Craft brands and cocktails lift the spirits

This ought to lift a few spirits: sales of the hard stuff are flying, with the sector’s brands having put an extra £176m through the supermarkets’ tills in the past year. That’s combined growth of 5.6%; volumes are up 4.6%.

Note the higher rate of value growth. “The average price of spirits per litre is £19.33, up 1% versus a year ago,” says Nielsen analyst Marika Praticò. “This rise is driven by premiumisation and craft credentials and counteracts the massive drops big brands have been through to increase overall sales.”

You’ll have to look far beneath Nielsen’s top 10 spirits - five of which have seen average prices fall - to find any of the 165 brands that fall into the craft sector, such as Sipsmith or William Chase. The subsector might be worth just £48.8m, but it’s up 48% and it’s adding significant value to the market, says Praticò.

Many of the big brands, meanwhile, are sacrificing value to drive volumes, particularly through deals during key seasonal events. “Offering value to shoppers is an important part of our plans,” says Crispin Stephens, head of commercial planning at BBFB, which has driven strong growth across the Jack Daniel’s portfolio. Tennessee Whiskey is up 9.9% on volumes up 13.1%; the Tennessee Honey variant has entered the top 20 thanks to 32.6% growth on volumes up 44.8%.

It’s not all down to price, of course. Stephens says big advertising spend, with JD enjoying a major presence on the Tube, has also paid off. The importance of above-the-line investment is best illustrated by the performance of market leader Smirnoff, which accounts for more than 25% of spirits growth alone.

Guy Dodwell, off-trade sales director at Diageo, puts this down to a pack redesign across the portfolio, the launch of the We’re Open campaign, which involved sponsorship of events such as London Pride, and involvement in nine UK festivals including V, Wireless and Creamfields. “We’ve done a lot to ensure we’re constantly evolving and innovating in line with the brand’s values.”

Spirits’ biggest loser is own label. “Consumers are trading up to brands,” says William Grant & Son category manager Faye Oliver. ‘Trading up’ doesn’t necessarily mean spending more, however: Grant’s Green Mark vodka is up 30.2% to £21.8m, but at £16.59 a litre, it costs less than the own-label average.

There are others - Greenall’s Gin; Whyte & Mackay; Russian Standard - stealing share by playing the value card, although Pernod Ricard commercial director Chris Ellis suggests growth in at-home cocktail consumption favours more premium brands such as Absolut. “What’s driving that is consumer engagement with brands, very much driven by what they’re doing in the on-trade.”