In a story this week just-drinks published research from the beverage analyst Canadean, which reported that in 2002 the Spanish beer market had been in growth as the Spanish spirits market declined. In fact the numbers supplied to just-drinks were incorrect and both the beer market and the spirits market have declined.
Spain’s beer market fell 3.3% in 2002. Spain’s spirit market, as previously stated, fell 7%. Canadean and just-drinks apologise for this mistake. A revised story follows.
Spain’s beverage industry struggled in 2002, wounded by the economic slowdown and poor weather, with alcoholic drinks in particular out of favour with consumers, according to research from beverage industry analyst Canadean. Even soft drinks saw a slowdown in growth in 2002, but the spirits sector suffered the most with a fall of 7%.
Whisky has long been the largest spirits category and Spain boasts the highest per capita consumption in the world. However, there are indications that the market may finally have reached its saturation point.
Sales of whisky were not helped in 2002 as the year was a poor one for tourism and new regulations banned the sale of alcohol after 11.00 pm. However, the category declined by over 5% with standard Scotch whisky contributing significantly to the downturn with sales dropping by almost 700,000 cases.
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By GlobalDataThe third, fourth and fifth leading categories, namely liqueurs, cocktails and specialities; genever and gin; and brandy also saw declining sales. Of these, brandy sales receded most notably – by a huge 27% compared with the previous year.
The category is dominated by domestic brands with the 16 most popular all being Spanish or Portuguese brandies. Brandy faces major challenges if it is to arrest this slide. It is priced less competitively than blended Scotch whisky and suffers from a poor image, being perceived by many consumers as being a male only drink. In addition, there is a distinct lack of new product innovation, which could help widen appeal.
With sales dropping in almost every category during 2002, rum and cane spirit provided one of the few bright points. Rum is the second most popular spirit in Spain, and although sales grew by less than 1% to over 4,200,000 cases, this result was encouraging following the explosive growth seen in 2001. The consolidation of rum’s position appears to be largely contributable to the increasing popularity of dark rum. Rum may be priced higher than blended Scotch, gin and vodka but young consumers are attracted to its fashionable Caribbean image. Flavoured rum drinks are also being looked at by the major producers as a source of potential future growth.
Much has been written about the destocking policies adopted by the Spanish wholesalers in 2002. With price increases no longer guaranteed, the wholesalers have been far less bullish in their approach to purchasing spirits from the producers. They can no longer build up vast inventories, safe in the knowledge that these will be resold in the future at guaranteed inflated prices. Caution, as a result, has become the byword.
Although destocking brings clear benefits in streamlining the supply chain, the producers have been adversely affected. Consumption of spirits in Spain may have dropped but actual shipments from producers to wholesalers have declined more significantly. Wholesalers have not replenished stocks to the levels seen in previous years, preferring to satisfy demand with existing supplies. The implications for producers cannot be underestimated with Allied Domecq, the leading single player in the Spanish spirits market, recently confirming that destocking could reduce profits in the country by as much as £25m.
