Campari Australia Commercial Director Brad Madigan became Managing Director UK for the Campari Group in July 2018. Here he gives his fresh eye on European drinks trends to the latest issue of Drinks Trade magazine.
Based on your experience in this market, what are the current European drinks trends to watch?
The most obvious is the growth and development of the low and no alcohol segment, which has gained considerable momentum in the last few years in the UK, and more broadly across Europe.
As consumers seek to balance increasing lifestyle demands and are becoming more conscious about their health and wellness, we see a greater demand for quality, premium drinking experiences in a low tempo occasion.
While this low tempo occasion is far from new for most of Europe, (think traditional Aperitivo moment) both new and old brands are helping to create and drive mass consumer appeal across the UK. Lighter, more refreshing drinks are booming, led by Aperol Spritz. Non-alcoholic alternatives are also featuring strongly with some good quality non-alcohol options re-inventing the mocktail.
However, the boom is also creating a tremendous amount of clutter and confusion as brands are retro-fitted into the occasion with tequila, vodka and gin brands creating spritz-based serves, stretching what is a low tempo occasion into a higher-energy and ABV serve.
The shift towards bitter flavours continues – from kale to espresso and chocolate. This has helped the popularity of products such as Campari surge in recent times in response to consumers’ growing taste for bitter and more adventurous flavours.
Gin and flavoured gin continues its steady growth. In particular, pink gin is driving the majority of the category growth (although there are some signs of gin fatigue in the last quarter). Flavoured gin continues its expansions outside of pink, and has a lot of parallels to the flavoured vodka boom (and bust) in the 2000s. Premium gin brands continue to perform well – both established and new entrants.
It would be amiss not to mention the continued growth and availability of premium mixers. In over 15 months, I have not had one spirits drink served with a post-mix. This changes the spirits drinking experience for the better.
Is the European drinks retail landscape changing?
E or d–commerce continues to build its presence and scale in the UK, and Europe led not just by pure e-retailers, but traditional retailers are growing their online presence and building e-retailing capability.
Although the channel currently represents circa 7% share of spirits sales in the UK, the channel is becoming an increasingly important brand building and activation channel for drinks brands to win in.
Voice is also playing a role in e-comm with consumers able to order cocktail ingredients to their door via technology like Amazon Alexa.
Unique offerings that you cannot find offline and convenience are driving the shift in consumer/shopper behaviour. The ability to select a delivery window where you can choose the hour you want your delivery while learning the provenance and heritage through product information are key contributors to the growth of e-commerce in the UK.
The competitive landscape remains as challenging as ever with increased presence and share gain of discount retailers (Lidl & Aldi). Traditional retailers are looking for further points of differentiation to drive shopper traffic and meet the needs of an increasingly savvy and demanding drinks consumer.
Retailer consolidation will remain high on the agenda despite the recent abandonment of the merger of ASDA and Sainsbury’s, due to concerns raised by the UK Competition & Markets Authority.
The UK convenience channel continues to grow in importance, with smaller high-street footprints playing a greater role in weekly shopping missions, creating an opportunity for smaller pack formats.
Who is being most successful in the increasingly competitive European drinks market and why?
Suppliers who can build and nurture a collaborative business partnership by aligning on common business strategies and move out of the transactional day-to-day grind are the suppliers who are winning.
Doing what you say you will do (and being brave in saying what you cannot do) along with excellent execution, will always be key staples of a great business partnership.
Distinctive brands that can capture consumer attention and drive shopper traffic, like Aperol, are also important.
Those who act fast and respond to trends in the market with speed are also winning; pink gin and non-alcoholic variants are great examples of this.
What about occasion? Is the home-entertainment trend gaining ground?
Consumers now have a greater desire to want to replicate that same premium experience they enjoy in bars with their friends and family, which is even more prominent in younger generations like Gen Z.
Gen Z, for example, has grown up with the internet, mobile and social networks, and expect to be able to replicate the experience in-home by using their digital and social channels to provide the relevant information and make the purchase journey as easy as possible.
Disruptive home-delivery brands like Deliveroo and Uber Eats are also helping to drive the in-home trend, creating new and additional opportunities to promote different at-home drinking occasions.
Do you see any emerging European drinks trends developing in on-premise?
The on-trade remains an exciting and dynamic channel, which continues to remain at the forefront of consumer trends. Overall experience remains vitally important, as consumers now not only expect a great tasting, well-made drink or cocktail, but an experiential element when they go out to a bar. It is more important than ever for brands to collaborate with venues to create something that can cut through a cluttered market.
Then of course there is social media, which has become the new word-of-mouth and is driving consumers out of their houses and into bars; 76% of influential consumers have ordered a cocktail they have seen on social media, posted by friends or bars. People are seeking premium drinking experiences that they can share with their friends, as well as drinks that will set their social media feeds apart – think Aperol Spritz or premium Champagne brands.
There continues to be a trend towards premiumisation in the on-trade, as consumers seek authenticity and quality from their drinking experience. This is driving a rise in the popularity of the classic cocktail from the Old Fashioned to the Negroni.
There has been a significant shift in the importance of sustainability and CSR agendas over the past 12-18 months, which is a real positive for the industry. In most instances, this has been driven from bar staff and venues demanding suppliers place a greater emphasis on sustainable practices.
From the war on plastic, sustainable cocktail ingredients and minimising waste, the CGA Influencers Report 2018 ranked this as the #1 trend in the drinks industry for the next 12 months. It will remain vitally important that brands and venues alike work together to ensure we are delivering a sustainable industry for future generations.
Europe is a fragmented market with vastly different cultures and approaches to drinking. How does this influence any strategies to crack these markets for brands?
For us, the most important thing is to embrace the diversity of experience from across the region. It is only by learning from each other that we continue to move forward, innovate and ultimately endure in a highly competitive market.
Look at the Aperol Spritz or Negroni for example; 10 years ago you would hardly have seen these brands outside of Italy. Now they are key cocktails in a number of developed and emerging markets. The global discovery of the Aperol Spritz or Negroni has not happened by chance or good fortune, but rather through delivering a unique and quality experience that resonates with consumers.
