Christmas Alcohol: Give customers the gift of joy

There are certain things that take place every Christmas. Something miserable happens on EastEnders, we’re disappointed that it’s not snowing, and some really terrible gifts are given to friends and family, bought on last-minute panic shopping trips. While the first two are out of your control, the last is something you can help with, by having a range of spirits that make the perfect gift.

Adam Hogwood, manager of Morrison’s Budgens of Broadstairs in Kent, says Christmas alcohol is a lucrative market for him. “Alcohol is always massive at Christmas for us,” he says. “There’s a lot of competition in the area, but we still do very well come Christmas.”

Adam focuses on the tried-and-tested sellers rather than going for every new product on the market. “We’ve tried the NPD in the past, but besides selling one or two of them, we end getting stuck with them for months afterwards,” he says.

“We’ll add one or two new lines at most, but our focus is on the well-known brands such as Smirnoff or Jack Daniel’s that always do well.”

According to Conviviality Retail head of licensed buying Matt Cain, the Christmas alcohol gifting season is a prime time for the top brands. “After birthdays, Christmas is the most important gifting occasion and all of the major brands recognise this,” he says. “They produce a variety of gift sets and limited-edition bottles for the season.”

He says that the old favourites always do well. “Gift sets from Jack Daniel’s and Absolut Vodka sold well last year,” says Cain. “Vodka is still our most popular spirit for gifting, but we’ve seen a continuous rise in sales of premium malt whisky at Bargain Booze over the past few years.”

Pernod Ricard UK off trade channel director Chris Shead says that convenience is missing out on a big opportunity. The company believes there is a £13m incremental sales opportunity in premium spirits alone this Christmas. “The independent sector is missing a trick in premium spirits,” he says. “In the sector, value sales of premium spirits have grown by £8m between Christmas of 2009 and Christmas 2013, increasing its share from 16.4% to 18.3%, yet it’s still underperforming compared with the multiples whose value sales have increased by £95m over the same period to a 30% share. If the independents could create a 30% share of sales, it would equate to £13m of incremental sales so the opportunity is massive.”

He’s not the only one to feel this way. Diageo’s head of category development James Cragg says that spirits are the key to a successful Christmas. “Last year spirits sales grew £77m in the 12 weeks to Christmas (off and on trade), faster than any other total beverage alcohol category,” he says. “It proved that if you’re going to win at Christmas, you need to win with spirits.”

He says there is a £340m opportunity in the off trade channel and that retailers can grow sales if they follow some simple steps. “The top 10 brands delivered 46% of spirits category sales in the Christmas period, so making these brands available and highly visible is crucial,” says Cragg. “Some 39% of annual premium sales are in the 12 weeks to Christmas, so it’s a great time to emphasise premium products in store. Innovation delivered £14m growth to the off trade last year and gifting packs grew at 31% last Christmas, so having an impactful presence of the big innovation and gifting brands is crucial to drive sales.”

Saki Ghafoor, who runs Nisa stores in Northumberland and Tyne & Wear, says people are more likely to treat themselves and others at Christmas, leading to trading up and increased basket spend. “When Christmas starts getting closer we make sure to start stocking more premium spirits and some gift packs,” says Saki. “It means you have to make space for them, but it’s worth it as people buy them as last-minute gifts for people and for parties. Some of the more premium bottles and gift sets can be quite expensive, so selling those really improves value sales in the category.”

Shead believes there’s one reason why spirits in convenience aren’t doing as well as in the multiples. “Spirits are behind the counter so it’s harder for retailers to take advantage,” he points out. “Ranging is a weak link for the channel. There’s not enough thinking about how they can develop the top end of the category. It can turn into a vicious circle. Some retailers believe the demand of these products don’t exist so don’t bother stocking them, and therefore people will just buy them elsewhere.”

Time for wine

Shead also believes there is an opportunity to improve wine sales over Christmas. “Premium wines are already the star performer in impulse at Christmas, and with both new and existing shoppers continuing to trade up it is essential that we continue to drive this opportunity.”

He says this can be done by ensuring premium wines are highly visible in the store, keeping the category simply and focusing on sparkling wine.

Continental Wine & Foods marketing manager Amy Ledger is confident that this year will be a good one for wine sales as she says the economy has changed wine shopping habits for the better.

“With the more buoyant and positive economic environment comes an increased consumer confidence and the willingness to loosen the purse strings in order to celebrate, experiment and have a little fun,” she says.

“Furthermore, we are starting to see a little more experimentation, particularly with wine choices - there are very few bottles of wine available for less than the £5 mark and, as a result, consumers are more willing to try something different within their price range.”

Ledger says that the independent sector hasn’t been intimidated by the multiples in the wine sector. “The cash and carry and independent sector has been quick to realise the need to compete strongly with the supermarket buying power and has become more aggressive and competitive with its promotions on wines, therefore consumers no longer see independent retailers as the ‘expensive alternatives to supermarkets’ and are more likely to impulse buy wine when shopping for their big night in.”

This impulsive shop can be used to retailers’ advantage, says Treasury Wine Estates head of customer marketing Shaun Heyes. “Figures show that wine above £6 gains share during Christmas as consumers trade up and treat themselves during the festive period,” he says.

“In fact, last year sales of wines over £6 represented more than 50% of all wine sales. However, wines over £10 increased their share by up to 6% to reach 12.9%, highlighting just how important it is for retailers to stock a balanced range of wine across different price points during this period.”

Heyes says the regular wine shopper is one that convenience retailers should be looking to win over. “Wine shoppers are very different to those in other FMCG categories,” he says. “Spanning a wide demographic and a diverse consumer landscape, wine shoppers consider taste and quality to be of much greater importance, over and above price. Wine shoppers buy less frequently, but spend more time when they do, and this behaviour presents convenience retailers with a great sales opportunity.”

He believes these shoppers can be twice as valuable as the average shopper. “Wine shoppers spend more than double the average convenience shopper spends, buying more items per visit and spending longer in store than the average shopper,” says Heyes. “By ensuring they have the right range, retailers can attract these higher-value shoppers and grow their sales as a result.”

Sparkling success

Your customers may want their Christmas to go off with a bang, and what better way to do that than with sparkling wine. Heyes says the fizzy stuff is becoming a popular option among British households. “Figures show that one in five households buy sparkling wine at Christmas, so retailers should also make sure they stock a good range of chilled sparkling wine throughout the festive period,” he says.

“Retailers looking to fully take advantage of the seasonal sales on offer need to adjust their range now otherwise they’ll miss out on the sales opportunity available both before and during the Christmas period.”

Freixenet managing director Damien Clarke says sparkling wines present an affordable treat. “Shoppers are looking for great value during the festive season; sparkling wine is well placed to deliver this,” he says. “For retailers wanting to create new sales opportunities, sparkling wines, and Freixenet in particular, provide the perfect solution for shoppers who want a quality brand they trust, but at a price which is more accessible to them.

“The sparkling wine category represents a huge sales opportunity; the category is now growing at 20% and is worth £521m,” adds Clarke. “It is also the fastest growing BWS category in both the on and off trade, and the only category in double-digit growth.”

Adam is banking on Christmas alcohol sales sparkling this year. “Sparkling wine is like the cider boom of a couple of years ago,” he says. “It’s massive for us and we’re going to be increasing facings of it for Christmas.”

As with any convenience store, Adam has space constraints so he has to sacrifice something to accommodate these extra facings. “The extra facings will come at the expense of the Old World whites and rosés as they’re not doing as well as they used to,” he says. “Rosé used to be the go-to wine for customers who weren’t sure what to buy, or wanted something sweet, but now sparkling wine has replaced that. It’s also more of a party wine so sales grow during Christmas.”

With the trade-up in mind, he recently introduced a £13 Prosecco that has exceeded expectations. “We thought it would do okay but struggle when stocked beside our £7 Prosecco, yet sales have been massive,” explains Adam. “People are willing to spend that little bit more for something premium and we’ll be pushing that this Christmas.”

As well as the trade up, there’s an opportunity to sell in those little extras. “Retailers can add value to customers’ gift purchases by offering gift bags or a wrapping service over the festive season,” explains Cain. “It’s a simple way of encouraging gift purchases.”

Donna and Bruce Morgan of Brownlie’s of Biggar, Lanarkshire, are keen on the upsell in their award-winning alcohol section. They won the Off Licence Store of the Year award at the 2014 Convenience Retail Awards, partly for their excellent way of adding something extra to the category. “We keep a display of gift bags beside the spirits display so that customers coming in for a last-minute gift can pick them up straight away,” says Donna. “It doesn’t take up much space, but it’s another item in the basket for no work at all.”

Cheers for beers

Besides the gifting and premium aspect of the festive season, other areas of alcohol also need care and attention. Conviviality’s Cain says retailers shouldn’t overlook beers and ales. “Retailers should make room for Christmas ales,” he says. “Last year the Marstons 6x500ml pack of Christmas ales was one of our biggest sellers in the beer and cider category.”

Adam agrees that multipacks come into their own at Christmas. “People have a bit more time off so they’re getting the beers in for the holidays,” he says. “Four-packs of beers still do well at Christmas with some people buying them as gifts, but the larger packs are big sellers so we always put more of them on display.”

Saki also goes big on beers and ciders come the festive season. “We’ll have plenty of promotions in beer and cider because customers will be attending lots of parties and drinking at home more over Christmas and want to pick up what they need to do that.”

There’s also a chance to cross-merchandise. “Complementary products, including crisps, nuts and chocolates, should be merchandised close to key sellers in the beer and cider category,” adds Cain.

The cider category has seen some new entrants of late and may be one area retailers need to pay close attention to come the festive season. Kopparberg customer marketing manager Ben Turner says it’s the perfect time to re-evaluate cider. He explains: “Ensuring incremental space for cider, whether that’s in fridges or on stacks, will help drive sales,” he says. “Multipacks are increasingly successful in the convenience channel and Kopparberg accounts for more than 90% of fruit multipack sales.”

Debs Carter, SHS Drinks marketing director of alcohol, agrees there’s a big opportunity for cider come December. “Christmas and New Year is the second biggest peak for cider sales after the summer, and what both of these periods have in common is the fact that consumers socialise more at these times of the year,” she says.

She adds that retailers have the opportunity to experiment with products more at this time of year, too. “Heritage ciders are having a positive impact on the category both in terms of performance and building a more premium image for cider. Value sales of heritage ciders have grown by 22% over the past two years, but they may not be getting the shelf space they deserve.”

Carter recommends that 45% of cider space should be allocated to glass bottles, 35% to cans, and the other 20% to PETs, and that the brands should vary where possible.

“The brand mix should focus on premium, heritage and mainstream brands, which will add interest to the fixture, offer consumers wider choice and appeal to a wider audience.”