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?
Whisk(e)y companies spend a lot of money and effort ageing their products for that premium taste....
PepsiCo created a stir last week with the news it is testing a product called Caleb's Kola, with some in the media claiming it was the beginning of a new “craft soda” category....
SABMiller's bid to widen the appeal of beer is very much in evidence at its latest 'House of Peroni' - with beer cocktails and a bigger bottle for the Italian lager brand on offer. ...
Here's a round-up of the big stories on just-drinks last week, featuring PepsiCo, SABMiller, the Scotch whisky category and the US wine market....
- Analysis - Remy's Cognac "dead-cat bounce"
- Comment - How Hand-Made is Tito's Handmade Vodka?
- Heineken to stay "active player" in beer M&A - CFO
- Focus - Pernod Ricard's Q1 sales by brand
- Time for Heineken to make a European break
- Moët Hennessy unveils first Travel Retail outlet
- United Spirits sees Q1 net loss
- Whisky downturn slows Diageo's Scotch spend
- Beam Suntory, Edrington part ways in Travel Retail
- Pernod Ricard sees sales lift in Q1