Blog: Spirits in the UK - trade up while prices go down?
Olly Wehring | 19 February 2007
At Diageo’s interim results last week, we managed to grab hold of the head of the company’s European operations, Andrew Morgan, for a quick one-to-one (the results of that chat will be ready exclusively for you, dear reader, tomorrow).
The UK off-trade spirits market seems to be high on the agenda, not only for Morgan, but also for Adrian McKeon, Beam UK’s MD (with whom we also have an exclusive interview coming up later this month), and Pernod Ricard UK. The latter has trumpeted its strong showing in the sector today (19 February), while highlighting how tough the market has become.
In the last eight weeks of 2006, Pernod said, the overall spirits category in the UK was down by 1% in value and by 4% in volume. While Pernod may have outperformed the market as a whole, the battle of Christmas 2007 will may drag the French group into the fray.
Morgan, meanwhile, conceded that the battlefield is getting bloodier. “We did draw something of a line in the sand in terms of what we were prepared to support with the retailers this Christmas and it cost us volume,” he told us. “We knew we’d lose some significant volumes, but as far as I’m concerned this is the right thing to do for the brands. It was negative for us but this is about the health of our brands for the long-term.”
So, is this some sort of tipping point? How do these drinks companies, so keen on ‘premiumisation’ and trading up, maintain this ethos while spirits sales - and volumes - slide in a market dictated by price? Does this not do the brands some damage? And where will this all end?
Here's a round-up of the top stories on just-drinks last week, featuring Pernod Ricard, soft drinks NPD, the Champagne category and international beer brands....
Heavy metal legend Bruce Dickinson - lead singer of the band Iron Maiden, for the unitiated - is clearly a man not afraid to get his hands dirty. ...
The homebrewing revival continues in the UK - and evidence has come that even the supermarket chains are taking it semi-seriously. ...
Does Pernod Ricard have something to hide? In a press conference after the release of full-year results today, only a quarter of the 100 minutes were given over to questions from journalists....
- Allegro: The shape of things to come at Pernod?
- Pernod Ricard's Allegro cost-saving programme
- Comment - Diageo's Distill Ventures: One Year On
- The End of the Road for International Beer Brands?
- Pernod Ricard's FY Performance by Region, Brand
- Pernod Ricard set for CMO switch
- ASA bans Jägermeister TV ad
- Wine Australia reports death of UK, Europe boss
- Pernod bemoans tough FY as sales, profits drop
- Diageo takes Haig Club to Singapore airport