Even though gin is still expected to grow in Australia for some time to come, the category has started to show clear signs of slowing down, with competing spirits beginning to reclaim some of its shelf space.
According to recent CGA by NIQ data, gin was the on-premise spirit category that least increased in price over the course of 2023. A separate IWSR study that compared gin and tequila globally provided further context to the reasons for gin’s struggle and concluded that, unlike tequila, the category is unlikely to continue growing at the same rate as before. This is despite both categories performing strongly over the past decade.
One of the key differences the IWSR attributes to gin’s slower performance compared to tequila is its price range limitation.
“Tequila is much more present than gin at the very high end (prestige and prestige-plus, status spirits), simply because its liquid and ageing classification justify, in some cases, very high pricing – and this is accepted by consumers,” said Luis Hermoso, IWSR research director – Central & South America.
“However, gin – which is usually non-aged – has relatively less to offer in order to be accepted as a prestige spirit with similar status to Cognac, single malt or high-end tequila.”
The second difference is product type limitation, with the boom of gin over the past decade relying on innovation to revive what the IWSR describes as “a rather jaded category.”
The third is in reference to consumption occasions, with gin generally being associated with aperitivo/early eaving occasion consumption and tequila catering to late-night and high-energy situations.
“The fact that tequila can be consumed neat or mixed, depending on the occasion, consumer and quality of the liquid, is an advantage… Even the brands that initiated the gin revival 20 years ago are consumed mixed, as are flavoured gins, and little or no gin is sipped or consumed on the rocks as most very high-end spirits are. This also tends to justify the higher price points tequila is able to command,” said Hermoso.
The fourth difference is market mix. Whereas tequila production is struggling to keep up with demand, gin is beginning to peak in its key markets.
The final difference is in relation to provenance and authenticity.
“Tequila has to be produced in Mexico, whereas gin can be made anywhere. I think there is no doubt that provenance and authenticity are important factors for consumers in many markets today,” said Hermoso.
One Australian brand that, in many ways, seems to contradict the above is Never Never Distilling Co., a premium brand proud of its Adelaide provenance that has steered clear of constant innovation to focus primarily on Juniper-forward London Dry styles.
Drinks Trade reached out to Sean Baxter, one of Never Never’s Founders, to discuss the brand and where he thinks the Australian gin category might be headed towards.
Drinks Trade: What’s been behind Never Never’s success
Sean Baxter: From the outset we’ve built high quality gin with a very clear understanding of its purpose and our customer. When we first created our Triple Juniper Gin it was the only gin in the Australian market that was truly celebrating juniper in all its refined and concentrated glory.
This certainly gave us an initial edge in the market because we were an Australian gin that was going after classic London dry and doing a better job of it than all the big imported brands (we won World’s Best London Dry in the 2022 World Gin Awards, not bad for a gin brand that started in the back of a shed).
Bartenders have always wanted to work with local products but it needed to fit the flavour profile of what their customers wanted. We created an incredible juniper-forward style that is brilliant in a G&T and built for classic martinis and other spirit forward cocktails.
DT: What are your thoughts on the Australian gin market?
SB: The Australian Gin market is one of the best in the world. Australian gin brands continue to win global trophies for excellence time after time and we’re incredibly proud to represent South Australia on both the national and international scene.
To remain competitive in the very busy Australian gin market you need to strive to be innovative and create spirit that sets you apart from other competitors out there. Never Never has always been a brand that seeks to constantly innovate and this is fundamental to not only our brand success but the growth of the category as a whole.
We’ve always been at the forefront of gin trends and built our business on creating exciting flavour and exceptional drinking experiences.
DT: Where do you think the category might be headed?
SB: I think it’s inevitable that we will see the Australian industry slow down in a similar fashion to what’s happening in the UK. With new gin brands entering the market every month, supply is outstripping demand and with added financial pressures, it’s getting harder and harder to make an impact in retail.
There will definitely be some contraction on shelf as retailers are forced to refine their gin offering to reflect the preferences of their customers. These preferences will largely focus on innovative local products and gin brands that have built a sophisticated and complete brand narrative but also brands that have got the financial (and creative) capabilities to generate brand awareness in the first place.
