Negroni drinkers; craft gin

Pernod Ricard warns craft gin saturation looms

November 4, 2019
By Alana House

The craft and high-end gin segment in the UK is at risk of a “shake-out” in the coming years, Pernod Ricard executive Jonny Peacock has told GlobalData, with the boom set to continue for around two more years.

The UK has been a major driver of gin’s resurgence in recent years, with the category’s high profile among consumers, combined with brand acquisitions, encouraging more entrepreneurial start-ups to enter the craft gin arena.

Pernod has responded to the reinvigorated segment through its stake purchase of German craft gin brand Monkey 47 in 2016, and adding Malfy to its gin portfolio earlier this year.

Malfy Gin; craft gin

Speaking at the Spirits Strategies & Innovation Congress in London, the groups’ UK customer development, strategy and planning director forecast that the high proliferation of premium-positioned gin brands in the country will not be sustainable in the medium-to-long-term.

Peacock added: “With so many new entrants recently, I can see a shake-out coming in craft gin. The category has to organise itself, otherwise it’s just going to be a race to the bottom.

“The barriers to entry in gin are low. The problem is, the barriers to exit are equally low.”

When asked what advice he could give to those brands hoping to ride out the potential reduction of craft gin stock keeping units (SKUs), Peacock said: “You should consistently highlight your unique selling point (USP). Also, promote the substance of your brand.”

Craft gin boom in Australia

According to market research company IRI’s International Wine and Spirit report gin is the fastest-growing alcohol in Australia, with more than 170 distilleries nationally.

IRI’s Daniel Bone told the Sydney Morning Herald: “You’ve got men and women together, these are the types of products that appeal to both genders. Those situations are becoming more and more important for liquor companies.”

IBISWorld analyst Matthew Reeves agreed that gin has been “booming” in Australia over the past couple of years, with sales in Australia up more than 16% over the year.

Craft gin; pink gin

And it’s not just craft gin that’s benefiting. sales of Gordon’s Gin grew by $12 million in the past year, making it the fastest-growing spirit brand in the country.

Light spirits marketing manager Linda Wellington said pink gin had driven growth.

“It’s capitalising on a number of trends coming together,” she said. “The popularity of gin, consumers loving to experiment with colour, and people can have fun with it.”

“People are coming into spirits at the moment. Less people are drinking but people are making different choices. We say that people are drinking less, but better.”

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