Quickly dwarfing its alcopop predecessor, the pre-packaged spirits category has proved it is here to stay. But despite phenomenal growth, the category is still dominated by only two players - Bacardi Breezer and Smirnoff Ice. Kate Cashmore investigates whether the category will ever expand.

PPSs, RTDs, alcopops, call them what you want - but you can't ignore them. For the pre-packaged spirits (PPS) market is now the fastest growing drinks category in the world, currently valued at £735m in the UK (the biggest and most progressive market yet) alone.

Driven by household brand names such as Bacardi Breezer and Smirnoff Ice, the image of the PPS sector has changed dramatically in the last few years. Cashing in on the demise of the 'alcopop', the PPS today is a stylish, sophisticated product.

The alcopop phenomenon began in the UK in the early nineties. Led by Hoopers Hooch from Bass, the sector took off overnight, but made the headlines for all the wrong reasons for its "irresponsible appeal" to under-age drinkers.

Brent Smith, on-trade marketing controller at Bacardi-Martini says: "The market place was defined by Hooch, now the UK palate is more developed, and what we've got on the market today is groundbreaking stuff."


There can be no doubt that the trend (for the leading brands, at least) is far more than just a fad

Launched six years ago, with a higher price tag than Hooch, Breezer was the first "grown up" PPS product. Smith believes that the Bacardi name had a lot to do with this. "With a credible parent brand steeped in history, the brand has added credentials immediately," he says.

At UDV, Denis Brown, global Smirnoff RTD director agrees: "Through our portfolio [Smirnoff Ice in the UK and a range of Australian and Greek RTD brands], we have learnt that leveraging credible parent brands and developing quality products are the key success factors."

The fridge category (all small refrigerated bottles) as a whole has remained fairly flat for the last few years, but in the last year (AC Nielsen figures for Sept 99 - Sept 2000) PPSs have nearly doubled their market share in the UK.

Most of the big names in the PPS sector are now filtering onto the international market with varying degrees of success (with Greece and Spain looking particularly promising), but interestingly, Australia has the highest per capita consumption rate, where the PPS concept sprung up almost 35 years ago. Brands such as the "alcoholic lemonade", Two Dogs have ensured a constant level of growth there ever since.

However, the UK remains the most important market for the sector, particularly in terms of trend and brand recognition. In the on-trade it's currently worth £546m and is growing at a rate of 52% a year, while in the off-trade it's growing at 69% (compared with bottled beer which is declining by 12.5% a year according to figures from AC Nielsen, September 2000).

There's Latin Spirit In Every One

The UK also has the widest range of PPS products available, yet brand recognition is dominated by Bacardi-Martini's Breezer and UDV's Smirnoff Ice. Nothing else (with the possible exception of Metz and Smirnoff Mule - again from the Bacardi-Martini and UDV stables respectively) even comes close to the level these brands are at, which is probably largely due to the phenomenal backing they have received in advertising. Smith admits: "We've spent £14m on Breezer advertising so far this financial year," while Brown states: "In the last 18 months, UDV has spent over £10m on Smirnoff Ice TV advertising."

Humorous and relatively risque, the recent Breezer and Ice TV ads in the UK have followed the tried and tested formulas of sex and controversy, while Metz has taken the more bizarre route with its Judderman puppet and tagline "Judder Pydir Metz Og Schnapps". Martini Metz is now the third biggest PPS on the market.

Launched in the UK on the back of Breezer's success, it sold 100,000 cases in its first four weeks. And it doesn't stop there for Bacardi-Martini. Another PPS product, Bacardi Rigo - although relatively small in terms of market share in the UK - has enjoyed phenomenal success in Greece. According to Smith, it was "aimed more at the male market - more of a direct attack on bottled lager."

UDV is also pulling out all the stops in this category, appointing a six-strong team last year to look after its PPS department. And in a first for UDV there was a US TV advert for Smirnoff Ice at the Superbowl. The brand is now available in 11 countries, but according to Smith, the largest market by far is still the UK.

Happy Hour Between 5 and 6

So the future is looking rosy for the two giants - but what does it hold for all the me-toos? According to Smith, there's plenty of room for competition. "We were glad when Smirnoff Ice came along because it's no longer a one horse race. It helped push the message that this is not just a fad," he says.

One brand that has proved successful both domestically and internationally is Halewood International's Red Square. A vodka and energy drink pre-mix, the brand is extending the consumer profile of the sector by introducing the late-night drinking crowd to PPSs.

Launched in February 1999, sales of Red Square last year in the UK amounted to 3m cases. Bob Rishworth, marketing director at Halewood International says simply: "We were in the right place at the right time. We don't have a big brand name behind us, but Red Square has succeeded in being a nothing into what it is today." The group has since extended the brand to iced and Irn bru versions.

The question now is where is the category going? There can be no doubt that the trend (for the leading brands, at least) is far more than just a fad. As Brown points out: "Bacardi Breezer has been growing in the UK for the past six years with no sign of declining," and admits that "Smirnoff Ice has been our most successful new product launch so far".

There is unarguably a place for these products in today's society. Some smaller brands may not survive, but one thing is sure; for Bacardi-Martini and UDV, the category is here to stay, as long as there the level of investment continues. If Allied Domecq or Pernod Ricard decide to jump on the PPS bandwagon with as much enthusiasm, only time will tell if the market will become flooded. For this is a sector where two or three brands will always dominate, and with life cycles that are both long and profitable, the word fad is far from everyone's lips.