Christmas Alcohol: Premium offer

Christmas: the most wonderful time of the year. With total alcohol sales reaching £4.1bn during the festive season and showing a 2% growth, there are plenty of retailers who agree. It’s certainly special if your alcohol offering is up to scratch, meeting the needs of customers who are time-poor and ready to spend big on last-minute premium gifts.

Faith Holland, category development manager RTM & convenience at Diageo, believes that convenience stores needn’t be just about value or cheaper brands at Christmas, and that retailers should embrace premium, especially within spirits. Within the convenience channel, the spirits sub-category saw a 2% drop in sales in the 12 months to April 27, 2013 (Nielsen). However, with just 1.2% of shoppers currently buying spirits, there is a significant opportunity to grow sales.

“Our main focus for Christmas 2013 in the UK convenience and independent channel is premiumisation, as well as driving innovation and excitement into the alcohol category,” she says. “Premium spirits are selling well in the off trade, with an increase of 10% in value sales year on year. They are a must-stock for retailers during the festive season, when consumers are willing to spend more on higher quality spirits for nights in at home, as well as gifting.”

To help retailers provide gifting options, Diageo has unveiled Smirnoff Gold with a hint of natural cinnamon flavouring and garnished with edible 23-carat gold leaf Baileys Chocolat Luxe, which is being supported by a £7m marketing campaign that includes TV advertising, sampling and in-store activation and premium vodka brand Cîroc, which is being marketed as a trading-up brand.

Diageo isn’t the only brand to focus on gifting this Christmas. First Drinks head of category management Roy Summers says that gifting certainly provides an opportunity to grow spirits sales. “Gifting remains a key driver of spirits during the festive season, particularly in the convenience sector where 19% of spirits are given as gifts,” he says. “Malt whisky and blended whisky are two of the three most popular spirits gifts in this channel, and as nearly 50% of all malt whisky is purchased as a gift, Glenfiddich offers the perfect gifting solution.”

Summers recommends stocking gift packs including the three x 5cl Glenfiddich range, which includes 12-, 15- and 18-year-old miniatures.

Dan Reuby, customer marketing director for Pernod Ricard UK, is also keen to persuade retailers of the benefits of stocking gift packs. “Within the off trade, consumers say that spirits make an ideal gift at Christmas,” he says. “Traditionally, the spirits gifting market has been focused around the stocking filler 70cl, or miniatures pack. This year, however, consumers are asking for more premium and larger gift packs ones that could potentially act as a main gift, priced at about £25-plus. Stocking a larger and more diverse selection of gift packs offers retailers a clear profit opportunity,”

To help store owners join in the Christmas gifting season, Pernod Ricard recently added a range of gifting options including an Absolut five-bottle pack (rrp £12) a tinned bottle of its Chivas Regal 12-year-old Scotch whisky (rrp £27.49) a three-pack of Glenlivet Scotch whisky, which includes a 12-, 15- and an 18-year-old blend (rrp £35) and a Glenlivet luxury pack including a 70cl bottle of its 12-year-old Scotch and two branded tumblers (rrp £32).

Reuby points out that retailers need to get their timings right in order to capitalise. “Timings are critical during the Christmas season,” he says. “Consumers actually begin to plan their festive purchases as early as October so we would recommend that retailers start planning early to ensure they are ready to capitalise on all sales opportunities.”

As well as getting the stock out on show, retailers should also get out the Christmas decorations. “When asked about an ideal shopping environment, consumers indicated that they wanted Christmas to be brought to life as much as possible in the wines and spirits aisle, and that this would put them in a good mood to shop, browse and spend. We would recommend that convenience retailers take time to bring the Christmas spirit into their stores, whether that be through decorations or music,” says Reuby.

He adds: “Consumers are also looking to retailers to inspire and educate them at point of purchase over the festive period as they look to treat themselves and their families at this key trading time.”

Size matters

When it comes to selling spirits, the bigger bottles don’t always equate to bigger sales, and it’s worth reviewing your range to consider how smaller fractional sizes may fit in. Earlier this year, First Drinks unveiled its ‘How Convenient’ strategy, which revealed that one in four spirit sales in convenience is a 35cl bottle. To help retailers capitalise on this, First Drinks increased its range in this size format to cover all sub-categories within spirits, and launched a pricemarked 35cl pack of Grant’s Family Reserve Scotch to the convenience channel.

Ali Brown, business sector controller - impulse, retail and off trade wholesale at Maxxium, agrees that bigger doesn’t always mean better. “Fractionals are currently demonstrating healthy volume growth and account for approximately 30% of spirits sold in the convenience channel compared with 14% across the total off-trade market. This is projected to continue as they meet the needs of shoppers reluctant to commit to higher unit prices in their basket.”

She predicts, though, that customers are likely to get a little more adventurous over the festive period. “Consumers broaden their drinks repertoire during the Christmas season and premium spirits see greater uplifts as consumers are more likely to trade up to something special,” says Brown. “Impulse purchases of spirits play an important role and retailers can capitalise on this by stocking a good range of well-known brands, and ensuring these are visible and clearly priced.”

Holland points out that Christmas often means there might be customers new to you, and this is an opportunity to create a good impression. “Christmas is a time when consumers are actively looking to spend money and will not necessarily shop at the same store that they would normally,” she says. “This is a great opportunity for retailers to maximise sales and encourage new business - therefore, it is vital for them to showcase their alcohol offering by keeping their display fully stocked at all times.”

She adds that customers have higher expectations of convenience stores, especially when it comes to alcohol at Christmas, and want to recreate the bar experience in their own homes. “Consumers are looking for the perfect serve in their own home, especially during the festive season when in-home entertaining becomes more of a focus. For example, retailers should encourage the sale of Smirnoff Gold, with apple juice and lemonade, as well as Espresso Smirnoff with cola,” she says. “By offering the ‘finished drink’ solutions retailers can inspire consumers into trying something new, and capitalise on additional purchases.”

WKD marketing director Debs Carter agrees customers demand more and retailers need to step up if they want to survive. “Consumers nowadays have so much choice that they want to see the top brands available and in stock in convenience stores,” she says. “Signage and POS are key consumers are busy in the run-up to Christmas so make it easy for them to find what they want. Clear pricing is also essential shoppers avoid items that aren’t clearly priced.”

She believes the key to success is in finding the right balance when it comes to stocking seasonal alcohol products. “The main thing is not to get stuck with stock which looks great on December 24th, but tired and unwanted on the 26th. It’s best to stick with the bigger, successful brands.”

Cider times

It’s not only in spirits that consumers expect a wide choice. The cider market is growing strong and customers are keen to find quality ciders that refresh them.

Ian Lewis, head of marketing at Westons Cider, says that the cider and perry market was buoyed by a value growth in premium, if not necessarily in volume. “During the Christmas period last year the cider and perry market in the independent sector saw a moderate growth with an increase in value of 8.54% and volume 3.8% year on year (IRI value and volume for the four weeks ending January 5, 2013).

“As with the total cider and perry market the traditional premium category saw a slight growth in value of 2.01% during last year’s festive period, however there was a decline in volume of -9.26% (IRI value four weeks ending January 5, 2013),” he adds. “Our star performer in the off trade, Henry Westons Vintage, grew ahead of both the traditional premium category and total cider and perry market, with growth in value of 32.09% and volume 25.64%.”

Amanda Grabham, head of brand marketing at Merrydown, says retailers should take a look at their competition when it comes to stocking cider and aim to offer as broad a range as possible. “When it comes to cider, consumers have different requirements so offer a broad range of brands and pack formats. It’s worth noting that multiple grocers increased the amount of display space devoted to cider by 22% last Christmas.”

She says the brand mix should focus on premium, heritage and mainstream brands, and recommends offering a choice of pack formats, too, as bottles and cans appeal to different consumers. “When selecting your cider range, don’t underestimate the role and importance of heritage brands which includes Merrydown, Westons, Thatchers and Aspall. Heritage cider is particularly popular with the over-35 age group, which accounts for almost two-thirds of cider consumption.”

Grabham adds that the rising cost of fuel may inadvertently help c-store owners. “Because of the high cost of petrol, research shows that more than a third (38%) of shoppers are planning to use their car less often, and it could have a long-term impact on how people continue to shop in the future, with 28% of shoppers saying that even if or when the economic climate does improve they still plan to continue using their car less,” she explains. “As a result, more consumers are purchasing alcohol from their local off licence or convenience store, and they have higher expectations and requirements. To maximise the potential we suggest independent retailers review their alcohol range in the lead up to the festive season, and use POS and off-shelf displays to create more visibility for what the store has to offer.”

Grabham says retailers need to be ready to cope with the potential of a very busy Christmas. “The two weeks prior to Christmas Day are always the busiest weeks for alcohol sales, with sales peaking the week before. But the day of the week on which Christmas Day falls does have quite a big impact. This year, Christmas Day falls on a Wednesday, so the sales surge is likely to swell between the Friday and Christmas Eve on the Tuesday. Plus, with there being a weekend falling between Christmas and New Year’s Eve, we’d expect trade to be a little more buoyant as consumers are likely to extend their socialising over the mid-festivities weekend as well as at Christmas and New Year, so it should be a bit of a triple-whammy.”

Wine time

Wine is a popular choice over the festive season, and with the sub-category achieving £1.4bn of sales throughout Christmas last year, outselling spirits, it’s vital retailers get it right. For retailers struggling to make the best of the wine category, Julie Ingham, marketing manager at Continental Wine and Food, advises them to consider how customers will be using the product.

“Think about the type of meals that your customers will be making at home to have with these wines,” she says. “Which wines will work best with the winter favourites? As your customers look to create more warming dishes using the best of the season’s ingredients, their choice of wine list will change. Focus on the autumn and winter red wines to accompany roasted meats, game dishes and casseroles.”

One way to help ensure your customers’ Christmas parties go with a bang is to have a sparkling wine offering. According to Freixenet managing director Damian Clarke, it’s a sub-category showing tremendous growth potential. “Sparkling wine is the only BWS sub-sector to be showing growth at a total trade level in the past 12 months,” he says. “Sparkling wine already represents almost 7% of total wine sales, but is showing incredible growth of 10% year on year (Nielsen) at a time when many other sub-sectors are showing decline.”

He says that customers want value without compromising on quality. “Shoppers are looking for great value during the festive season sparkling wine is well placed to deliver this. For retailers wanting to create new sales opportunities, sparkling wine - and Freixenet in particular - provides the perfect solution for shoppers who want a quality brand they know and trust, but at a price point which is more accessible to them.”

Ingham is also confident that sparkling wines will be in demand this Christmas season. “Sparkling wines are likely to be very popular this Christmas as consumers look set to party,” she says. “Building on the success of recent months we anticipate that the demand for Prosecco will be huge. It is partly a matter of price, but the success of Prosecco is also due to the appeal of the wines. Remember, a good, well-made Prosecco is much more pleasant than a cheap discounted Champagne. Prosecco has a soft fruity character which makes it very easy to drink and which many consumers prefer to the aggressive acidity to be found in bargain-basement Champagnes.”

He advises retailers to get their offering ready as early as October to take advantage of repeat purchases. “October to December is a critical period for convenience retailers to maximise their sales and the impulse nature of shoppers,” says Clarke. “The frequency of social occasions over November and December increases dramatically and shoppers regularly use c-stores to purchase alcohol.

“Within convenience the critical time for sales is from mid-November when the party season really starts to get going,” he adds. “Shoppers around this time are looking to make planned and impulse purchases for small social gatherings with friends, or extending the party following drinks after work. Up until the end of December, shoppers regularly use convenience stores for topping-up over the Bank Holiday periods and therefore retailers can make sure they maximise the opportunity by maintaining availability throughout the season and into the New Year.”