Gin slings its old image
Premium is becoming the watchword for this doyen of white spirits, says Richard Woodard
Gin's decline in recent years has been a bit of a mystery, given its membership of the all-conquering royal family of white spirits. Vodka is king, tequila the young and brash pretender, and gin - well, it's the dotty old aunt, tiara askew, talking to herself in the corner.
But that's changing, thanks to the growth of premium gin. Established brands such as Tanqueray and Bombay Sapphire have been challenged by such dynamic and iconoclastic new names as Hendrick's and Martin Miller's, ushering in a period of cocktails and character.
The success of premium gin is unanimously acknowledged, with Euromonitor International figures suggesting this trend will continue for the next few years at least. While the gin category as a whole is static, the premium sector is up 6.5 per cent (Nielsen MAT to Feb 24), despite Tanqueray's 19.1 per cent fall in volume .
"Gin has enjoyed really strong value and volume increases over the past year in Waitrose," says the supermarket's gin buyer, Giles Fisher. "Value is up nearly 12 per cent in the category comparing 2006 against 2005. This growth is heavily skewed toward the premium end, with brands such as Hendrick's, Tanqueray and Bombay all doing much better than the average."
Factor in more newcomers like Whitley Neill, plus the relaunch of Beefeater (see box), and premium gin appears to have a strong future.
"It seems a move towards higher abv, better-quality products has taken place recently, and more flavoursome gins are gaining share too," agrees Fisher. "This can be seen by the rise of Beefeater of late, which is not priced in the premium segment but, for my money, is a good quality gin which is exceeding the wider gin growth considerably."
Premium, niche gin brands are likely to focus on the independent sector before making the leap into the multiples. That's what William Grant did with Hendrick's, seeding the brand into the independents before responding to increased demand by taking it into bigger accounts, says William Grant's Jun Hirst.
And that's certainly the path being followed by Whitley Neill, although Johnny Neill acknowledges that the brand will have to move into wider availability at some point in order to reach a wider cross-section of consumers.
But in so doing, it's wise to choose your retail partner carefully, says Emma Martin, of The Reformed Spirits Company, brand owner of Martin Miller's. "We work with Oddbins and Sainsbury's within the multiple arena as they seem to have the best understanding of how to work with premium brands," she says.
"They realise we are building a brand and so understand that we don't want to heavily discount. Discounting on a new premium brand is always a waste of time as, if there is no consumer awareness of the premium price of a brand, they will not appreciate a price deal."
Martin counsels against giving in to the temptation of discounting to maintain listings, as this will undo all the good work of the brand builder and the premium category as a whole - as well as eating into everyone's margins. "Premium independent brands are not protecting market share, but are trying to build their way into the market. This is done by maintaining the premium values of your brand and making sure that all activity is in keeping with strategy."
Nor is this way of thinking confined to the independents. Tanqueray's loss of volumes over the past year has been caused by a reluctance to over-promote, according to brand manager Jenny Wallace.
"This [decline] is due to a concerted effort to pull back from the depth of promotion in the off-trade - thus average selling prices have increased, causing the anticipated decline," she says. "For us it is important that prices reflect the quality and premium nature of the brand."
Premium gin sector leader Bombay Sapphire sings a similar song. "We would rather add value to customers and consumers - for example, a special pack," says Sophie Bowers, marketing controller, premium brands team. "This in turn stimulates more interest in the premium gin category and helps drive volume with the right consumers."
Such tactics, however, are unlikely to have the instant effects of a price-off. Fisher acknowledges that the response to Waitrose's listing of the quirky Hendrick's was "slow to start with", but says it has since "done very well", partly because of the above-the-line support given at launch.
The way in which the premium gin sector has built slowly and steadily in the UK off-trade in recent years augurs well for the future. However, some things never change, despite the buzz about the revival of gin-based cocktails in the on-trade.
"We would be fooling ourselves that consumers are going home and making cocktails ," says Emma Martin.
"Ninety-five per cent of all gin is still drunk with tonic - but now they have a choice in premium tonics, as well as premium gin, with brands such as Fever Tree."
The relaunch of Beefeater gin by new owner Chivas Brothers could hardly have done more to emphasise the brand's London roots. Apart from giving the Beefeater himself a bit of a makeover (his more confident stride is, dare we say it, almost Johnnie Walker-like now), Chivas rightly recognised that the brand was getting rather tired.
The new pack should go some way to addressing this, as will the funky new London-centric advertising, although that's not yet being used in the UK. "It builds on the trend for authenticity which consumers the world over are looking for," argues Chivas marketing director Martin Riley.
Brand director Nick Blacknell believes the short-term challenge is to rebuild UK distribution, with an emphasis on the on-trade. However, securing listings in all major retailers is another top priority.