Executive Summary

The after-dinner drinks market was worth around £1.03bn in 1994. After-dinner drinks as defined in this report consist of port (£62m), brandy (£530m) and liqueurs (£433m).

The UK market for port consists largely of standard ruby and premium ruby. Both are at the lower end of the price scale, but the slightly more expensive premium ruby is taking a growing share of the market. The UK market for brandy is divided largely between French grape brandy and 3-star Cognac. The liqueurs market is subject to differing segmentations. Key Note identifies three main sectors: advocaat, cream liqueurs and traditional strong liqueurs.

Most of these products are relatively expensive or luxury items and, as such, have suffered a decline in sales during the recession years since 1990. There is some sign of recovery, however, in 1994 as far as sales by volume are concerned, but strong competition is restraining prices and hence sales by value.

The market rests heavily on brands and branding, but own labels in all sectors now represent a significant and growing threat to brands. Most of the major brands are marketed by five multinational drinks groups. Brand support is expensive. £1m a year in above- and below-the-line promotion could be considered a minimum. After-dinner drinks tend to appeal more to older, upmarket and male consumers. Cream liqueurs are the exception to this and their sales are also heavily weighted towards Christmas. Brand owners fight a constant battle to rejuvenate their consumers profile and spread sales more evenly throughout the year, but with very limited success.

The economic recovery is good news for after-dinner drinks. People may be dining a little more formally at home and eating out more. They are also trading up to more expensive ports and brandies. The fast growing cream liqueurs market is going the other way, however, as products with a wine base heavily undercut the prices of those with a spirit base.

The short- to medium-term prospects are for better business than has been experienced for most of the 1990s so far and Key Note forecasts the market to increase to around £1.07bn by 1997.

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