As with the rest of the economy, the drinks industry in Ireland has had to react to changing circumstances over the past two years. Kevin Ecock reflects on a challenging year for the trade, and on what we can expect in 2023.
When society began to reopen earlier this year, the trade had to cope with a new minimum unit pricing model, chronic staff shortages, sourcing and shipping difficulties, and rising costs across almost every facet of production. However, despite coping with difficulties and challenges that have never been experienced before, the trade continues to evolve.
In the words of Kevin O’Callaghan of SuperValu, “NielsenIQ reports SuperValu to have grown by another 0.5% this year, and this is on top of capturing share from our competitive set over the last two years.
“This is due to being flexible and ensuring we meet the needs of the consumer, who is looking for quality, affordable wines with a changing face that excites and engages them, and allows them to expand their repertoire of wines.”
Flexibility and meeting the needs of customers have never been so important.
Drinks Ireland reports that, regardless of the immediate impact of recent difficulties, alcohol consumption in Ireland has ‘fallen drastically’ over the past 20 years.
Beer and cider consumption, we are told, saw the most dramatic declines due to their popularity in the on-trade.
Beer consumption fell by 18.3% between 2019 and 2021, and cider was down by 15.1% during this period.
Wine consumption was down by 13.1% between 2020 and 2021, and 2.7% between 2019 and 2021, while spirits consumption remained relatively static, rising marginally, by 1.9%, between 2019 and 2021.
Against this backdrop, the industry had to deal with the closure of the hospitality sector. Couple this with the impressive export markets that Irish whiskey, craft beer, and cider had achieved pre-pandemic, and one can understand why, for example, the recent Cider Market Report was sprinkled with calls for ‘an excise reduction to support the sector, as well as the urgent implementation of an excise relief programme for craft producers.’
While excise reduction measures are a constant calling card from all aspects of the drinks industry – see NOffLA’s annual pre-Budget submission, wherein it links job insecurity to excessively high excise levels – no government can deny that the growth of Irish craft drinks such as cider, beer and gin has generated an impressive level of local employment opportunity. These are jobs that need to be protected as, in most cases, they are home-grown and potentially sustainable.
Classic Drinks, now a Cisco company, recently appointed David McEnroe as its new managing director. David is well respected across many industries for his noteworthy work with Cuisine de France. Speaking to Checkout, he recognises the value of how well built Classic Drinks has been, the excellence of its portfolio, its highly qualified countrywide workforce, and the strong customer loyalty that has been painstakingly built up over the past 20 years.
However, Mark Donohue, head of wine with Classic Drinks, tells me that those achievements won’t amount to much unless the company can promote itself successfully to cope with the extreme challenges that the drinks industry currently faces. As such, Classic Drinks is working to build a unique and industry-wide social-media presence, so that it can work to a successful future.
Difficulties need to be overcome. Trends need to be recognised. Bearing this in mind, certain sectors of the drinks industry in Ireland have been slow to get involved in meaningful social-media engagement beyond colourful imagery and soft-marketing exercises.
Seamus O’Hara, chair of Drinks Ireland|Cider and CEO of Carlow Brewing Company, was refreshingly upbeat when he reported, “The full reopening of Ireland’s hospitality sector in January 2022 will hopefully provide a much-needed boost, but support is certainly required at this critical stage.”
Does support always need to come in the form of central-government intervention?
Tesco recently revamped its Clubcard offering in relation to its in-store offers. These include alcohol, where a Clubcard price now often reflects a generous discount.
This may fly close to our understanding of why special offers on alcohol are now discouraged by legislation, but it also reflects how retailers can be flexible. Minimum unit pricing (MUP) legislation is designed to slow down inappropriate levels of consumption. It was never intended to ban alcohol. As such, many retailers have offered fixed and low prices. Tesco’s aligning these to a Clubcard purchase is clever.
Another clever offer on the way to our shelves is made up of wine brands with reduced alcohol. Redmond Gavin of Comans has told Checkout that its range of McKenna wines from Chile will soon be offered at 10% ABV.
Not only does this work in harmony with the wishes and spirit of the MUP legislation, it also reflects a growing trend among young consumers, who are actively seeking out low-alcohol drinks.
It has been noted across the trade that growth in low- and no-alcohol products is continuing to rise. Every major store in the country is now selling low- and no- alcohol beer, cider, spirit and wine offerings.
Many of these were completely unheard of a few years back. Much of this has been due to the quality offered by many of the beers, but this quality has since been replicated by spirits and wines.
McGuigan Zero, at €5 a bottle, now sits comfortably beside a Birra Moretti four-bottle pack, at €6.
Reflecting On The Rankings
This year’s Top 50 Alcohol list of alcohol products reflects a retail trade that experienced fabulous sales during lockdown.
It will be interesting to see what the 2023 list brings, now that we have grocery inflation running at 5.5% and rising. Indeed, 2022 doesn’t accurately reflect the post- pandemic lockdown drop of over 6%, year on year, in grocery sales.
What our list does show, however, is how retail in Ireland continues to be dominated by familiar brands that are occupying rankings similar to those that they have enjoyed over the past five years.
It should also be noted that we have three brands – Santa Rita, Casillero del Diablo and McGuigan – performing well as top-20 wines, with the first two taking top-ten places on the Top 50 Alcohol list.
The lists also remind us that price alone is a contributor to, and not a final arbiter of, success.
Unless pricing is closely matched to positioning, our lists show that very few brands have ‘super brand’ status. This is especially true for new categories and labels.
The year 2021 saw the rise of seltzers across the world, but they don’t seem to have resonated with consumers in Ireland. Remember when Blossom Hill was a top-ten product? It doesn’t feature at all now.
Likewise, brands such as Bavaria, Stella Artois, Jacob’s Creek and Miller Genuine Draft have failed to achieve Top 50 status. It is very difficult to continue to perform at the very top.
Brand positioning is not an indication of consumption patterns. The best brands will be acutely aware of societal change and consumer preferences. When craft beers became fashionable, the Open Gate Brewery at Guinness brought us Hop House 13. It is back on our list this year, at number 50. How long before we see a no-alcohol beer?
A Desire To Drink Less
The Drinkaware Barometer series of research papers shows, very clearly, that ‘consistently across the 2021 and previous Drinkaware Barometer surveys, people report a desire to drink less (circa 30%), and this desire is especially evident in the 2021 Barometer amongst those who are binge drinking or who have increased their consumption in the past 12 months. An additional and encouraging finding is that more than one in three have already made small positive changes to their drinking.’
Perhaps the Chilean McKenna range from Comans Beverages is showing us one way forward in this challenging market. The behaviour of the company that brought the Las Moras brand DADÁ and a host of own-brand beers to Ireland is worth noting.
Ally this to David McEnroe’s comments about Classic Drinks and innovations such as Clubcard discounts, and we may well see an interesting shift in brand awareness over the coming year.