Pernod Ricard UK predicts consumer trends accelerated by lockdown will continue driving wine and spirits growth this Christmas

Christmas 2020 is set to be a little different this year for the Off-Trade, with the On-Trade operating at reduced capacity, as well as social-distancing and health and safety measures impacting shopping behaviour. The COVID-19 pandemic has accelerated consumer trends that were already starting to emerge and Pernod Ricard UK (PRUK) is supporting the grocery channel adapt to this ‘new normal’ by focusing on three key opportunities for growth within wine and spirits:

• Cocktails at home – 43% of consumers claim to have attempted making the perfect cocktail during lockdown[1], as the complete closure of the On-Trade reduced options to enjoy convivial moments out of home 
• eCommerce – now accounts for 10.2% of the total grocery market, up from 7.4% before the pandemic[2], as consumers reduced frequency of trips to physical stores during lockdown
• Winning categories this Christmas – Gin, Vodka, Whiskey and Wine

Festive at-home cocktail occasions

Cancelled holidays and On-Trade closures during lockdown encouraged consumers to find new drinking occasions to enjoy through virtual cocktail hours, experimenting with serves with a slight bias towards cocktails with fewer ingredients that were easier to make – and this trend is predicted to continue through to Christmas. As a result, the UK’s favourite confinement cocktails differed from those they would typically be able to enjoy in the On-Trade with the Piña Colada rising to number two¹, helping Malibu achieve +79% volume and +86% value growth in the Off-Trade⁸. Espresso Martinis have also been a Top 10 favourite[3], with more shoppers adding Absolut, Kahlúa and Filter Coffee to their baskets during the 12 weeks of lockdown[4]. This trend is only set to continue, due to the On-Trade experiencing a phased recovery and 46% of 19-34-year-olds saying they would make cocktails at home this Christmas[5]. This Christmas, more than one-fifth of shoppers will be making cocktails at home and 82% of those who said they made cocktails at home last year plan to make the same amount if not more this year[6].

eCommerce opportunity

Reduced frequency of trips to physical stores forced consumers to adopt technology during the lockdown period, which led to a boom in online sales, with 40% more households buying online versus last year and over 65s representing 32.6% of the spend (+168%)[7]. In 2019, 51% of all festive hosts sought inspiration for their festive mixed drinks or cocktails and independent research conducted by PRUK revealed grocer.com sites rank higher than Facebook, Instagram or Pinterest in terms of where consumers go for recipe inspiration⁹.

PRUK’s eBusiness performance is growing ahead of market at +71.4% (vs. market growth at 41.2)[8] and the company is increasing its investment in digital assets for grocery platforms and social media. Continuing the success of virtual experiences offered during lockdown, during which PRUK engaged with over 3,000 consumers through online masterclasses, the company is once again offering online masterclasses hosted by the company’s newly formed Experiential and Consumer Activation team. Masterclasses will run from mid-November until the end of the year on grocer.com websites and consumers will also be directed to a bespoke online hub via the company’s social media activity, which will serve to educate over 15,000 consumers on how to make great cocktails over the festive period. A key element is a significant investment in the social media platform Pinterest, which has inspiration at its heart and will be used to direct consumers to the online masterclasses.

Winning categories this Christmas: Gin, Vodka, Whiskey and Wine

Gifting and hosting were the main reasons shoppers traded up to premium spirits at Christmas last year, with hosting accounting for 56% of all spirits occasions in December and 48% of people buying alcohol as a gift[9]. COVID-19 has impacted these predictions, however, hosting and gifting will remain the key alcohol occasions. Gifting purchases are likely to become more heavily biased towards online purchases, as consumers look to gift directly to friends and family observing social distancing measures[10].

Gin, Vodka, Irish Whiskey and Wine have always been important categories for both hosting and gifting at Christmas, however, growth has accelerated in these sectors in 2020 and are the four key categories that have seen exponential growth during the lockdown period.  

• Gin has been remarkably resilient during the COVID-19 crisis (Off-Trade) and has seen continued double-digit growth for the past 12 weeks, accelerating +38.4% vs. MAT +12.1%. PRUK has the most extensive Gin portfolio and has consistently performed ahead of the category (+64% vs. +12.1% value). The Gin category is also booming in eCommerce since the beginning of the COVID-19 crisis, showing triple-digit growth in the last 12 weeks (AC Nielsen ending 12.07.20). Beefeater is growing +99.5% in value and 96.5% in the Off-Trade and Plymouth is back in growth in the Off-Trade (+9.7% value sales) and during the lockdown period experienced double-digit value growth (+33.6%), driven by its strong presence in the off-trade and eCommerce acceleration. Since acquisition in June 2019, MALFY is seeing outstanding performance in the Off-Trade, growing +21.5% in value[11]
• Vodka is now the second biggest value contributor in Total Spirits after flavoured Gin, worth £45.9m in value sales. Absolut holds the majority of Premium+ Vodka category sales and is experiencing strong Off-Trade value growth momentum (+18.3%). Absolut continues to hold the majority Premium+ Vodka Off-Trade sales with the value share growing +57%¹¹
• Irish Whiskey is the second-fastest-growing category behind Gin with Jameson leading its remarkable growth. Jameson is the UK’s #1 Irish Whiskey brand and is seeing a significant performance in the Off-Trade (+22.1% value), and growing seven times faster than Total Whisky (+3.1%). PRUK is offering Jameson Caskmates Stout Edition in a gift box for the second year running after the box drove a 20% increase in rate of sale in 2019¹¹
• Wine momentum is building as more consumers enjoyed wine at home, as opposed to in pubs and bars, during the COVID-19 crisis and the Off-Trade has seen +27% value growth and +22% volume growth (MAT to 26.06.20). PRUK is ramping up investment in this category and can claim the #1 red wine and #2 white wine in the UK with Campo Viejo and Brancott Estate respectively. The company is also continuing to add value to the market through the average bottle price being over £1 the market value (£7.23 vs £6.07)¹¹

Chris Shead, Off-Trade Channel Director at Pernod Ricard UK, comments: “Lockdown has altered consumer shopping habits and one of the biggest changes we have seen within wine and spirits has been the shift in consumer spend to the Off-Trade and eCommerce. eCommerce usage has accelerated and as a result, what we expected to achieve as a business by 2024 has already been achieved in the three months of lockdown and we want to ensure our customers are ready to capitalise on this trend ahead of the festive period. With social distancing measures likely to still be in place, we’re predicting the Christmas purchasing period will happen earlier, with shoppers planning ahead of time to minimise time spent in store. Our mission this year is to inspire consumers with easy to create cocktail recipes and provide them with the knowledge to confidently select cocktail ingredients either in-store or online.”