Spirits of Christmas

If your customers purchase only one bottle of spirits this year, chances are it will be in November or December as they stock up for the party season. And with the Christmas and New Year celebrations already in their thoughts, now’s the time to turn your attention to this most seasonal of sectors.

Beers, wines and spirits is the leading category at Christmas, worth £3.5bn in the 12 weeks to the big day last year, of which £1.5bn went through the tills in the off trade in the last four weeks alone. Spirits account for £900m of this (ACNielsen), pipped only by light wine as the nation’s celebration drink of choice.

Maxxium UK off trade marketing manager Sian Baxter quotes a recent BBC survey which ranked alcohol as the No.3 Christmas essential behind turkey and cranberry sauce. “With 30% of retailers’ annual spirits turnover generated over the November/December period alone, planning cannot start a moment too soon,” she says. “Consumers spend half their annual budget on spirits during the festive season with almost a quarter of the UK population still shopping for alcohol, both for themselves and for gifts, on Christmas Eve.”

Diageo Great Britain sales director David Smith says that last Christmas spirits exceeded all expectations with £28m incremental growth over the period, and predicts that this year will be even better. “We believe there is the possibility of £37m-worth of extra value this festive season,” he says.

Pernod Ricard UK’s customer development director Dan Reuby says there’s one thing retailers absolutely must get right in coming weeks. “Availability is the most obvious and yet critical component for success at Christmas. We know that if shoppers cannot find their preferred brand, 46% will not buy a different brand or variant,” he says. As many as 11% of spirits shoppers say they would leave the store to buy elsewhere if their preferred brand wasn’t available, so keep products visible and in stock – any out-of-stocks will lose valuable custom.”

Diageo’s Smith points out that the 50% of spirits buyers who only enter the category on one or two occasions each year pick the most popular brands. “Christmas is one occasion when people want to be reassured they are buying quality products they can be proud to serve to guests or to give as a gift,” he says.

That view is supported by Reuby. “The key to retailer success this Christmas is to stock well-established and popular brands, since these resonate most strongly with consumers at a time when they are looking to purchase a range of quality drinks,” he says.

He also expects that, despite the drop in disposable incomes over the course of this year, consumers will trade up for affordable treats, which remain a huge opportunity for c-stores. “This is particularly apparent for cognac,” he explains. “The category is in 4% value growth, but premium cognac is growing at 13% and super-premium at 22%. The same trend is also being seen across gin, vodka, malt whisky and golden rum.”

Adds Reuby: “Consumers are not always seeking the lowest price product at a time when they are celebrating with friends and family.”

Maxxium’s Baxter makes the case for promoting spirits above wines and beers. “Seven of the top 20 alcohol brands at this time of year are spirits and, on average, a store at Christmas will display almost twice as many spirits brands compared with either beers or wines,” she says. “Eye-catching, organised displays can encourage customers to try or consider something new this year.” She suggests positioning mixers next to spirits to encourage cross-purchasing.

In terms of promotions, it’s a case of balancing an enticing offer with reasonable value, and here Diageo’s Smith advises convenience retailers to concentrate on single bottles of spirits, which saw 4.3% growth last year. “Around half of spirits shoppers choose lighter spirits and are unwilling to spend more than £20 in a single transaction,” he says.

“This year we are again recommending retailers focus on a single-bottle promotion; that’s 70cl for convenience stores.”

Present and correct

Perhaps the biggest opportunity however is in gifting, with spirits not only being one of the most common Christmas presents, but also the perfect fall back for the tricky-to-buy-for friend or relative, and the ultimate safe bet as a last-minute present.

“Alcohol is the leading gifting category by volume in grocery – making up 65% of all gifts bought,” says Smith (TNS Gifttrack December 2007). “Spirits account for more than half of this and should correspondingly be given extra display and focus in your store.”

And let’s not overlook one more vital ingredient in the sales mix: the excitement of Christmas itself. “Our research has shown that shoppers are still carrying out their regular routine shops until December when they actively start looking for Christmas purchases,” says Smith. “Therefore, before December there is a fantastic opportunity for retailers to encourage early spirits purchases by creating some excitement to entice shoppers out of their routine shop mode.”