Recent growth in spirits has been driven by fractionals and premium lines, while PMPs continue to help retailers illustrate value, and with major suppliers investing more in programmes to fuel growth in independents, this year could be your best opportunity yet to grow spirits sales.
by Émer O’Toole
Growing almost twice as fast as the overall alcohol category, the spirits market remains a key driver for boosting basket spend. With the growth of price marked packs, premium products breaking into mainstream off-trade and fractionals, it is a category constantly evolving.
So what can retailers do to keep up with this changing category? According to research by him!, over the last three years, consumers have increased their spending in convenience by 13%, topping up their baskets with unplanned, last minute purchases. Spirits can play a major role in this – being housed at the tillpoint, they are in a highly visible part of the store and so driving impulse sales in a high value category with good margins makes sense on every conceivable level. And spirits are in increasing demand.
Patricia Mota, Category Development Manager and head of My Store Matters, Diageo GB, said that retailers “can’t underestimate the appetite for spirits” and pointed out that there are 10 million spirit searches on Google every month across Western Europe.
Know Your Store, Maxxium’s retailer guide for the convenience sector, revealed that spirits shoppers spend more time and money in convenience stores, spending on average over £10 more than other shoppers.
Also, research carried out by Bacardi Brown Forman Spirits with a key customer revealed that 92% of new shoppers buying its new spiced rum, Bacardí Carta Fuego, were completely new to the rum category.
Bringing them out
In recent years there has been a drive to bring best-selling spirits from behind the counter to the shop floor to raise impulse sales in particular. This will allow consumers to browse without a counter preventing them from handling the products, or a queue of impatient customers affecting their decision time. Shoppers will be looking for convenience so cross merchandise mixers next to spirits to bump up that basket spend. In terms of pack sizes, the surge of popularity of fractionals makes it increasingly important for independent retailers to ensure their fixture reflects demand. 70cl is still the key pack size that shoppers buy, but retailers also need to stock fractionals such as 35cl SKUs to appeal to those on a top-up mission with lower anticipated basket spend.
Since 54% of spirits bottles sold in convenience are smaller than 70cl, retailers have responded to the demands of the convenience shopper and have capitalised on key trends in this area. For instance, The Famous Grouse is now available in 35cl and 20cl four pack cases.
Price-marked packs continue to be a major draw in the category. Remember, as many as 53% of consumers are more likely to try a new product if it is sold in a PMP, so it could be the difference between an extra £10-15 spend. Diageo recommends that retailers stock a wide range of PMP spirits and pay attention to the mission your shoppers are on, for example, ‘something for tonight.’ It also advises stores to include a variety of fractional spirits (50cl, 35cl, 20cl) and to stock PMP premix in the fridge.
The growth of premix spirits has led to an new revenue stream for retailers, but remember, it’s still permissible to merchandise mixers with spirits – so creating a display on the shop floor by bringing a select number of spirits lines out from behind the counter can increase baskert spend.
Lisa Jazwinski, Category Director Rum – Northern Europe for Bacardi, says: “We would recommend allocating space to sales and brand blocking; grouping Bacardi rums together to help signpost the rum category, and educating shoppers on the different styles of white, gold, spiced and dark rum available within the range. Above all, spirits shoppers are essentially looking for great tasting drinks so we highly recommend communicating how easy it is to make rum drinks at home.”
Research from him! last year found that some of the benefits of stocking PMPs are: they sell faster than standard packs, they save time on having to price products, and they are the biggest pricing trend. Another advantage is that shoppers don’t have to ask to see the price, this is more important for spirits than any other category because it is more difficult to see prices, given spirits are generally kept behind the counter. Having a range of PMPs available in your store instils a sense of confidence and trust between you and your shopper, and creates a perception of value.
The increase in the number of premier spirits lines being stocked by independent retailers goes hand in hand with the growth in gifting. It has been shown that 73% of shoppers would buy spirits as gifts from convenience stores, therefore, there is vast opportunities for retailers to increase sales by paying more attention to gifting occasions such as birthdays and Christmas. However, there is key opportunity for gifting all year round as 64% of shoppers would buy spirits as a birthday present.
It is worth noting that in the last four years the number of spirits shoppers grew by 4.5% making it one of the fastest growing categories in convenience stores. Remember to push PMPs, cash in on the smaller pack sizes trend by stocking fractional bottles, and move spirits from behind the counter to the shop floor to improve the customer experience – the key to any successful store.