (% of LDA population), by gender, in 15 countries across Europe, the Americas, and Asia Pacific, 2009
Figure: Rate of alcohol abstention (% of LDA population), by age, in 15 countries across Europe, the Americas, and Asia Pacific, 2009
Figure: Spirits market value (US$ millions) and volume (liters millions), by country, Europe, 2003-2013
Figure: Spirits market value (US$ millions) and volume (liters millions), Brazil and the US, 2003-2013
Figure: Spirits market value (US$ millions) and volume (liters millions), by country, Asia Pacific, 2003-2013
Figure: Number of spirits consumption occasions (millions), Europe, Brazil, the US, and Asia Pacific, 2004-2014
Figure: Per capita spirits consumption occasions, Europe, Brazil, the US, and Asia Pacific, 2004-2014
Figure: National preferences vary considerably in the spirits market
Figure: Number of per capita spirits consumption occasions, by gender, Europe, 2009
Figure: Number of per capita spirits consumption occasions, by gender, Brazil and the US, 2009
Figure: Number of per capita spirits consumption occasions, by gender, Asia Pacific, 2009
Figure: Number of spirits consumption occasions (millions), by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014
Figure: Percentage share of spirits consumption occasions, by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014
Figure: Not all spirits subcategories are dominated by men in market value terms
Figure: Number of spirits consumption occasions (millions), by age group, in 15 countries across Europe, the Americas and Asia Pacific, 2009
Figure: Number of per capita spirits consumption occasions, by age group, in 15 countries across Europe, the Americas and Asia Pacific, 2009
Figure: Spirits preferences show marked differences with age
Figure: Overall alcoholic beverage market volume sales (millions liters), by on-trade versus off-trade, in 15 countries across Europe, the Americas and Asia Pacific, 2003 - 08
Figure: Share of overall alcoholic beverage market volume sales (%), by on-trade versus off-trade, in 15 countries across Europe, the Americas and Asia Pacific, 2003 - 08
Figure: Share of overall alcoholic beverage consumption occasions, by on-trade versus off-trade, Europe, 2009
Figure: Share of overall alcoholic beverage consumption occasions, by on-trade versus off-trade, Brazil and the US, 2009
Figure: Share of overall alcoholic beverage consumption occasions, by on-trade versus off-trade, Asia Pacific, 2009
Figure: Number of on-trade alcoholic beverage consumption occasions (millions), in 15 countries across Europe, the Americas, and Asia Pacific, 2004 - 14
Figure: Number of off-trade alcoholic beverage consumption occasions (millions), in 15 countries across Europe, the Americas, and Asia Pacific, 2004 - 14
Figure: In light of recessionary conditions, Europeans, especially the French, Germans and Italians, are showing a tendency to restrain their eating out
Figure: Americans and Brazilians are showing an above average propensity for cutting back on their eating out due to the downturn
Figure: South Koreans stand out in Asia Pacific through their significant cut backs in on-trade eating
Figure: Europeans are making a greater effort to drink more frequently at home than they are to change the frequency of their on-trade visits
Figure: Brazilians and Americans are notably contrasting in their behavior toward changing the balance and relative frequency of drinking both on- and off-trade
Figure: The more developed markets of the Asia Pacific region have seen only a limited change in on- and off-trade drinking behavior compared to the emerging markets
Figure: Consumer survey: In the past six months, please indicate to what extent you have done the following more or less frequently: Cut down on the number of times you drink in bars, restaurants, etc.
Figure: Consumer survey: In the past six months, please indicate to what extent you have done the following more or less frequently. Made a conscious effort to drink more frequently at home.
Figure: Consumer survey: In the last month, on average how many times did you have a drink in a bar, restaurant, pub, etc?
Figure: Consumer survey: In the last month, on average how many times did you have a drink at home or in somebody else' s home?
Figure: Europeans' propensity for alcohol consumption on-trade is particularly strongly tied to restaurant visits
Figure: US consumers' moderate drinking patterns on-trade favor restaurants and local bars
Figure: Brazilian consumers' on-trade drinking is more frequent across most channels than their US or European peers
Figure: Asia Pacific consumers show a greater propensity for more frequent alcoholic beverage consumption in restaurants and local bars
Figure: European drinking patterns reflect a trend for regular off-trade social drinking and a propensity for frequent weekly drinking at home
Figure: Half of US drinkers are prone to social drinking in others' homes several times a month
Figure: Brazilians show a high propensity for regular weekly alcohol consumption in the home
Figure: Asian consumers exhibit a much lower propensity for social drinking in the homes of others
Figure: UK and Spanish consumers show the most striking tendency to trade down in brand terms off-trade compared to on-trade
Figure: A quarter of Brazilians are switching to cheaper alcohol brands both on- and off-trade
Figure: Australians have shown a particular tendency to purchase cheaper brands for off-trade consumption in recent months
Figure: Consumer survey: In the past six months, please indicate to what extent you have done the following more or less frequently: Bought cheaper brands of alcoholic drinks when drinking in bars, restaurants, etc.
Figure: Consumer survey: In the past six months, please indicate to what extent you have done the following more or less frequently: Bought cheaper brands of alcoholic drinks when drinking at-home.
Figure: Share of spirits consumption occasions, by on-trade versus off-trade, Europe, 2009
Figure: Share of spirits consumption occasions, by on-trade versus off-trade, Brazil and the US, 2009
Figure: Share of spirits consumption occasions, by on-trade versus off-trade, Asia Pacific, 2009
Figure: Overall spirits market volume sales (liters millions), by on-trade versus off-trade, in 15 countries across Europe, the Americas and Asia-Pacific, 2003-2008
Figure: Share of overall spirits market volume sales (%), by on-trade versus off-trade, in 15 countries across Europe, the Americas and Asia-Pacific, 2003-2008
Figure: Whisky is not especially popular in European on-trade venues, with the notable exception of Russia
Figure: Whisky is not particularly popular in Brazil' s on-trade, but performs on a par with the overall spirits market in the US
Figure: Whisky is more geared towards on-trade consumption in Asia-Pacific, most notably in China
Figure: Vodka is a popular on-trade spirit in most European markets
Figure: Vodka is not overly popular as an on-trade spirit in the Americas
Figure: Vodka' s on-trade split is similar to the spirits market as a whole in the Asia-Pacific region
Figure: Consumer survey, factors influencing consumers' alcoholic beverage choices, 2008
Figure: Italians and Spanish consumers have shown a particular tendency to switch types of drink based on price
Figure: Consumers in the Americas are switching alcohol types based on price more than their global peers
Figure: Consumers across Asia Pacific are more likely to trade down in type of alcoholic drink than their peers globally
Figure: Consumer Survey: In the past SIX MONTHS, please indicate to what extent have you done the following more or less frequently? Chosen cheaper type of drinks (e.g. beer instead of spirits)
Figure: Spirits are most popular among consumers enjoying high energy nights out
Figure: Spirits are generally not popular as an accompaniment to food in the home
Figure: Popularity varies from country to country, but spirits have a fairly secure following among consumers drinking in the off-trade
Figure: Spirits are slightly more popular for consumers when eating in the on-trade rather than the off-trade
Figure: Overall, spirits are almost as popular as wine as an on-trade drink for consumers when not eating
Figure: Spirits have a strong following among consumers partaking in high energy nights out
Figure: Despite spirits lending an air of sophistication, the category is not particularly popular at dinner parties
Figure: Consumer Survey: In the past SIX MONTHS, please indicate to what extent have you done the following more or less frequently? Chosen alcohol on the basis of how well it goes with food
Figure: Southern Europe and Russia stand in contrast to the rest of Europe in how much health influences alcoholic beverage choice
Figure: Health is a below average influence on US consumers' alcoholic beverage choice
Figure: Australian and Japanese consumers stand out regionally with their lower concern for health in their drinks choices
Figure: Consumer Survey: Please tell us how much influence the following factors have in your alcoholic beverage choice: Health
Figure: A regular measure of spirits combined with a low calorie mixer represents one of the least calorific drinks among regular alcohol servings
Figure: The most mature European markets have seen relatively limited shifts in behavior favoring low-alcohol versions of well known brands
Figure: The contrast between Brazil and the US highlights the limited traction of health as a factor in alcoholic drinks purchases in mature markets compared to a greater degree of openness in emergent ones
Figure: Australia and Japan contrast the growing interest in lower alcohol brands in the Asian region' s emerging markets and South Korea
Figure: Consumer Survey: In the past SIX MONTHS, please indicate to what extent have you done the following more or less frequently? Opted for lower alcohol versions of favorite brands
Figure: Consumers are seeking authenticity as an arbiter of higher quality and sensory gratification
Figure: Upscale is the most popular tag for new releases in the spirits market over the last five years
Figure: The number of new releases tagged as ‘upscale' declined in 2009, but the annual total remains substantial
Figure: Products marketed as ‘premium' or ‘upscale' will not always be targeting the same market
Figure: Natural is a tag that has gained momentum in the spirits industry
Figure: Organic and ethics in general are becoming important concepts in the vodka market
Figure: Micro spirits have proved popular among US consumers
Figure: The Jack Daniel' s whisky brand is attached to a range of cooking sauces and meat products
Figure: Much potential exists for pairing whisky with food
Figure: Flavored vodkas are being positioned as an accompaniment to food
Figure: The first protein-infused vodka reached the market in late 2009
Figure: Repackaging is something that can be employed to good effect for long-established brands
Figure: Packaging in spirits is important with a wide range of novel designs now seen in the marketplace
Figure: Absolut has created a strong identity through a relatively unremarkable design
Figure: Datamonitor' s Recession and Recovery portal will facilitate forward thinking planning for those leading companies that start planning for the longer-term