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Alcohol Promotional Strategies

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Brand View Insights reviews price and promotional trends taking place in different categories. This report takes a closer look at changes across the Beers, Wines and Spirits category.

Inflation and Innovation

Kantar Worldpanel reported for 52 w/e July 2011 that whilst the alcohol category has, as a whole, grown in value, volume is down – indicating that shoppers are buying less.

Brand View data shows that the average shelf price for BWS products available to consumers in the major multiples since July 2008 and still sold today (constituting nearly 2,500 products) has increased by 13.5% from July 2008 – October 2011.

This is a much steeper increase than seen in the Ambient, Frozen, Chilled, Health & Beauty or Homecare, indicating that cost is the driving force behind shoppers’ reluctance to spend in this category.

The Grocer last week reported the need for greater innovation and new products across all categories. Manufacturers however, have in fact responded with an influx of innovation that accounts for a significant 9% increase in product listings in the last 3 months (up to 24th November) compared to the same period last year.

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Impact of Promotional Laws

On 1st October, new licensing laws to amend the Alcohol etc. Scotland Act 2010 came into force, including a ban on all quantity discounts and a ban on multipack promotions. In the period before the change in promotional laws, the number of products on price reduction promotions in Scotland was roughly between 550 and 750.

When the new legislation came into force, the Multibuy deals were replaced by price reduction promotions (although in fact, the depth of cut fell by 2%). Only in the last couple of weeks have Multibuy promotions in Scotland completely stopped, although the total number of promotions (Price Reductions and Multibuys) have remained at a similar level throughout.

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Promotional Intensity

In the run up to Christmas, promotional activity in stores will increase across all alcohol categories, although the mechanic used is likely to vary considerably between manufacturers – as has been seen previously. Of the products within Beers, Wines and Spirits on promotion today (2 Dec) 581 will still be on promotion during Christmas (w/c19 Dec) in the Big Four and Waitrose. In the last 6 months Carlsberg has favoured short, deep promotions whilst Stella has offered longer, shallower discounts.

The chart below demonstrates that cider brands, which saw a surge of promotional activity throughout the festival season, all supported relatively short promotions. Within Spirits however, there has been little correlation between brand promotions, as a comparison between Gordon’s gin and Bacardi rum show.

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