Is the gin boom over?

There are fears gin has fallen on the dual swords of its own success and the cost of living crisis, with reports emerging of sales declines around the world. According to UK publication The Grocer “Britain’s gin boom is well and truly over”.

“Leading the decline in value sales is Gordon’s, which has shed £72.8m according to this year’s Britain’s Biggest Alcohol Brands data [NIQ 52 w/e 22 April 2023]. It is the biggest absolute decline of any alcohol brand in the off-trade – on volumes down 20.5%,” The Grocer said.

“At the same time Whitley Neill, Bombay and Tanqueray have all suffered huge value losses. Between them, they have shed £33.9m, as 7.7 million fewer litres went through the tills.”

The Grocer noted that the brands “outpaced the general decline in booze sales, as Brits cut back for financial and health reasons”.

However, there was a bright spot, with Diageo noting it had seen “strong growth” across its no-alcohol lines for Gordon’s and Tanqueray.

“The Gordon’s 0.0 SKUs continue to deliver for the brand, with Gordon’s proudly holding majority of share within the alcohol-free spirits segment,” said Hazan Aydin, head of Gordon’s.

The rise of no-alcohol spirits was noted in new data and forecasts from IWSR Drinks Market Analysis. It reported that the no-alcohol category grew +8% in 2022, and will continue on a growth trajectory of +7% volume CAGR, 2022-2027. By 2027, it is expected to command 2% volume share of the total global beverage alcohol market.

Performance in 2022 was boosted by no-alcohol beer, which grew 8% in volume in 2022, and no-alcohol spirits, which grew almost 22% in volume (off a small base). In all key markets, around half of all alcohol drinkers say they are intending to moderate their consumption.

The outlook for Australia

IWSR, the leading authority on the global beverage alcohol market, also flagged there are signs the gin boom is over in markets including the UK and Australia.

“Gin is now in long term decline in the key UK market, and has also lost momentum in many of its previous growth markets such as Brazil, South Africa and Australia; future gin growth will be driven by countries including the Philippines and Nigeria,” IWSR said.

It coincides with the news that online craft gin platform Gintonica entered administration last week.

Documents listed by the Australian Securities and Investments Commission on Friday show Gintonica appointed David Ross of I & R Advisory as administrator. The first meeting of creditors will take place on July 3.

Gintonica founder David Box announced the business was for sale in May 2023. Gintonica’s focus is on producing 30mL and 50mL tasting bottles and then packaging them as advent calendars, tasting packs, gin subscriptions, gin gift packs and cocktail packs.

Gintonica has suspended order processing, with customers awaiting shipments told to contact the business directly.

Conversely, actress Margot Robbie and four of her friends have collaborated to release Papa Salt Coastal Gin, made in conjunction with Byron Bay distillery Lord Byron, with the first batch immediately selling out.

The forecast for spirits

Globally, spirits declined -2% in volume consumption in 2022, largely due to low-priced baijiu in China. However, excluding national spirits (which includes spirits such as baijiu, soju, arrack and shochu), the global spirits category grew +5% in volume, 2021-2022, particularly driven by whisky (+8% volume growth, 2021-2022), but also categories including rum (+9%) and brandy (+6%). Cognac saw a 10% volume loss globally, due to declines in its two key markets of the US and China. 

IWSR said premiumisation in whisky will be a key growth driver for the overall spirits category. The premium+ whisky segment is forecast to grow by +4% volume CAGR, 2022-2027.

In Australia, whiskies have maintained positive consumer momentum despite adverse economic conditions.

Tequila will remain a high-profile affordable luxury thanks to the number of celebrities directly involved with brand offerings, although it said there are early signs of a slow-down in the premiumisation trend.

“As geopolitical and economic turbulence impacts the market, alcohol drinkers are shifting their consumption behaviours,” said IWSR Drinks Market Analysis CEO Mark Meek.

“The key trends that have underpinned the industry, such as premiumisation, will evolve as consumers respond to the increased cost of living crisis. The industry will, however, still deliver pockets of significant value growth. The pandemic also
accelerated the rise of trends such as the at-home occasion and moderation; these behaviours are now here to stay.”

Success! You're on the list.

Categories: Business