Trend Spotting: 10 alcohol trends in UK retail to watch in 2018/19

The fast-moving UK drinks retail sector sees fashions come and go at a blistering pace. Here, Edith Hancock highlights the top 10 trends that are hot in the market right now and are likely to have real staying power…

(Photo: William Grant & Sons)

As national treasures go, few are as influential as David Attenborough.

Drinks giant William Grant & Sons recently released its annual market report, the takeaway point of which was that a new type of consumer is on our radar; the activist. During the launch, UK marketing boss Caspar MacRae highlighted the influence of television shows such as Attenborough’s Blue Planet II on consumer interests.

Nowadays, consumers have a “very real level of expectation” that brands should make their products unique and exciting, while also being ethically produced with locally-sourced, environmentally-friendly ingredients. Provenance is no longer something that can be achieved with a few words on the back of a bottle of gin. Now, producers are swapping disposable glass bottles for aluminium cans, lowering the alcoholic contents of their products, celebrating their hometowns and sourcing their ingredients from as close to their production facilities as possible in an effort to cut pollution.

“Consumers want value for money and something that aligns with their ethical and political views, is transparent, and good for them,” says William Grant & Sons’ marketing director Matt Billinghurst. “And they want it fast.” The big supermarkets are bolstering their no- and lower-alcohol drinks offerings, while cans of craft beers and gins listing their ingredients right down to the distillate are cropping up in high street stores such as Majestic Wine and Aldi.

But activist consumers also want excitement. After all, when a generation has to scrape together over £80,000 just to pay the 20% deposit on an the average London flat, consumers would rather spend their money on experiences and enriching their lives as they are.

Pink, orange and even blue gins are appearing in the off-trade, while sales of sparkling wine continue to soar in increasingly decadent formats. We’ve asked industry insiders to predict which of 2018’s trends they believe will stand the test of time.

1. Low and no

Data from a 2017 Nielsen report reveals that the value of non-alcoholic wine in the UK rose by 66% last year, while no-ABV beer showed 37% value growth.

“It’s just another facet of this general movement towards health and wellness,” says Julian Dyer, chief operating officer of Australian Vintage. “People are becoming more aware of the damage excessive drinking can cause.” Thanks to the proliferation of health studies on drinking, one in four adults in the UK have cut down on their alcohol purchases since 2017, according to Mintel.

Devolved governments, too, are cracking down on the production of cheap, high-strength beverages such as white cider. Scotland officially rolled out its Minimum Unit Pricing (MUP) policy in March, while the Welsh Assembly passed its own MUP bill in June.

“We need to recognise there are consumers who want an alcohol-free option,” Dyer says. Beer is leading the pack. Around 1.4m UK households bought low- or no-alcohol beers in the past year, according to a recent report by Kantar Worldpanel, a 57% increase in two years.

Spirits have also seen innovation, with the launch of premium non-alcoholic ‘spirit’ Seedlip, while gin brand Gordon’s released its own ready-made low-ABV drinks this year, styled on a classic G&T. Meanwhile a number of breweries that specialise in lower ABVS (between 1% and 2.5%), such as south London’s Small Beer Co., have launched in the past 12 months.

The UK government is looking into ways to modify the current labelling for low and non-alcoholic drinks, but experts say that, when it comes to beer and spirits, ‘lower’ is the space to watch. “An increasing number of consumers are gravitating towards drinking less, but better,” MacRae says.

2. Ethical wines

One stand-out feature of the wine trade this year has been the raised profile of organic, natural, biodynamic and vegan wines in supermarkets and wholesalers such as Majestic Wine. The Co-op stepped up its vegan wine offering at the start of the year. The supermarket has worked with winemakers around the globe to develop a range of vegan-friendly fining agents used to filter wines and improve the clarity of the final drop, providing an alternative to traditional additives such as egg white or isinglass, which is derived from fish.

“We’re definitely seeing more people ask us about vegan wines,” Esther Pinuaga, head winemaker at Spanish producer Bodegas Pinuaga, says. The reality is that many wines are already vegan, but the rising interest in vegan food has led producers and retailers to use this as a sales tool. Last October Majestic Wine added vegan and vegetarian symbols to its wine labels and on its website, and now boasts 32 vegan-friendly bottles in its portfolio.

Organic wine is also expected to see further growth. These expressions only represent 2.2% of the British wine market, according to a study published at French trade show Millésime Bio, but the category could rise by more than 14% this year. Sales of eco-friendly vino are also up by 36% year-on-year at Waitrose. Pinuaga says the regulations for organic wine in the EU will be updated in the next few years. Asked whether she thinks sales of low-intervention wine in the UK will be affected by Brexit, she says it depends on the trade deal the UK ends up with.

“I hope they aren’t, anyway,” she adds.

3. Rum

Dark spirits are having a moment in the sun, and rum is the flavour of 2018. The WSTA claims that rum sales broke the £1bn mark at the end of March 2017, while retail analyst Mintel said that dark, golden and spiced rum put in a “strong performance” in 2017, with off-trade value sales up by a third, and volumes rising by 27%.

On the other hand, volume sales of white rum fell flat, which analysts put down to an “enduring consumer demand for unique flavours”. WSTA’s figures found that there are now 150 rums in the UK market, compared with just 50 a decade ago. CEO Miles Beale puts the rise in popularity down to an increased consumer interest in craft cocktails.

If dark rum-makers can successfully tap into the craft movement, then sales could rise fast. A recent visit to Laki Kane, a north London tiki bar which opened last month and boasts its own distillery, shows us how rum’s off-trade presence could change in the coming years. Co-founder Georgi Radev said the bar blends its own rum on-site, and hinted that he wanted to bring it to the retail sector within the next few years.

4. Large formats

Magnums continue to grow in the supermarket sector.

Magnums have been making a comeback for a while, with Waitrose reporting a more than 120% boost in sales two years ago, but now smaller formats are growing in stature too.

Tesco launched a range of 37.5cl half bottles and 50cl bottles in store this April, following the lead of Aldi and Waitrose, which launched their own smaller-format wines this year. Among the Tesco wines in the new smaller formats are a New Zealand Sauvignon Blanc, a Valpolicella, a Beaujolais and a Rioja Reserva.

Magnums and half bottles have boomed in supermarkets, thanks to what Dyer calls the UK’s recent “major structural lifestyle changes”. On the whole, people are drinking less, but both Dyer and MacRae say quality is still a crucial concern, so a couple that wants to enjoy a glass of wine with dinner may go for a half bottle over the traditional 75cl measure.

Magnums of Prosecco, Dyer says, are popular for their ability to create a “sense of theatre at a more affordable price point”, and though Brits are drinking an average of one less alcoholic beverage each week (Neilsen), the trend isn’t about to die out just yet.

In June, The Magnum Company, an online retailer specialising in 150cl bottles, was founded by friends George Clements and Edward Harrison, who spotted a gap in the market for an online retailer solely selling magnum formats of quality red, white, rosé, Champagne, Sherry and Port.

5. Ginnovation continues

This was the year that gin blushed. The pink gin category has grown rapidly in recent months, with big players Diageo and Pernod Ricard entering the ring. Over the past eight to 10 months, the gin category has seen high-profile big-brand launches, kicking off with Gordon’s Pink in September 2017. This was followed by Beefeater Pink in February 2018, Tanqueray’s Flor de Sevilla and basil-flavoured O’ndina gin from Campari in April, Tanqueray Lovage in May, and a sour-cherry gin from Italian liqueur giant Luxardo, which is due to be released in the UK later this summer.

“Pink gin has certainly helped to make the gin category more accessible,” MacRae says. “It has visual appeal, and represents fun and spontaneity.” But pink is just the start. Last month discount grocer Aldi launched a gin by Scottish distiller McQueen that changes colour when tonic water is added, from sapphire blue to pale pink.

MacRae says that, judging by the continued success of gin as a whole, there’s still room for further diversification. But he warned that while “further innovation will not succeed in the long term [because it could detract from core brands], we think the category will remain vibrant and growing in the foreseeable future”.

6. Extreme craft

Craft beer and spirits are still booming, but drinkers and retailers alike are keener than ever to make sure what they’re buying is the real deal. Purchases of craft beer across the whole off-trade rose by just over 46% year on year to reach £138 million, according to Kantar Worldpanel. However, craft brewers Beavertown and Lagunitas fell foul of independent store-owners when they sold stakes of their businesses to Heineken.

Like many, south London independent bottle shop Hop, Burns & Black declared it would no longer sell Beavertown products after Heineken bought a minority stake in the company in June. Consumers, Dyer says, enjoy the sense of community that comes with buying a locally brewed beer or distilled gin. William Grant & Sons’ ‘activist consumer’, meanwhile, wants to support local and independent businesses.

To achieve that sense of community, the language of craft is becoming even more localised. When it comes to the craft side of the spirits category, gin is the clear success story. William Grant & Sons revealed that 82 new gin labels entered the UK market in 2017 alone. At the end of last year one new gin, Fifth Spire, distilled by two friends in a bedroom in Litchfield, Staffordshire, won a double gold award at the San Francisco International Spirits Competition. Selfridges Birmingham, started selling it for £40 per bottle at the end of last year.

Retailers are showing a continued and still-growing interest in stocking craft-focused drinks, but as smaller brewers and distillers continue to fill the shelves, major firms must keep their newly acquired brands’ identities clear. Craft producers are becoming smaller, and there’s less room for drinks giants to hide their influence.

7. Hybrid drinks

Hybrid drinks continue to find favour with consumers looking for a unique experience. Glenfiddich matures a range of whiskys in casks previously used for storing IPA beers and ice wines, which are available at retailers like Ocado and Tesco, and breweries large and small have been ageing their beers in whisky barrels.

At the boutique end of the spectrum, English winery Chapel Down, which also owns Curious Brewery, ferments both its cider and lager with yeast left over from producing its Chardonnay and Bacchus wines, both of which are available at the likes of Waitrose and Majestic Wine.

While hybrid drinks are more easily found at independent retailers, the move towards premiumisation in the supermarket sector means that even the big players are getting in on cross-pollination.

“We’re conscious that the ‘Big Four’ shopper is getting just as adventurous with their palates as the high-end shopper,” MacRae says, adding that innovation trends are “being increasingly adopted across different value points”, particularly in spirits.

8. Alternative packaging

Consumers are more time-poor and ethically astute than ever, leading some drinks firms to think outside the bottle when packaging their products.

Reversing the downmarket image of tinnies, around a quarter of all beer sold in the UK last year was in a canned format, making it not only recyclable, but also portable, ideal drinking in the park for those whose budgets can’t quite stretch to the pub every week.

“What we’re learning is things need to be appropriate for the consumer,” Dyer says, adding that the canned movement is being driven by millennials. “They want good packaging, points of difference, and a fair price,” he says. Wine, too, is getting a canned makeover in retail. Waitrose launched its own range of canned wine in June in time for festival season, a move the retailer said was inspired by the 10% rise in sales of its 187ml bottles last year.

9. Sparkling wine

Sparkling wine, in particular Prosecco, continues to blossom in the UK. Industry insiders don’t see that changing any time soon, but with Brexit looming, there could be a small place for English fizz on supermarket shelves. Sales of sparkling wine totalled 35.8 million gallons last year, an increase of 5% compared with 2016, according to chartered accountant UHY Hacker Young.

While it is a boost, it is the first year of single-digit growth since 2011. “Unless the industry can revitalise its image this year, we may now be reaching “peak Prosecco,” said analyst James Simmonds. In the interests of diversification, retailers have bolstered their fizz offerings. This year the WSTA said that exports of Crémant de Loire wine rose by 34% in 2017, with 3.7 million bottles sold.

In December 2017, Tesco predicted that English sparkling wine sales would boom in 2018, explaining why the grocer included an own-label English fizz from Hush Heath winery in its most recent portfolio tasting in May. Marks & Spencer also reported a 15% rise in sales of English fizz last year.

More than 120 million bottles of bubbly, worth upwards of £850 million, were sold in British shops and supermarkets last year, and that figure is predicted to grow. Dyer is optimistic that the bubble has yet to burst, but agreed that further diversification is on the cards. “I really can’t see Prosecco losing ground for a while,” he says, “but I think there is more room for global sparkling wine.”

10. Vermouth

Following the success of rum and gin, the craft cocktails available in UK bars and restaurants are influencing purchases in the off-trade, and both retailers and drinks giants are taking note.

Data from Research & Markets published in June shows that the global vermouth market is estimated to exceed £14 billion by 2021, with Europe, the Middle East and Africa accounting for more than 65% of sales. And when it comes to retailers, established upmarket vendors are seeing rapid growth. Merchant Berry Bros. & Rudd saw 41% growth in sales of the aromatised wine last year.

Tapping into the trend, William Grant & Sons has released a vermouth of its own called ‘Discarded’, a modern, “activist” version of the fortified wine, which marketing director Matt Billinghurst believes is the point of difference the category’s main players will need to focus on in the coming years.

Discarded, he said, “ties into a lot of trends”. It is made by steeping cascara leftover from coffee production in alcohol then blending the infusion into the base of a fortified wine along with other botanicals.

The drinks giant is launching it in the UK on-trade first, but if the ongoing success of premiumisation in retail is anything to go by, an off-trade presence is only a matter of time.