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KN15051 KEY NOTE DARK SPIRITS AND LIQUEURS JULY 2001

Editor: Emily Pattullo
ISBN: 1-84168-218-7

This report covers: dark spirits, scotch whisky, whiskey, cognac, brandy, bourbon, dark rum, liqueurs

Companies and brands covered include: Brewers & Licensed Retailers Association, BLRA, European Confederation of Spirits Producers, CEPS, Scotch Whisky Association, SWA, Wine and Spirit Association, WSA, Scotch Malt Whisky Association, Malt Distillers Association, Gin and Vodka Association, Irish Cream Liqueu Producers Association, Portman group.Allied Domecq, Ballantine's Scotch, Beefeater Gin, Kahlua, Sauza tequila, Courvoisier cognac, Maker's Mark, Tia Maria, Diageo, Guinness, Grand Metropolitan, IDV, JBB (Greater Europe), Jim Beam Brands, Whyte & Mackay, The Claymore, MacKinlay's, Scots Club, Invergordon, Seagram Distillers, Captain Morgan, Martell, Godiva, Chivas Regal, Glenlivet, Four Roses, VO Canadian, United Distillers & Vintners (ER), UDV, Baileys, Johnnie Walker, Bell's, Jack Daniel's, Gordon's, Cuervo, Malibu, Tanqueray, Smirnoff, William Grant & Sons, Glenfiddich, The Balvenie, Clan Macgregor, Grant's, Bacardi-Martini, First Drinks Brand, Maxxium UK, Pernod-Ricard, Remy UK

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TABLE OF CONTENTS

Executive Summary


1. Market Definition

Report coverage
Market Sectors
Dark Spirits
Scotch Whisky
Cognac and Brandy
Non-Scotch Whiskey
Dark Rum
Liqueurs
MARKET TRENDS
Drinking Patterns
Table 1: Average Weekly Household Expenditure on Alcoholic Beverages by Type of Beverage (£), 1998/1999 and 1999/2000
Growth of the Off-Trade
Cross-Channel Smuggling
Abolition of Duty Free
MARKET POSITION
The UK
Table 2: Consumer Expenditure on Spirits as a Proportion of Total Expenditure on Alcoholic Drinks ( percent), 1995-2000
Liqueurs Market
Table 3: Market Shares in the UK Spirits and Liqueurs Market by Product Type ( percent), 1998-2000
Overseas
KEY TRADE ASSOCIATIONS
Brewers & Licensed Retailers Association
European Confederation of Spirits Producers
Association
Wine and Spirit Association
Other Associations


2. Market Size

THE TOTAL MARKET
By Value
(£m at rsp), 1996-2000
By Volume
Table 5: The Production of Spirits by Volume (million litres), 1996-2000
MARKET SECTORS
1996-2000
Dark Spirits
Scotch Whisky
Table 7: The UK Scotch Whisky Market by Value at Current Prices (£m at rsp and percent), 1996-2000
Cognac and Brandy
Table 8: The UK Cognac and Brandy Market by Value at Current Prices (£m at rsp and percent), 1996-2000
Non-Scotch Whiskey
Table 9: The UK Non-Scotch Whiskey Market by Value at Current Prices (£m at rsp and percent), 1996-2000
Dark Rum
Table 10: The UK Dark Rum Market by Value at Current Prices (£m at rsp and percent), 1996-2000
Liqueurs
Table 11: The UK Liqueurs Market by Value at Current Prices (£m at rsp and percent), 1996-2000
OVERSEAS TRADE
Exports and Imports
Table 12: Imports and Exports of Spirits and Liqueurs (£m), 2000
Exports of Scotch Whisky
Table 13: Major Export Markets for Scotch Whisky by Value (£m), 1999-2000


3. Industry Background

RECENT HISTORY
Number of Companies
Table 14: Number of VAT-Based Enterprises Engaged in the Manufacture of Distilled Potable Alcoholic Beverages by Turnover Sizeband (£000), 2000
EMPLOYMENT
REGIONAL VARIATIONS IN THE MARKETPLACE
DISTRIBUTION
Retail Distribution
Table 16: Retail Distribution of Dark Spirits and Liqueurs by Value and Volume ( percent), 2000
Pubs and Licensed Clubs
Table 17: Sales of Alcoholic Drinks through Pubs by Type of Drink by Value (£m and percent), 2000
The Take-Home Trade
Table 18: Take-Home Sales of Alcoholic Drinks by Type of Drink by Value (£m), 1999 and 2000
MARKET?
LEGISLATION


4. Competitor Analysis

THE MARKETPLACE
MARKET LEADERS
Allied Domecq PLC
Diageo PLC
JBB (Greater Europe) PLC
Seagram Distillers PLC
Vintners (ER) Ltd
Table 19: Sales and Volume Growth of Guinness UDV Global Priority Brands (million cases and percent), 1999/2000
William Grant & Sons Ltd
Other Companies
Bacardi-Martini Ltd
First Drinks Brands Ltd
Maxxium UK Ltd
Pernod-Ricard SA
Remy UK Ltd
OUTSIDE SUPPLIERS
Ingredients
Packaging and Labelling
Wholesalers
PROMOTION
Advertising Expenditure
Table 20: Main Media Advertising Expenditure on Dark Spirits and Liqueurs (£000), Years to March 2000 and 2001
Exhibitions
Exhibition and Congress
The International Food and Drink Exhibition
London International Wine and Spirits Fair
Vinexpo
Worldwide Food Expo
Other Trade Fairs


5. Brand Strategy

INTRODUCTION
RESEARCH FINDINGS
Table 21: Penetration of Leading Dark Spirits and Liqueurs Brands by Sex ( percent of adults), 2001
Table 22: Penetration of Leading Brands of Scotch Whisky by Age and Social Grade ( percent of adults), 2001
Whiskies and Liqueurs
Table 23: Penetration of Leading Whiskey and Liqueurs Brands by Age and Social Grade ( percent of adults), 2001
Other Dark Spirits
COMPANIES BRANDS
Allied Domecq PLC
The Drambuie Company
and Vintners Ltd
Maxiuum
Pernod-Ricard SA
Seagram Distillers PLC
William Grand & Sons Ltd
BRAND ACTIVITY
Allied Domecq PLC
Guinness United Distillers & Vintners Ltd
Maxxium UK Ltd
William Grant & Sons Ltd
BRAND ADVERTISING
Table 24: Main Media Advertising Expenditure for Major Dark Spirits and Liqueurs Brands (£000), Years to March 2000 and 2001
Threats
Strengths
Weaknesses
Opportunities
Threats


7. Buying Behaviour

ALCOHOL CONSUMPTION
CONSUMER PENETRATION
Table 25: Penetration of Spirits by Product Type ( percent of adults), 1998-2000
Scotch Whisky
Table 26: Penetration of Scotch, Malt and Non-Scotch Whiskies by Sex, Age and Social Grade ( percent of adults), 2000
Brandy and Rum
Table 27: Penetration of Brandy and Dark and Golden Rum by Sex, Age and Social Grade ( percent of adults), 2000
Other Spirits and Liqueurs
Table 28: Penetration of Other Spirits and Liqueurs by Sex, Age and Social Grade ( percent of adults), 2000
REGIONAL VARIATIONS
Table 29: Penetration of Scotch Whisky, Brandy, Rum and Liqueurs by Region ( percent of adults), 2000


8. Current Issues

DEVELOPMENTS
OVER RUM
OWN-LABEL SALES
REFORM OF THE LICENSING LAWS
THE PORTMAN GROUP CAMPAIGN
THE ROLE OF THE INTERNET


9. The Global Market

MARKET SIZE
MAJOR TRENDS
Declining Spirit Sales in the US
Japanese Imports of Scotch Whisky
Exports of Scotch Whisky to India
The Move Towards Premium Drinks
Growth in Irish Whiskey
Flavoured Rums
Corporate Developments
CONSUMER BEHAVIOUR
Eastern Europe
Western Europe
The Far East
The US
THE FUTURE


10. Forecasts

INTRODUCTION
FORECASTS 2001 TO 2005
Table 30: The Forecast UK Spirits and Liqueurs Market at Current Prices by Value (£m), 2001-2005
White Spirits
Liqueurs
Dark Spirits
MARKET GROWTH
Figure 1: The UK Dark Spirits and Liqueurs Market by Value at Current Prices (£m at rsp), 1996-2005
FUTURE TRENDS
Trends
Table 31: Age Profile of the UK Population (000), 1998, 2001 and 2006
‘Share of Mouth’
The Take-Home Trade
Further Consolidation


11. Company Profiles

Allied Domecq PLC
Diageo PLC
JBB (Greater Europe) PLC
Seagram Distillers PLC
Vintners (ER) Ltd
William Grant & Sons Ltd


12. Company Financials


13. Further Sources

Associations
Publications
Directories
General Sources
Sources
Government Publications
Other Sources

Understanding TGI Data

Penetration
Social Grade
Standard Region

Key Note Research

The Key Note Range of Reports

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EXECUTIVE SUMMARY

Key Note estimates that the UK market for dark spirits and liqueurs reached £3.69bn in 2000, having risen by 3.9 percent from the previous year. Between 1996 and 2000, the dark spirits market grew by 10.2 percent. This has coincided with an increase in the white spirits and liqueurs share of the market. The market for dark spirits and liqueurs received a boost with the advent of the Millennium, with a corresponding rise in sales during the latter part of 1999, although growth has been more modest since.

The dark spirits and liqueurs market, as described in this report, consists of several sectors. In the dark spirits sector, subsectors include Scotch whisky, Cognac and brandy, non-Scotch whiskey and dark rum. Whisky matured and distilled in Scotland is known as Scotch whisky while whiskies from any other part of the world come under the classification of non-Scotch whiskey.

Like the white spirits market, the dark spirits market is facing increasing pressure from other sectors of the alcoholic drinks market. Wine, in particular, has performed exceptionally well in recent years, and the popularity of premium-packaged spirits (PPS) has also increased their share of the overall market, often at the expense of more traditional drinks such as Scotch whisky and brandy. Scotch whisky, however, remains the largest market sector.

Sales of spirits and liqueurs have traditionally been biased towards the on-trade, although the take-home trade has increased in importance during recent years. However, owing to higher prices, the take-home trade has made most of its recent gains in volume, rather than by value. The growing power of the major supermarket groups has led to price discounting in the sector and this has further hampered market growth.

Two large companies, Diageo PLC and Allied Domecq PLC, dominate the dark spirits and liqueurs market. Both companies have recently disposed of other business interests, and are now positioning themselves as international drinks companies, focusing upon a number of key brands. Elsewhere, a number of small, independent distillers exist, especially within the Scotch whisky sector, although their number is in decline.

Scotch whisky remains one of the UK's largest exports. Exports are now starting to recover again, having been hit particularly hard by the recent currency crisis that swept the Far East economies.

The market for dark spirits and liqueurs is likely to experience marginal growth between 2001 and 2005, although most of this growth will come from the liqueurs sector. The market for dark spirits has a mature consumer profile and many sectors have been slow to innovate, thereby failing to attract younger drinkers. There will also be increasing competition from other alcoholic drinks, eroding the sector's share of the market even further.

Text © 2001 Key Note

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