The morning after feeling hit some sectors of the drinks industry harder than most in the months following the millennium bash
As the going gets even tougher in the alcoholic drinks market, the Big Arnies among the brands are squaring up for price wars, rationalisation and rapidly changing consumer allegiances. But in this tough liquid environment, he who dares wins. And the rewards are immense.
This winter the retailers want to match the volumes they achieved ahead of the millennium celebrations, but they're planning to avoid the overstocking which left some of them with warehouses stashed full of product in January mainly sparkling wine and champagne which then had to be promoted out through the year.
A bigger problem is the sales uplift or rather lack of it in some sectors, especially sparkling wine, so retailers are fighting harder for market share.
Tesco signalled its intentions in October by moving down to pre-Christmas pricing levels early and Asda matched it penny for penny. Others adopting high/low strategies cut ruthless deals on key brands.
The name of the game is attracting more consumers into the stores increasing footfall and convincing them that one chain has consistently better deals than its neighbour.
But does this build customer loyalty, turn shoppers into deal junkies, or are they just becoming innured to the offers?
Suppliers maintain that if the deals were not there consumers would still be buying the drinks. For them, building brand loyalty in this environment becomes increasingly difficult.
Not only do the deals encourage consumers to brand switch, but the extra cash required to support the offers means marketing budgets are squeezed. So consumer loyalty declines at the same time as brand support is reduced. It's a potentially no-win situation.
But it is not all bad news for the industry. The market dynamics show that the take home industry is increasing its share of the business at the expense of the on-trade. The big brands are also increasing their volume share as fixtures continue to be rationalised and less successful products are delisted.
Consumers however, are less loyal than they used to be to their drinking sectors the session drinking, one brand lager man is becoming the exception rather than the rule. He now chooses his brands to suit the occasion. What he drinks for pleasure in front of the telly will not be the same brand he offers to mates who call round, or be the one he drinks for a barbecue in the back garden.
And his choice of brand might not be down to him. It could depend on what his wife picks as she hurtles around the supermarket. If they've just had a row he might end up with a 2% abv own label cheapie but if things are on the up he might get his favourite Beck's, Bud or Stella.
More often than not, though, the couple won't be drinking beer at all.
Brewers have recognised that they are losing volume to other categories; that session drinking lager man and woman have been transformed into repertoire drinkers.
The high spending under-30s consumers are comfortable switching from standard to premium lager, to premium bottled ales to suit the occasion. And, even more crucial, they are just as at home switching to an Australian Chardonnay or a Californian Cabernet.
Wine consumption in the UK has rocketed in the last decade because the wines are consistently better quality, more easily understood and the myths and snobbery surrounding them have largely disappeared.
Volume growth has now slowed to around 6% but it continues to be a very dynamic sector and almost for the first time serious money is being put behind a growing collection of leading brands in the wine trade.
The running is being made by the Australians and Californians, but the rest of the New World and even Old World recognise the need to build brand franchises.
Despite all the hype, consumers still know very little about the wines they drink and most is still sold well below £5 a bottle. Although there is considerable experimentation, they are still looking for the reassurance of names and brands they trust.
The barriers to wine drinking are not the only ones to fall. The alcopop revolution in the mid Nineties zeroed in on young people's sweet teeth.
The market for sweet fizzy single serve alcoholic drinks has since gone into overdrive with the evolution and heavyweight promotion of premium mixed drinks. These have taken the place of the much derided alcopops and carry none of their negative baggage. The products have not changed much, but the marketing is different and there is strong emphasis on a parent spirit brand.
Bacardi Breezer dominates, but the introduction of UDV's Smirnoff Ice last year was one of the most successful brand launches of the decade. The development of this category has been meteoric and retailers have been hard pushed to keep up with demand.
Inevitably, me-toos have flooded in but the sector has shown little signs of slowing down. Latest figures put volume growth at 66%. Although poorer quality own labels moving into this sector will almost certainly grab a share in the short term through attractive pricing, much of this market is about image and the strong brands should prevail.
The PPS phenomenon has also helped the parent spirit brands to gain visibility and credibility among a younger generation which has been showing a distinct apathy towards "the hard stuff". Now there are clear signs that a cocktail revival is underway which could give a welcome boost to a sector facing long term decline.
Value Share of Alcohol sectors
22 Aug '99 20 Aug '00 yr/yr
% change
Total market 8.8
Total beer 21.9 21.8 8.2
Cider 3.8 3.8 11.1
FABs 1.3 2.2 82.4
Fortified wine 5.7 5.2 -0.2
Sparkling wine 2.2 3.1 53.2
Spirits 26.8 27.5 11.4
Wine 38.3 36.4 3.5
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