White Spirits - Market Report
The main 'white spirits' sold in the UK are vodka, gin, white rum and tequila. In 2004, they had a combined value of £3.53bn, representing just over 40% of the total market for spirits - led by the whiskies - and around 9% of all spending on alcohol by UK consumers.
Although these spirits are grouped together for the convenience of market analysis, their customers are very different. Vodka appeals mainly to younger drinkers (particularly 18 to 24 year-olds) and gin is favoured by the over-45s. Consumers of white rum are spread more broadly across the generations.
It is the youthful appeal of vodka that has inspired growth. As a whole, white spirits grew by 27.5% in market value between 2000 and 2004, led by vodka, followed by white rum, and with gin trailing, but no longer in decline.
Although supermarket sales have increased and own-label ranges have developed, distribution of these spirits is still dominated by the on-trade (public houses and clubs), which maintains profitability for the distillers and reinforces the importance of brands. By market value, the on-trade takes 70.5% of vodka sales, 65.8% of the gin market, and 77.3% of white rum sales.
Each sector is very much dominated by a single brand taking well over half of sales: Smirnoff vodka, Gordon's gin, Bacardi white rum and Jose Cuervo tequila. Both Smirnoff and Gordon's are owned by the UK-based Diageo, the world's largest spirits company, which also distributes Jose Cuervo. Bacardi-Martini, based in the Bahamas, has white rum as its main product, but has made acquisitions to broaden its portfolio, including Bombay Sapphire gin.
Patterns of drinking among young adults tend to change with fashion, and the current decline of the ready-to-drink (RTD) spirits, or 'alcopops' is part of this. The market is led by Smirnoff Ice and Bacardi Breezer, but drinkers moving away from alcopops are turning towards pure spirits, including the original vodka and rum brands, as well as an interest in cocktails.
Prospects for the next few years are fairly optimistic for white spirits. The main challenge is likely to come from anti-alcohol legislation, including restrictions on drinks promotions and possibly a future advertising ban
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