Established spirits brands are “struggling to compete” with craft players and face “fragmentation” in the market, new research has found.

According to the IWSR’s Global Spirits Trends Report 2015, the overriding trend in the international spirits market in 2014 continued to be that of “premiumisation” across the majority of categories and price points.

The growth of an aspirational middle class in the emerging markets couple with a surge in discerning consumers in developed markets has driven widespread “trading up” trend in the industry.

However, the research suggests that this presents “mixed opportunites” for the drinks market as premiumisation has given rise to the pervasive craft movement, which in turn challenges the market share of established players.

“Although premiumisation has played into the hands of some larger international brands, such as Jack Daniel’s and Hendrick’s, many established brands face a mounting challenge from the rise of the craft sector and the overall fragmentation of the market,” IWSR states.

“As consumers seek to explore, experiment and discover ever-more unique offerings, international brands are struggling to compete at this same level.

“Additionally, in many markets the traditional middle is being squeezed as consumers either gravitate to buyers’ own-labels or trade up to higher price points.”

According to the IWSR, premiumisation has also “manifested itself” in the growth of the malt whisky category, Japanese whisky, single barrel and “esoteric” American whiskies and super-premium gin.

Conversely, a leading bar consultant recently argued that craft labels “mean nothing” to consumers, claiming such terms “do not sell gin”.

Source: Spirits Business

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