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Premium spirits up 11% in on and off-trades

Published:  22 July, 2011

Premium spirits have grown by 11% in value in the on and off-trades in the past year, according to a new report carried out for First Drinks.

Premium spirits have grown by 11% in value in the on and off-trades in the past year, according to a new report carried out for First Drinks.

Research compiled by Nielsen and CGA Stratey for the group's first market report, showed the premium spirits category ? defined as those priced at over £20 per 70cl bottle ?  is currently worth £202 million in the off-trade and £234 million in the on-trade.

In addition, the spirits market overall is worth £7.7 billion in the UK, up 5%, and over 60% of households buy spirits and spend an average of £175 per year on them.

Managing director Chris Mason said the firm had grown to be the number one player in the off-trade premium sprits sector accounting for one quarter of market share. Mason said the firm has also moved to become number two spirits supplier to the grocery channel, with a 9.5% share of the market.

Cocktails are a key driver of the category, the number of outlets selling them has grown by 36%.

Sales director John Hyman said that gifting was a key part of the firm's strategy ? it already offers gift packs fro Christmas and Father's Day but is now working on making gifts more of a year-round activity to tap into birthdays. He said it was a "big growth opportunity" and plans to develop a full range at between £10 and £30.

Hyman also predicted that smaller formats, especially 50 cl, will be come more important in the next five to ten years at the expense of the one litre bottle, because of increasing taxes and the "pure cash outlay" customers will face on bigger bottles.

Other findings included the switch from on-premise to the take home experience - the off-trade now accounts for 80% of spirit volume sales, but consumers are spending more when they go out. It predicted that special occasions will continue to be crucial for the on-trade ? First Drinks sales were boosted 13% by the royal wedding. It also identified online spirits shopping as a real growth opportunity ­? just 36% of online shoppers buy beers, wines and spirits  compared to 89% in the general population.

Mason said: "Despite this report being published during a very challenging time for the economy, it clearly demonstrates the continued importance of premiumisation, best practice and working closely with customers. If these key trends are pursued, we can ensure the exciting evolution of the drinks industry."

The launch of the market report comes in a year that the company announced a £55m investment package for its portfolio. Continued heavyweight investment has been confirmed for core brands including Glenfiddich, Grant's, Hendrick's, The Balvenie, Sailor Jerry, Tullamore Dew, Russian Standard, Disaronno, Tia Maria and Cointreau.