Spirits to get ‘£37m boost’ this Christmas, says Diageo

Diageo GB sales director David Smith said retailers that focussed on the big brands for in-store offers and promotions last Christmas shared in the extra £28m that was generated for spirits in the off-trade.

The opportunity for this Christmas was even bigger, he said. “The spirits market is performing very well,” he said. “Spirits are growing faster than beer or wine in take-home. We believe now is the time for spirits.”

The beers, wines and spirits categories were worth £3.5bn in the last three months of 2007, with spirits accounting for around £900m of sales.

Smith said the credit crunch was not having a profound impact on the spirits market and he predicted people would be willing to spend on premium spirits this Christmas. “At times like this, people do want a little bit more of a treat and let their belts out,” he said.

Brands were crucial at Christmas, with their share of the spirits category reaching 85%, as against 72% for the rest of the year. Many millions of spirit drinkers only purchase at Christmas and they are looking for the big brands. For example, said Smith, Baileys is in more households at Christmas than any other spirit or liqueur brand.

He said retailers had to get the “right balance” in its promotional offers in the festive season in order to attract shoppers to the spirits fixture, while still maintaining market value. Last year’s decision by Diageo to only promote on single bottle prices– rather than multibuys – for its leading brands, including Bell’s, Smirnoff and Baileys, generated a 4.3% uplift in sales.

In-store theatre at Christmas, he said, was also vital for spirits. Sales from pallets positioned in supermarket foyers, for instance, were almost 100% incremental because they encouraged impulse sales.

Alcohol accounts for almost two-thirds of gifts bought in supermarkets at Christmas and, said Smith, Diageo had invested heavily in its gift packs and there will be 53 different options available.

“Despite the challenging conditions, things are looking very promising for Diageo’s brand and this should work for us,” he said.