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Vodka is the new Scotch...

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Over the last 5 years, each individual sector within the spirits and liqueurs market has observed various changes, with the biggest alterations involving vodka and Scotch whisky. In Spirits & Liqueurs, its new Market Report, market intelligence provider Key Note says that sales of vodka increased by 16.8% over the review period (from 2005 to 2009) and currently account for 32.4% of the entire spirits and liqueurs market. Conversely, the Scotch whisky sector has seen a massive decrease of more than 23.3% over the last 5 years and currently accounts for 24.3% of the market, down from the 31% share that it held in 2005. The majority of sectors saw some loss over the review period, with consumer preferences shifting away from more traditional spirits and towards more fashionable and popular alcoholic drinks, such as vodka.

The last decade has seen demographics in the UK dictate the market, with divisions in the spirits and liqueurs market having formed corresponding to consumer age. Growth in sales of white spirits and particularly of vodka has been maintained by younger consumers, who have enjoyed the versatility of the spirit, i.e. in cocktails, while brands such as Smirnoff have achieved global domination. In contrast, the dark spirit industry has reported a gradual decrease in the past few years. The Scotch industry, especially, has experienced a steady decline for some time, although, since the recession was announced in the UK in 2008, conditions have worsened. Furthermore, Scotch is typically favoured by older consumers, holding less of an appeal to the mass audience, who are typically younger.

The total UK market for spirits and liqueurs was valued at nearly £8.4bn at current prices in 2009, after declining by 2.1% from 2005. The market grew in 2007 and 2008, but dipped in 2006 and 2009, in line with the fluctuating UK economy.

The profile of the UK population is continuing to age, with 20.8% more people expected to live to over the age of 75 during the 10 years between 2008 and 2018. Although much of the growth in the spirits and liqueurs industry is sustained by sales to younger consumers, there is still a market for older consumers. However, despite the potential for growth that such a change in demographics could generate, factors such as concern over health and wellbeing, which are strongly associated with alcohol, could deter consumers, as they try to maintain the healthiest lifestyle possible. The cost of spirits is also a strain on the older consumer; most old age pensioners (OAP's) are on a low income, and such purchases are therefore considered a luxury.

While the spirits and liqueurs industry is currently dominated by major players, which will continue to make it hard for new competitors to enter the marketplace successfully, one potential sector of the market that could see growth is the own-brands sector. In the last few years, the own-brand market has seen increased growth, much to the dismay of private-label companies. If the economic instability continues, further growth could be seen as price-conscious consumers will tend to opt for cheaper own-brand spirits over the higher end branded products.

Press enquiries: Lisa Ivey at Key Note at or 0845-504 0452. Press/review copies of the report are available on request.

Notes to editors:

Key Note's 2010 Market Report, Spirits & Liqueurs, examines the spirits and liqueurs industry within the UK. The main sectors that comprise the spirits and liqueurs market are Scotch whisky, imported whiskey, brandy and cognac, dark rum, vodka, gin, white rum, tequila and liqueurs. The ready-to-drink (RTD) market is also mentioned briefly, as the majority of brands within this sector are part of leading companies involved in the production and distribution of alcoholic beverages; for example, Smirnoff Ice is part of Smirnoff.

Key Note Ltd has been providing commercially relevant market information to libraries, academia and businesses for almost 30 years. With over 1,000 titles available across 30 market sectors, and new or updated titles published every week, Key Note is one of the UK's most prolific and respected business information providers. Within the range, some reports are written in response to particular market conditions, whereas other reports will be produced regularly year on year.

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