After beer, spirits are the second largest drinks category in the on trade sector, worth £5.98bn*. Then, consider that over 70% of spirits are drunk with a mixer, and you can see how getting your spirits and mixer offer right for your customers can substantially improve your revenue stream and profits.
Perfecting your offer is essential, especially when industry research has shown that over 30% of people haven’t chosen what to order when they walk into an outlet. Take Stock asked Diageo about the market and key ideas for success.
What factors have contributed to the continued success of premium spirits in the on trade?
• Consumers are going out less often, but spending more on each occasion.
• They are seeking value from the experiences that they have. In the on trade this is about experiences that they can’t replicate at home.
• Consumers are interested in provenance, ingredients and stories behind products and brands. They are also seeking options that offer some form of customisation and personalisation. Licensees are able to satisfy this demand by using mixers to create any number of cocktails; long, short, still, fizzy, pink, green, hot or cold, to drive footfall and spend in their pub or bar.
• Much of the demand for top quality mixers can be put down to Fevertree. They were amongst the first to argue that if a cocktail is made up of 50cl of spirit and 200ml of mixer, it makes eminent sense to use the very best mixer ingredients possible.
• This consumer awareness has been picked up by brands like Schweppes and Britvic, whose ranges now offer a premium taste at a competitive price point.
• Presenting a customer with a drink accompanied by a bottled mixer (rather than draught), gives an impression of quality. It’s a premium customer experience that they’re willing to pay extra for.
What kind of role do you foresee premium spirits playing in 2017’s summer sales? What steps can operators take to encourage consumers to trade up at the bar?
• In spring/summer 2016 rum sales were up 2.4% year on year, Smirnoff was the number one spirit and Pimm’s made up 43% of speciality spirits sales. We are expecting 2017 to be just as successful because:
• Premium spirits are in 11.5% growth and now account for 1 in 6 serves in the on trade
• Luxury vodka sales are up 28.1% and premium gin 29.7%
• 54% of customers agree that premium spirits brands are a sign of a quality outlet
• 65% of people agree that they would be willing to pay more for premium spirits
• Over 33% of people agree that they would buy a premium brand if recommended to them, so it’s really important to stock a combination of premium and non-premium brands.
The figures are staggering.
• If every licensed outlet in Great Britain sold four more spirit drinks per day this would be worth £439 million in total category sales per year.
• If every licensed outlet in Great Britain traded five existing customers up by £1 – from a standard to a premium spirit, or from a spirit and mixer to a cocktail for example – this would be worth £219 million in total category sales per year.
What are the top tips for promoting spirits and mixers?
Range. Licensees should ensure they regularly review their range to ensure they are capitalising on new products and innovations. Have lead in, premium and super premium spirits in each category and a comprehensive range of bottled mixers – especially in the popular 200ml size.
Layout. Position premium mixers at the top of the fridge and make the most of the profit margins they offer. Try multiple facings to draw the customer’s eye to certain lines.
Visibility. 38% of consumers admit that visibility influences their decision. Keep the bar clear and clean so as not to block the view of the back-bar fridge. This should also be a consideration when
positioning POS – obstructing the fridge will only hide what you have on offer.
Train. Research demonstrates that frequent cider and craft beer drinkers are more likely to experiment by trying something new – making them a prime target for selling a spirit and mixer to.
What’s more, customers are more likely to choose their drink at the bar – so make sure staff are trained to confidently communicate the range you have available.
Diageo’s on trade consultant Rob Poulter has the following tips for licensees wishing to maximise profits from the spirit and mixer/cocktail opportunity:
Offer choice – Accommodate customers who actively seek new and innovative cocktails and those who stick to their favourite cocktails by ensuring your menu offers the traditional favourites as
well as unique and alternative options – for example ‘herbs’ and ‘savoury’ flavour trends are taking off.
Upsell – A quarter of cocktail drinkers now opt for premium options. Take advantage of this and increase your premium offering, positioning your premium cocktails as the go-to indulgence.
Know the trends – Eliminate preconceptions – as male customers now account for nearly half of those drinking cocktails, tailor your serves to appeal to both genders. Ensure there is a range of cocktails on offer, from beer/smokyflavoured cocktails (e.g. Old Fashioned) to fruity/berry flavoured cocktails (e.g.Strawberry Daiquiri).
Ice & garnish – Get your ice right. Using part melted cubes is unacceptable and detracts from the whole experience. With garnishes, think outside the box. Freeze herbs and fruits in ice; use local produce; pick complementary flavours – orange zest is brilliant in a G&T for instance.
Perfect serve – Present your customer with their chosen spirit, in the correct glass, decorated and iced as appropriate. When adding a mixer, use a chilled 200ml bottle and pour just under half the mixer in, leaving your customer to add the remainder, to their taste.
Food pairing – Adult consumers increasingly drink cocktails while enjoying dinner. Offer and position a selection of cocktails as an after-dinner option, especially coffee flavoured cocktails such as the Flat White Martini with Baileys.
Promotions – Attract frequent and infrequent cocktail drinkers by ensuring you run regular promotions which appeal to over 75% of cocktail consumers.
Sources: CGA MAT 28.01.17 & 27.12.14, TNS Omnibus Research 2012, CGA Peach BrandTrack, July 2015, 8 CGA Mixed Drinks Report, April 2016