Executive Summary
Key Note estimates that the UK market for dark spirits and liqueurs reached £3.69bn in 2000, having risen by 3.9% from the previous year. Between 1996 and 2000, the dark spirits market grew by 10.2%. This has coincided with an increase in the white spirits and liqueurs share of the market. The market for dark spirits and liqueurs received a boost with the advent of the Millennium, with a corresponding rise in sales during the latter part of 1999, although growth has been more modest since.
The dark spirits and liqueurs market, as described in this report, consists of several sectors. In the dark spirits sector, subsectors include Scotch whisky, Cognac and brandy, non-Scotch whiskey and dark rum. Whisky matured and distilled in Scotland is known as Scotch whisky while whiskies from any other part of the world come under the classification of non-Scotch whiskey.
Like the white spirits market, the dark spirits market is facing increasing pressure from other sectors of the alcoholic drinks market. Wine, in particular, has performed exceptionally well in recent years, and the popularity of premium-packaged spirits (PPS) has also increased their share of the overall market, often at the expense of more traditional drinks such as Scotch whisky and brandy. Scotch whisky, however, remains the largest market sector.
Sales of spirits and liqueurs have traditionally been biased towards the on-trade, although the take-home trade has increased in importance during recent years. However, owing to higher prices, the take-home trade has made most of its recent gains in volume, rather than by value. The growing power of the major supermarket groups has led to price discounting in the sector and this has further hampered market growth.
Two large companies, Diageo PLC and Allied Domecq PLC, dominate the dark spirits and liqueurs market. Both companies have recently disposed of other business interests, and are now positioning themselves as international drinks companies, focusing upon a number of key brands. Elsewhere, a number of small, independent distillers exist, especially within the Scotch whisky sector, although their number is in decline.
Scotch whisky remains one of the UK's largest exports. Exports are now starting to recover again, having been hit particularly hard by the recent currency crisis that swept the Far East economies.
The market for dark spirits and liqueurs is likely to experience marginal growth between 2001 and 2005, although most of this growth will come from the liqueurs sector. The market for dark spirits has a mature consumer profile and many sectors have been slow to innovate, thereby failing to attract younger drinkers. There will also be increasing competition from other alcoholic drinks, eroding the sector's share of the market even further.
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