This Key Note Market Update analyses the UK market for sprits and liqueurs, covering all product categories across the white spirits, dark spirits and liqueurs segments, including whisky/whiskey, vodka, gin, brandy, rum and similar products. The UK market, and much of the global market, is dominated by a small number of major international producers, engaged in the distribution of leading regional and/or global brands across various product categories.
In 2015, the UK spirits and liqueurs market is estimated to have grown by 1.9%, following the recent trend of falling annual growth in the market. This increasingly constrained growth in recent years is largely a result of reduced upward pressure on retail prices, driven by reduced alcohol duties.
The abolition of the alcohol duty escalator — the policy of increasing duty across all alcohol categories by 2% above inflation each year — followed by a freeze on duty costs in 2014/2015 and a 2% cut for the 2015/2016 financial year has represented the key development in the spirit and liqueurs market. While this is expected to limit value sales growth, the reduced duty burden will likely limit any further price increases in the spirits sector, a trend that is expected to lead to volume growth, particularly in the context of recovering economic conditions and consumer expenditure.
While a cut in alcohol duty in 2015/2016 will help drive volume sales, value growth is likely to remain limited in 2016 as a result. Future growth in the market will be impacted...