Ben Cooper

Research in Focus - Doing its Own Thing Pays Off for Gin

By | 16 December 2011

As vodka sales have soared over the last ten years, gin has been somewhat in the doldrums. However, a new The IWSR/just-drinks report shows that the premium gin category is now growing, on the back of new product innovation and marketing which emphasises gin’s unique attributes rather than simply trying to emulate vodka.

The last few years of economic strife and despond may have dampened consumer appetite for some luxury products but it appears to have had the opposite effect on those attracted to quality gin. 

After years of category decline, the global market for premium-and-above gin rose by 4.4% between 2009 and 2010 to reach 3.6m cases, according to a new report from just-drinks and The IWSR.

This recovery has to be seen in the context of gin’s overall performance during the past decade. While vodka brands have held all before them, the gin category declined from 54.6m cases in 2001 to 46.6m cases in 2010, more than 1m cases below the level in 1991.

So, how has this recent reversal of gin’s fortunes come about, particularly with the world mired in economic misery?

The answer appears to lie in the recognition that, rather than being a poor relation to vodka in the white spirits market, gin has unique attributes that offer consumers something different.

There is a strong suggestion in the report that, seeing the growing appeal of premium vodka during the past decade, gin brands have mistakenly attempted to emulate vodka brands too closely, for example in packaging and marketing, rather than emphasising gin’s points of difference from vodka and other spirits. 

Now, companies such as Diageo are stressing that gin should be marketed very differently from vodka.

While vodka is an ideal mixable spirit by dint of its neutral flavour, gin is characterised by its depth of flavour and richness. “This complexity of taste actually stands gin in good stead when creating the all-important points of difference,” the report states. “Gin’s natural home is status, discernment and knowledge. From that standpoint, gin is more comparable with Scotch whisky and not vodka.” 

Diageo’s view appears to sum things up. The world’s leading spirits company, and owner of the Gordons and Tanqueray gin brands, says it has focused on “promoting the quality of the flavours with all the botanicals and the richness of our liquids” and “the classic taste of gin itself”, which, it says, allows for a “stronger alignment between gin and food”. Diageo says it is “reasserting gin as a sophisticated yet accessible pre-dinner drink”.

Such new thinking on gin certainly appears to be paying dividends. Super-premium gin sales rose by 17.75% between 2005 and 2010 and increased their share of the sector from 0.3% to 0.8%. Premium gin sales as a whole showed a compound annual growth rate of 1.5% between 2005 and 2010, and now represent 7.9% of the sector.

While the premium gin sector in the US, the largest market for premium-and-above gins accounting for 64% of global sales, has remained relatively flat, other markets have “surged” at the premium-and-above level, according to the report. 

The UK saw premium-and-above gin sales rise by 11.6% to 304,750 cases in 2011. Meanwhile, premium sales in Spain were 35% up at 230,000 cases. In Canada, sales rose by 8.5% to 157,750 cases, while Australia, Germany and New Zealand also saw double-digit growth.  

New product development and innovation has also been a feature in the recovery. “For a long time gin was a relatively unexciting area compared to such explosive categories as vodka or Scotch,” the report states. “There were relatively few new products or brand innovation. That is changing. While the big brands continue to account for the lion’s share of sales, a plethora of new super-premium brands have come to the market in recent years.” 

Among the new entrants making headway are brands such as London Number 1, Broker’s, Bulldog, Caorunn and Hayman’s. 

The report states that the entry of more premium and super-premium gins, and the higher margins that go with such products, is making the category more appealing to retailers and on-premise operators. 

Another key factor behind the growth of premium gin has been the revival of classic cocktails in markets such as the US. “For a long time, people were drinking vodka cocktails and relying on the taste of the mixers to go with the alcohol. Now, people are looking for more flavour from the actual spirit. Gin – because it is so flavourful and bold – can add a lot to the cocktail itself.”

Interestingly, in spite of the subtleties involved in gin production, marketers concede that much more could be done to educate consumers about the category. “Compared with Scotch or vodka producers, for instance, gin has done a fairly poor job of explaining product quality, distillation methods or the taste,” the report states. 

It may be rather fanciful to extrapolate from the recent growth that the gin market could be on the verge of a boom, but the idea that gin marketers are now stressing the unique qualities of their product, rather than simply trying to copy what vodka brands have done, appears to augur well for the category.

Expert analysis

Global market review of gin – forecasts to 2016

This latest edition of our popular review of the global gin market provides over 30 data tables of essential market consumption volumes. Providing both historic and forecast data and key brand performance in the world's key markets, this report is the definitive guide to how this exciting sector will develop.

Sectors: Spirits

Companies: Diageo, Tanqueray

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