| KN15125 |
| KEY NOTE WHITE SPIRITS : May 2005 |
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EXECUTIVE SUMMARY
| The main `white spirits' sold in the UK are vodka, gin, white rum and tequila. In 2004, they had a combined value of £3.53bn, representing just over 40% of the total market for spirits — led by the whiskies — and around 9% of all spending on alcohol by UK consumers. |
| Although these spirits are grouped together for the convenience of market analysis, their customers are very different. Vodka appeals mainly to younger drinkers (particularly 18 to 24 year-olds) and gin is favoured by the over-45s. Consumers of white rum are spread more broadly across the generations. |
| It is the youthful appeal of vodka that has inspired growth. As a whole, white spirits grew by 27.5% in market value between 2000 and 2004, led by vodka, followed by white rum, and with gin trailing, but no longer in decline. |
| Although supermarket sales have increased and own-label ranges have developed, distribution of these spirits is still dominated by the on-trade (public houses and clubs), which maintains profitability for the distillers and reinforces the importance of brands. By market value, the on-trade takes 70.5% of vodka sales, 65.8% of the gin market, and 77.3% of white rum sales. |
| Each sector is very much dominated by a single brand taking well over half of sales: Smirnoff vodka, Gordon's gin, Bacardi white rum and Jose Cuervo tequila. Both Smirnoff and Gordon's are owned by the UK-based Diageo, the world's largest spirits company, which also distributes Jose Cuervo. |
| Bacardi-Martini, based in the Bahamas, has white rum as its main product, but has made acquisitions to broaden its portfolio, including Bombay Sapphire gin. |
| Patterns of drinking among young adults tend to change with fashion, and the current decline of the ready-to-drink (RTD) spirits, or `alcopops' is part of this. The market is led by Smirnoff Ice and Bacardi Breezer, but drinkers moving away from alcopops are turning towards pure spirits, including the original vodka and rum brands, as well as an interest in cocktails. |
| Prospects for the next few years are fairly optimistic for white spirits. The main challenge is likely to come from anti-alcohol legislation, including restrictions on drinks promotions and possibly a future advertising ban. |
TABLE OF CONTENTS
| Executive Summary |
| 1. Market Definition |
| REPORT COVERAGE |
| MARKET SECTORS |
| Vodka |
| Gin |
| White Rum |
| Tequila |
| RTD |
| MARKET TRENDS |
| Demographics Dictate the Market |
| Dominance of `Icon' Brands |
| White Spirits in Favour |
| Mergers Reaching a Legal Limit |
| Prices Under Restraint |
| ECONOMIC TRENDS |
| Population |
| Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 2000-2004 |
| Gross Domestic Product |
| Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 2000-2004 |
| Inflation |
| Table 3: UK Rate of Inflation (%), 2000-2004 |
| Unemployment |
| Table 4: Actual Number of Unemployed Persons (million), 2000-2004 |
| Household Disposable Income |
| Table 5: Household Disposable Income per Capita (£), 1999-2003 |
| MARKET POSITION |
| The UK |
| Overseas |
| 2. Market Size |
| THE TOTAL MARKET |
| Table 6: The Total UK White Spirits Market by Value at Current and Constant 2000 Prices (£m at rsp and index 2000=100), 2000-2004 |
| BY MARKET SECTOR |
| Table 7: The UK White Spirits Market by Sector by Value at Current Prices (£m at rsp and %), 2000-2004 |
| Vodka |
| Table 8: The UK Vodka Market by Volume and Value (million, % and £m at rsp), 2004 |
| Gin |
| Table 9: The UK Gin Market by Volume and Value (million, % and £m at rsp), 2004 |
| White Rum |
| Table 10: The UK White Rum Market by Volume and Value (million, % and £m at rsp), 2004 |
| Tequila |
| OVERSEAS TRADE |
| 3. Industry Background |
| RECENT HISTORY |
| INDUSTRY SYNOPSIS |
| Table 11: Industry Synopsis for UK Distillers (£000 and %), 2004 |
| Number of Companies |
| Table 12: Number of VAT-Based Enterprises Engaged in the Manufacture of Distilled Potable Alcoholic Beverages by Turnover Sizeband (number and %), 2004 |
| Employment |
| Table 13: Number of Local Units Engaged in the Manufacture of Distilled Potable Alcoholic Beverages by Employment Sizeband (number of employees), 2004 |
| REGIONAL VARIATIONS IN THE MARKETPLACE |
| DISTRIBUTION |
| The On-Trade |
| The Off-Trade |
| HOW ROBUST IS THE MARKET? |
| LEGISLATION |
| KEY TRADE ASSOCIATIONS |
| British Beer & Pubs Association |
| European Confederation of Spirits Producers |
| Gin and Vodka Association |
| Wine and Spirit Association |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| MARKET LEADERS |
| Table 14: Leading Companies and Brands in White Spirits, 2005 |
| Table 15: Major Spirits Companies by Turnover (£m), 2003/2004 |
| DIAGEO PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| BACARDI-MARTINI LTD |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| OTHER COMPANIES |
| Allied Domecq |
| Glen Catrine Bonded Warehouse Ltd |
| Maxxium Worldwide (Whyte and Mackay, Vin & Sprit) |
| Pernod Ricard |
| OUTSIDE SUPPLIERS |
| Distributors, Contract Bottlers and Cash-and-Carry Suppliers |
| Drinks Ingredients and Packaging |
| MARKETING ACTIVITY |
| Main Media Advertising |
| Table 16: Main Media Advertising Expenditure on All Spirits and Ready-to-Drink Spirits (£000), Year Ending December 2004 |
| Other Marketing Activity |
| Exhibitions |
| 5. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 6. Buying Behaviour |
| CONSUMER PENETRATION |
| Table 17: Drinkers of All Spirits and Liqueurs (% adults), 1998 and 2002-2004 |
| Types of White Spirit Drinker |
| Table 18: Penetration of White Spirits by Sex, Age, Social Grade and Region (% adults), 2004 |
| Vodka Drinkers |
| Gin Drinkers |
| White Rum Drinkers |
| Penetration of Leading Brands |
| Table 19: Drinks Brands Consumed at Least Once a Month (% of adults), 2000 and 2004 |
| Table 20: Penetration of White Spirits Brands by Sex, Age, Social Grade and Region (% of adults), 2004 |
| 7. Current Issues |
| Introduction |
| WHITE SPIRITS ISSUES |
| RETAIL ISSUES |
| GENERAL ALCOHOL ISSUES |
| 8. The Global Market |
| INTRODUCTION |
| MULTINATIONAL OPERATORS |
| INTERNATIONAL BRANDING |
| NATIONAL MARKET CHARACTERISTICS |
| PER CAPITA CONSUMPTION |
| Table 21: Estimated Per Capita Consumption of Spirits in Selected Countries (litres of pure alcohol), 2004 |
| 9. Forecasts |
| INTRODUCTION |
| Population |
| Table 22: Forecast UK Resident Population by Sex (000), Mid-Years 2005-2009 |
| Gross Domestic Product |
| Table 23: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2005-2009 |
| Inflation |
| Table 24: Forecast UK Rate of Inflation (%), 2005-2009 |
| Unemployment |
| Table 25: Forecast Actual Number of Unemployed Persons (million), 2005-2009 |
| FORECASTS 2005 to 2009 |
| Table 26: The Forecast UK White Spirits Market by Value at Current Prices (£m at rsp), 2005-2009 |
| FUTURE TRENDS |
| Healthy-Drinking Concepts |
| High Quality of Manufacture |
| Demographic Changes |
| Table 27: Age Profile of the UK Population (% of total), 1998 and 2006 |
| The Mature Age Group |
| The Impact of the Economy |
| 10. Company Profiles |
| Allied Domecq PLC |
| Bacardi-martini Ltd |
| Diageo PLC |
| First Drinks Brands Ltd |
| Glen Catrine Bonded Warehouse Ltd |
| Pernod Ricard Uk Ltd |
| Whyte and Mackay Group Ltd |
| 11.Further Sources |
| Associations |
| Publications |
| General Sources |
| Government Publications |
| Bonnier Information Sources |
Text © 2005 Key Note
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Last updated by Amanda Porteous 2005
