Premium is the buzzword this Christmas, says Pernod Ricard UK
The biggest money-spinning opportunity this Christmas is wines in the £6.50 to £8.50 price bracket and spirits costing £14 to £21.
That's according to Pernod Ricard UK, who today revealed its festive plans for 2012 as it urged restaurateurs and retailers to start thinking about stocking up.
The buzzword this Christmas is "premium", the drinks giant said, with significant financial gains to be made for any business that gets its top-end offering right.
"One of the strongest opportunities lies in accelerating the existing trends of premium wine," said Chris Shead, Pernod's commercial director, who revealed 25% of off-trade value sales during Christmas come from wines costing £6.50 or more.
Shoppers are willing to spend £3 to £5 more on wine during Christmas, he added, however, with the average price of wine increasing by only 33p "retailers are missing a huge opportunity to trade up".
Against a declining market, premium wine (priced £6.50-£8.50) is experiencing both double-digit volume (up 21.5%) and value (up 22%) growth. This is in contrast to upper-mass wines (£5-£6.50), which are growing through less profitable levels of price promotion – driving a decrease in average price for retailers, according to Pernod.
"We know that nearly 60% of wine shoppers are willing to purchase premium wines," added Chris Ellis, commercial director for wine. "Retailers should be inspired by this as premium wine (on average) returns a retail sales value of £2.69 more per bottle – it's a profitable and an easy-win opportunity for retailers dedicated to getting their offering right."
Ellis advised retailers to "focus on regional brands and capitalise on emerging trends through premium offerings", while also pushing food-matching tips and flavour profiles.
In off-trade premium spirits, value sales have grown 7.5% and volume by 1% in the last year (Nielsen, year to July 21), ahead of standard spirits which have seen 4.8% value growth and 0.8% declines in volume.
In the take-home sector, spirits account for 25% of market share by value, but in the final week before December 25, this figure increases to 33%, Pernod added. Put another way, £1 in every £5 was spent on spirits in 2011. During Christmas this increases to £1 in every £4 and in the final weeks before Christmas it grows even more to £1 in every £3.
In the off-trade the drinks giant added it was putting significant efforts into boosting the 35cl category, with the launch of a smaller bottle for Havana Club, bringing the 35cl range up to eight SKUs. The strategic decision to focus on 35cl comes after research showed 37% of shoppers would be encouraged to try other spirits if smaller formats were available.
While Pernod Ricard added that in general 50cl bottles are at risk of "cannibalising" 70cl sales, and therefore isn't a key focus going forward, the company said it is working on a 50cl format for Absolut.
Sparkling wine is another big opportunity for the off-trade, Ellis said, and should be stocked in the seasonal fixture. When it comes to Champagne, 40% of all sales occur at Christmas, and within this, 30% of consumers exclusively buy Champagne at Christmas.
Premium spirits are growing by 3.5% in volume and 13.5% in value – this is in contrast to standard spirits, which are experiencing a volume decline of 2.7% and a slower growth of 4.7% in value.
Premium spirits now account for 39% of all spirit value sales – well over £1 in every £3 spent on spirits, according to Ian Peart, on-trade channel director for spirits, who said he expects to see an estimated 400,000 incremental spirit consumers buy into the category this festive season. The majority of these drinkers fall into the ABC1 catgeory and, on average, spend per occasion goes up to £25.67 from £23.93 per person.
While whisky and vodka sales accelerate at Christmas, liqueurs and cocktails also turn in strong performances, particularly being bought by people who are infrequent drinkers in the on-trade. Promoting the aperitif and digestif occasion is also a key opportunity.
In the on-trade more consumers classed in the C1 category tend to drink wine. Red and rosé wine tends to be drunk by infrequent drinkers and there are around 650,000 additional shoppers in the wine category in December.
Time is right
Pernod advised retailers and restaurateurs to start thinking about stocking up on their festive offerings in October as that's when the consumer begins to buy alcohol for the festive season.
In November, ranging decisions should be based around pushing the "party occasion", especially with an eye to premium brands and promoting indulgence should be Decemeber's priority.
In the vast majority of cases, premium sales are made in the two weeks leading up to Christmas, it added.
News just in
Pernod Ricard UK revealed Jacob's Creek will be sponsoring the Jonathan Ross Show, starting this Saturday with a host of special Olympic guests. The sponsorship will include break-bumper ads and is expected to reach 3.4 million viewers. Facebook activity will give consumers a chance to win tickets to the show.
Pernod told Harpers it maintained volume and gained £4 million over last Christmas and commanded the highest average price for 70cl.
Don't forget to check out tomorrow's update for all the news on Pernod's Christmas marketing campaigns for 2012 and to find out more about the latest limited edition launches, ad campaign details and gift roll-outs.