Customers seek out experiences

Quality over quantity is behind spirits success, say drinks firms

WHILE on-trade alcohol sales as a whole remain largely flat, premium spirits have been the success story of 2016 with all producers in agreement that this is a sub-category on the rise – and with growth expected to continue.
As 2017 approaches a number of spirits firms have offered their assessment of what could be behind the boom in premium spirits sales, as well as advice for operators looking to get in on the action and drive up their margins in the process.

Richard Barlow, customer marketing director at Diageo GB, the firm behind  Tanqueray and Smirnoff, reckons customers are going out less often than before “but spending more on each occasion”.
This should create ideal conditions for operators to up-sell premium spirits as Barlow reckons customers visiting the on-trade are doing so in search of “experiences”, and not just drinks.

They are seeking value from the experiences they have in the trade.

“They are seeking value – value from the experiences that they have,” said Barlow. “In the on-trade this is about experiences that they can’t replicate at home.”
A spokeswoman for Halewood Wines & Spirits, the firm behind Whitley Neil gin and West Cork whiskey, agreed that the “demand for experience” is a trend that’s “showing no sign of slowing”.
“Brands are having to go much further than just making a product that looks good and launching with heavyweight advertising,” she said.  
“Consumers are looking to make informed choices based on a variety of factors including peer recommendation, product provenance, discovery and taste.”
The Halewood spokeswoman suggested that growth in spirits as a whole could be traced to a rise in sales of premium brands.
“Premium spirits are driving growth in the category by offering unique experiences, craft authenticity and satisfying customers’ need for discernment, treats and social status,” she said.
A customer appetite for quality was also highlighted as a key driver of sales by Martin Dyer of Cellar Trends, the firm behind the Angostura and Jefferson’s brands in the UK.
Dyer said there is “no doubt” that the trend for drinking less, but drinking “better” is gathering pace.
“Consumers are looking for products and occasions which offer a premium experience,” said Dyer.
“Therefore, the look and feel of the brand and the serve is very important.”  
Mixed drinks and cocktails have understandably played a major role in the elevation of premium spirits in recent years, but Dyer suggested the brands themselves – and not just the serves – are becoming increasingly important to on-trade customers.
“Cocktails are important in this sector, however we are witnessing more consumers [ordering] by name and at the same time asking for premium mixers also by name – ‘brand drinking’, asking for brands,” he said.  
Jamie Walker, commercial director of gin maker East India Company, agreed that the quality of the brands on offer to customers can have a real impact on sales, suggesting that guests have a decent nose for drinks with true provenance and those without.
“Authenticity – this is what consumers of premium products demand,” said Walker.   
“Operators need to ensure that what is on offer is the real thing – paying more for a product is worth it if you are getting value.”
With so many brands to choose from, navigating the back-bar can be a bit daunting for some customers. To help with this, Walker suggested some simple steps operators can take to make things easier for both customers and bar staff.
“Give simple clear messages on the benefits of the products you are selling via menu details or placement cards – this can highlight the product’s heritage, production quality and even suggest suitable pairings,” he said.
Looking to 2017, Walker doesn’t reckon there’s going to be any kind of slow-down in sales of premium spirits and he was particularly bullish about the prospects of premium gin.
“The gin renaissance shows no sign of slowing down, with more new brands and gin products coming onto the market to meet continued consumer demand for the highly versatile spirit,” he said.  
“Demand for premium quality gin is at an all-time high in the UK reflecting our changing drinking habits and I think this trend can only continue into 2017. However, I predict we’ll see more demand for authenticity and interesting flavours as the national palate becomes even more discerning and adventurous.”

Demand for premium gin is at an all time high and shows no sign of slowing.

Gin makers may be in for healthy returns in 2017, but they’re not the only ones. Walker also reckons there are some brown spirits worth keeping an eye on as we come into the new year.
“It feels like we’re at the start of a great rum revival which is good news for another excellent spirit,” he said.  
“I also think more mixable Cognacs and grain whisky are ones to watch.”
The potential rise in rum was also flagged by Andrew King, managing director at Funkin, who reckons the spirit will “make waves in the coming months and years”, particularly dark and spiced variants.
“Mainstream serves continue to dominate the top five cocktails for consumers including the Mojito, the Pina Colada, Sex on the Beach, the Daiquiri and the Margarita,” said King.
“So we are seeing variations on these serves using different spirits, for example a Pina Colada made with a dark or spiced rum or a Mojito made with gin.”