Spanish spirits losing their appeal

Related tags Distilled beverage Alcoholic beverage Canadean Spain

Spanish sales of Scotch whisky, liqueurs, gin and brandy all
declined last year as younger consumers turned away from strong
alcoholic drinks with an unfashionable image. Only rum managed to
register a slight increase, according to a new Canadean report.

Spain has traditionally been a major market for Scotch whisky, gin and other spirits, but a new report from Canadean​ shows that hard liquor is losing its appeal as the drink of choice among the all-important young consumer group.

The Spanish tradition of long-drinks - a liberal dash of spirit with an even larger dollop of soda water, lemonade or cola - has long meant that Spain is one of Europe's most important spirits markets, but the Canadean report shows that growing concerns about the strength of such drinks - combined with increased marketing efforts from the major brewers - has led to a 7 per cent decline in sales of spirits.

Whisky has long been the largest spirits category in Spain, which has the highest per capita consumption in the world, according to Canadean. However, there are indications that the market may finally have reached its saturation point.

Sales of whisky were not helped in 2002 as the year was a poor one for tourism and new regulations banned the sale of alcohol after 23.00 - the time when many young Spaniards are beginning to venture out for the evening. But while these factors clearly did not help, they were only partially to blame for the 5 per cent drop in whisky sales in 2002. Standard Scotch whisky was the biggest loser, with sales plummeting by 700,000 cases.

The third, fourth and fifth leading categories - liqueurs, cocktails and specialities; genever and gin; and brandy - also saw declining sales according to the Canadean report. Of these, brandy sales receded most notably - by a huge 27 per cent compared with the previous year, despite the efforts of brands such as Soberano to appeal to a younger audience.

The brandy category is dominated by domestic brands with the 16 most popular all being Spanish or Portuguese brandies. Brandy faces major challenges if it is to arrest this slide, according to Canadean, as it is priced less competitively than blended Scotch whisky and suffers from a poor image, being perceived by many consumers as being a male only drink. In addition, there is a distinct lack of new product innovation, which could help widen appeal, the report claims.

But if most of the top five spirit categories showed stark declines during the year, there was at least one ray of sunshine from the number two product group - rum. On the surface, an increase of less than 1 per cent to just over 4,200,000 cases is not much to crow about, but this came on the back of explosive growth in 2001, showing that the category is still very much alive and kicking.

Unlike many other western European markets where Bacardi-style white rum is by far the most popular, Spanish growth has come primarily from the increasing popularity of dark rum. As with so much about the alcoholic drinks image, the success of rum is due in no small part to its image, with the laid back Caribbean lifestyle the drink evokes proving so appealing to younger consumers that they are prepared to forget the relatively steep price tag for the drink compared to Scotch, gin or vodka.

Again, the trend towards flavoured rum drinks such as Malibu, or premium packed spirits based on rum brands such as Bacardi Breezer or Rigo, has been slow to catch on in Spain, but producers there are expected to introduce such products in the immediate future to take advantage of the drink's current popularity.

Last year was also a watershed year for the Spanish wholesale industry, which until then had pursued an aggressive policy of buying in bulk from producers safe in the knowledge that its stocks could be sold off over a longer period.

But the once legendary price increases in the Spanish market are now no longer as regular as they once were, Canadean said, which means that wholesalers can no longer build up vast inventories, safe in the knowledge that these will be resold in the future at guaranteed inflated prices.

This, of course, has a knock-on effect for producers, who face the prospect of significantly reduced orders from their wholesale customers as the latter sell off their stocks. While consumption of spirits in Spain has dropped over the last few years, actual shipments from producers to wholesalers have declined even more significantly.

The implications for producers cannot be underestimated, according to Canadean, with Allied Domecq, the leading single player in the Spanish spirits market, recently confirming that destocking could reduce profits in the country by as much as £25 million.

For more details on Canadean's Spirits Watch Report - Spain, click here

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