GIN: The State of the Libation
Gin sales in the UK in 2019 were valued at over £2 billion mark for the first time in the 12 months to March 2019[i]. That is £600 million up on 2017!
How big can the gin bubble be? Will it burst? The truth is no one can say for definite, but we can look closer and see how the Gin market is fragmented into a number of sectors and each has their own micro-climate.
As the gin market has begun to expand the sector has shown two areas where activity is strongest: The entry level and the more discerning sector of the market. The entry level is growing fast due to the increasing number of new and innovative product launches, with such trends as fruit flavoured gin liqueurs and fashion orientated products like Pink Gins. These products are trends and with each passing season they change as the market looks to the next big thing and ‘follow the herd’ of mass social media and marketing hype. This level depends on mass volume and low margins to survive and although it is innovative, it culminates in short lived products that have a seasonal life cycle.
Gin flavours are seen as ‘fashionable’, if not faddish. 2017 saw the rise of rhubarb and in 2018/19 it was Pink Gins[ii]. Chasing the next big thing ignores the underlying trend for more premium, heritage gins: gins with an engaging back story, authenticity, and a superb premium taste.
Quintessential Brands’ CEO Warren Scott notices that the growth is primarily fuelled by flavoured sales to the newbie, millennial drinkers, but underneath the trend for Premium Gin and Ultra-Premium Gin is rising with a loyal following from the seasoned classic dry gin drinkers. This latter trend is set to continue as new consumers to gin find their taste preferences in the more classic styles of gin and also begin to explore the premium craft ranges – this is very true for the 30-55 age group of affluent consumers.
“While innovation is key to driving interest in British gin,
it’s important to recognise the longstanding gin heritage
we have in this country and the enduring appeal of classic gin.”
Warren Scott, CEO Quintessential Brands
This discerning sector is also growing and is recognised as having a far more stable future. It is made up of sophisticated consumers with a higher amount of disposable income who are more concerned with matters of taste, quality, heritage and products that can reflect their more well-informed and polished lifestyle. The quality end of the market is where the higher prices deliver the best profit on margin, but also where the entry level gin market consumers migrate to from the lower entry points and where fashion fades as they become aware of their own place and taste within society.
Marketing activity now focusses on the flavour, serve, heritage and lifestyle positioning. The way we drink has also changed. Pubs and clubs are giving way to dining environments. Socialising is moving from the real to the digital word.
Another factor in the discerning sector, which is totally absent from all the others, is the concept of Premiumisation and Positioning. Once the only spirits that tapped into the consumer desire to be discerning were cognac and whisky, and these would be drunk neat, over ice or with a dash of water. However, their powerful flavour and the lack of a recognisable long serve with a discerning mixer limited the occasions where these products could play. The arrival of super premium mixers, such as Fever-Tree and Franklin & Sons, has opened up the opportunity for a discerning, but refreshing and ‘personalised’ long drink choice using gin as a base. Coupled with gin’s taste and versatility allows it to dominate the cocktail market; the epitome of sophisticated and aspirational cool. Consequently, there is an expansion in the variety of occasions that were previously untapped by traditional discerning spirit categories, e.g. "Gin with Afternoon Tea".
This aspirational market is one that is very important to the quality and higher ends of the gin market. Allied to the rising economic stability; the expansion of the middle-class; the increase in disposable income; and the desire to be seen to circulate in more influential circles, you can see the potential of premium gins with taste and heritage. Gin used to be a standard product with no route to premiumisation. With the rise of craft gins producing smoother, more flavoursome spirits, which are often beautifully packaged, a premium category has emerged.
So far so good! The gin market is as diverse as its customers. Thinking on the ‘bubble bursting’ would mean that the customer base would have deserted us. Possible? Yes. But in reality is this likely? We Scottish gin distillers also have a crucial ally: the Scottish whisky industry. It has a deserved gold standard reputation for creating the most premium and aspirational spirits on the planet. Accordingly, Scottish Gin benefits from this reputation. That is not to say other UK territories do not make great gins; they do. But Scotland just happens to have a respected ally.
Hrafn Gin also has the added unique selling point that it has a heritable link to Scottish Malt: it is made in Scotland, which is perceived as the country with the expertise in making spirits of exceptional world-renowned quality; and it also has a taste profile and journey that echoes malt whisky with a deeper taste; a longer, lingering finish; and a smoothness of spirit. These characteristics even hold true with the addition of tonic!
However, Hrafn Gin also offers you more. It has a range of products, which sits within the more mature and sophisticated premium market. Furthermore, Hrafn Gin has received independent accreditations to verify its 'Statements of Quality' and its ‘Points of Difference.
So there you go, that was a gallop through the Home market. Later, we will fly high and report from overseas...