The UK drinks market is forecast by Key Note to be worth £58.3bn in 2009,
accounting for approximately 6% of total consumer spending. Alcohol is
forecast to account for just under three-quarters of the market in 2009, with
soft drinks worth £12.98bn and hot drinks £3.4bn.
Beer is the leading alcoholic drink although its share of the total spent on
alcohol is down from 50% to 42.9% in this decade. Wine is still the fastest
growing major alcohol category. A consumer survey for UK Drinks found that
adults named white, red and rosé wines among their five ‘favourite’ alcoholic
drinks, along with lager and vodka.
Spirits (and liqueurs) are stable in value while cider has been the fast riser of
the decade, doubling from £1.2bn to £2.4bn. This is principally down to the
fashion for ‘over-ice’ cider, spearheaded by the imported Irish brand,
Magners. The rise of Magners typifies the fashion-influenced aspect of the UK
market where young drinkers are adventurous, although many other drinks
sectors are noted for their conservative nature (e.g. some spirits, such as
Cognac, or fortified wines, such as sherry and port).
Another unusual aspect of the over-ice boom is that it was started by a new
brand, whereas most drinks markets feature one or two extremely dominant
brands. Some of these — Smirnoff in vodka, Coca-Cola in carbonated soft
drinks, Red Bull in energy drinks, Nescafé in instant coffee — are powerful
enough to influence the direction of the whole market sector.
Evidence of the power of these brands comes from Key Note’s consumer
research in 2009, which found that 55% of adults drink Coca-Cola regularly,
55% drink Robinsons squash, 51% drink Nescafé and 45% drink Tetley tea.
The UK’s largest indigenous drinks companies include Diageo, the world
leader in spirits (also a major in beer, with Guinness, and in wines, with names
such as Blossom Hill) and Unilever, the world’s largest tea company. However,
globalisation is the trend and foreign multinationals are omni-present in
most drinks markets including coffee (Nestlé, Starbucks), beer (Heineken and
Carlsberg) and even Scotch whisky production (Pernod Ricard of France).
Key Note is forecasting very slow growth for drinks as a whole in the 5 years
to 2014. In addition to the slow climb out of recession, problems will include
possible restrictions on alcohol marketing, downward pricing pressures, the
healthy living movement and, generally, saturation in many drinks markets
after years of growth and experimentation. Despite these negative concerns,
the diversity of the drinks market remains its strength, encouraging
innovation and new entrants.
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