Alcohol - spirits 2024: big brands hit as duty hikes raise prices

Spirits drinkers are feeling the squeeze. Duty increases of 10.1% that took effect on tipples over 22% abv in August 2023 have been key in driving up the price of vodka, gin and the like. They’re 5% per litre more on average.

Given those higher prices, it’s little surprise that spirits volumes continue to fall – by 5.6%, or 15 million litres. Brands are responsible for the lion’s share of this loss. They’ve fallen 6.3%, while eight of the top 10 are in volume decline. And seven have shed value. That includes top two Smirnoff and Gordon’s, which have lost a combined £26m.

Of the big brands bucking the downward trend, Baileys is the most notable. It’s added £13.2m on volumes up 10% – with strong promotions encouraging one in three Brits to “allow more treat moments this year”, says Lauren Priestley, head of off-trade development at owner Diageo GB.

Baileys has also “owned this occasion through innovation and the introduction of new blends”, she adds, pointing to the chocolate variant added this autumn.

That its abv is 15.7% is also important. As alcohol duty is set to increase again in April 2025, more lower-strength innovation – that below 22% abv – is likely, predicts Andrew Eagle, NIQ senior analytics executive. Such launches “will enable brands to hit more accessible price points and stem declining sales”, he says.

For RTDs, NPD is already paying dividends. The market is up 5.1% in value, while volume decline has slowed markedly to 1.1%. This performance is being driven by demand for posher canned cocktails from busy challengers such as Au, Four Loko and Moth. They’re all in strong growth after this year respectively launching Pink Lemonade, Dark Berry Burst and Paloma (see Top Launch, below).

Eagle predicts further growth in the market will likely come from these “professional grade ready-to-drink cocktails”.

But NPD of all shapes and hue are important, Eagle adds. “Brands that are achieving growth are doing so through innovation. Where big players have not taken steps to do something new, they have lost ground.”

One big RTD player not to lose ground is Jack Daniel’s. Its premix RTD with Coca-Cola, launched in spring 2023, has added £21.8m on volumes that have swelled 141.5%.

New packaging for its sugar-free variant and the addition of a PMP for convenience are behind this performance, says Elaine Maher, associate director for alcoholic ready-to-drink at Coca-Cola Europacific Partners GB.

“Jack Daniel’s & Coca-Cola Zero Sugar has generated around 16% of the range’s sales to date and we’re confident there is further potential for growth.”

Read more: Alcohol - spirits 2023: Premium tipples keep spirits afloat