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Beam bucks trend of declining spirits

Published:  23 July, 2008

Beam Global, whose brands include Courvoisier Cognac, Harveys Sherry and Cockburn's Port, has reported growth of more than 10% by value, despite almost every category being in decline in the UK.

The company, the UK spirits and wine arm of Fortune Brands (which also has a home and hardware division, and a golf division), saw growth of 10.6% by value and 3.4% by volume (AC Nielsen trade audit to November 2006). In the same period Diageo fell 4.7% by volume and 0.7% by value; Pernod Ricard dropped 4.6% by volume and 1.2% by value; and Bacardi Martini declined by 3.2% and 0.2% respectively.

Beam gave a presentation in central London last week which showed that the UK spirits market is declining across the board, with only tequila and vodka showing modest growth. Overall, the spirits sector is down 1.6% by volume (AC Nielsen MAT to week ending 30 December 2006), blended whisky is down 4.3%, gin and rum have dropped by 2.7% and malt whisky has fallen by 2%. Tequila (+3.1%) and vodka (1.3%) were the only two spirits in growth.

Despite the slump in volume, the statistics in on-trade value terms are a little better, and while static, several categories are showing growth, including tequila (4.8%), liqueurs (3.8%), malt whisky (2.7%) and vodka (2.1%). But the off-trade by value scenario remains bleak, with only imported whisky (3.9%) and vodka (3%) showing positive growth.

The fortified wine sector is in an even worse state, with virtually every category in decline in both the off- and the on-trade, both by volume and by value. In total, the sector is down 6.7% by volume. Port is down 3.1%, Sherry has fallen 7.8% and vermouth has dropped by 5.2%.

The only categories showing growth are in the on-trade by value: aperitifs (9.1%); Port (0.3%); and Sherry (0.1%).

The one bright spot over the past year has been the average price per litre of spirits in the UK on-trade, although the average rise of 2% is barely keeping up with inflation. In the off-trade, the average per-litre price is 13.80, the same as the previous year.

Beam UK also announced that it will be investing 36 million in its core brands in 2007, and that this amount includes a 46% increase in strategic brand-building investment'. Also on the agenda in 2007 is a huge study' into consumer psychology and shopping behaviour, focusing on the beer, wine and spirit aisles in major multiples and smaller stores.