This article was initially published in the February issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
There have been better times to be in classic gin, but there are plenty of silver linings – if you look hard enough. Joe Bates reports.
Classic gin producers are facing considerable challenges this year. Many smaller craft distilleries in the UK, the world’s biggest gin market, are closing due to soaring costs and falling sales as cash-strapped consumers tighten their belts or switch to spirits perceived as more trendy, such as Tequila and rum.
The gin boom of the past decade may be over, but there are plenty of silver linings to alleviate the gloom. Sales are rising in non-traditional gin markets, super-premium gins are faring well and the indispensability of London-style gins in many classic cocktails ensures juniper-forward gins retain a high profile.
Challenges ahead in the UK
There’s no escaping the fact that the UK’s gin market is faltering: According to industry researcher CGA, its share of the country’s total on-premise spirits market has fallen five percentage points from pre-Covid 2019 to 19%.
The category’s popularity has waned among all age demographics, says CGA, as consumers switch to other spirits and even non-alcoholic options. Gin is also now perceived as an expensive drink option.
Soaring costs have heaped further misery on distilleries with the burden falling particularly heavily on smaller craft operators. Recent closures include Liverpool’s Turncoat Distillery, Darlington’s Little Quaker Distillery and Leicestershire-based Burleigh’s Gin.
Sam Lawson-King, founder of Cotswolds-based King Stone Gin, admits the economic situation became so bad last year that the firm was forced to stop sales to the on-premise and focus on solely supplying its restaurant, The Scenic Supper, to ensure survival. “As utilities increase,” he says, “the cost of living grows and general worries set in; where we put our leftover disposable income, which is lower than it was last year, becomes more important than ever.
“I see consumers investing in brands they already know and love or buying better quality spirits that they ultimately buy less of – leaving the mid-range, newish spirit brands in a grey area. We have seen lead times on bottles increase, botanical prices increase, labour prices increase, which all need to be added on to the bottle price.”
Spain sees post-pandemic revival
In contrast to the UK, gin is staging a modest post-pandemic recovery in Spain. IWSR Drinks Market Analysis forecasts that over the next three years, the category’s sales in the country will post a CAGR of 2%. (Conversely, IWSR expects the UK will suffer a 4% decline.)
Zamora Co’s global brand manager for Martin Miller’s Gin, Arturo Illan, reveals the brand enjoyed strong, double-digit growth in Spain last year, attributing the performance to a “strong on-trade recovery” and the “offer of a high-quality liquid objectively recognised by experts which complements our communication efforts but also helps to drive loyalty”.
Jonathan Marsh, head of EMEA, LATAM & GTR at Quintessential Brands, whose gin brands include Greenall’s, Bloom and Opihr, also highlights the differing performances of the two gin markets. “Standard and premium London Dry Gin is still buoyant and very positive in markets like Spain, while we have seen double-digit declines in flavoured gin in the UK, down 30% in off-trade sales.
“There has been an influx of gin flavours over the past two years and now we are starting to see a drop off in consumption frequency as the market is saturated and consumers are exploring other spirits categories.”
Emerging markets offer potential
Despite this, Marsh says that Latin America offers plenty of potential for classic gin. Quintessential’s gin volumes in the region are growing 30% year-on-year, he says, with the business primarily driven by Greenall’s Original London Dry Gin. IWSR also believes developing and non-traditional gin markets hold the key to the category’s future growth, predicting double-digit volume increases in South Africa, Japan and India over the next three years.
In India, locally-produced IMFL [Indian Made Foreign Liquor] gins once dominated the market, but locally-produced craft gins have transformed the category. By 2026, IWSR expects volumes in India for the standard-and-above price bands to almost treble.
Sanjeev Banga, president of international business at Rampur-based Radico Khaitan, owner of Jaisalmer Gin, is pleased with the brand’s performance in 2022. “There was a big boost in the global travel retail channel thanks to renewed and revenge travel,” he says. “The re-opening of the on-trade across regions helped induce trials and acceptance of Jaisalmer. Newer markets have been opened and distribution within India has also been expanded. In fact, we have doubled our production capacity to cater to the increased demand.
“We have just launched a Gold Edition of Jaisalmer Gin in the UK and other international markets,” he adds. “In addition to the 11 botanicals in classic Jaisalmer, it has seven more from India, including saffron, rose petals and GI-tagged Gandharaj lemon. It also passes through a filter made of intertwined golden silk filament, enriching the gin with gold ions.”
Higher strength and higher value buck the trend
While many mid-range gins seem to be struggling, higher-priced expressions, many of them bottled at stronger ABVs, seem to be flourishing. A sign of this tier’s potential was evident last November when Brown-Forman purchased Spain’s Gin Mare, billed as the world’s No.1 ultra-premium gin, for an undisclosed sum from Barcelona-based MG Distilerías. Established in 2010, 42.7% ABV Gin Mare features mostly Mediterranean botanicals, including Arbequina olives, thyme, rosemary and basil.
Last year, Pernod Ricard’s Chivas Brothers division relaunched the ultra-premium Beefeater Crown Jewel, which first appeared as a limited-edition release nearly 20 years ago. Bottled at 50% ABV, the juniper-forward gin was brought back after bartenders “banged on our door”, according to Desmond Payne MBE, master distiller for Beefeater.
Similarly, Martin Miller’s Illan reveals the company will relaunch its Westbourne Gin variant this year, a higher-strength 45.2% ABV line extension first released in 2003 after bartender requests for a gin suitable for classic cocktails.
Cocktails ensure that classic gin will never go out of style
If there’s one thing that should fortify classic London Dry-style gin producers to weather the difficult times ahead, it’s gin’s central role in many classic cocktails, which continue to grow in popularity.
“Classic, London Dry Gin is central to the popularity of gin and in most cases, it is an important foundation of any drinks menu, back bar or retail shelf,” confirms the founding director of UK-based Silent Pool Distillers, Ian McCulloch. “Our focus is very much on gin and how we can continue to premiumise. We’re finding that the classic gin cocktails – Martinis, Gin Fizz, Bees Knees, Negronis, etc – are holding their own in the on-trade, which is providing us with continued opportunities.”
McCulloch is right. Martinis and Negronis aren’t going to disappear overnight, so classic gin, while not enjoying the electric growth of recent years, is assured of a substantial role in the years ahead.
This article was initially published in the February issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
