The negative effects of COVID-19 on spirits in Spain were amplified by the category’s dependence on the country’s on-premise and tourism. Thankfully, the outlook is now much brighter. Sandra Newman reports.
Last year, according to the Spanish spirits federation Espirituosos España, spirits consumption in Spain rose by 9.9% year-on-year to 165m litres – about 20% below pre-pandemic 2019 levels. The importance of the on-premise for spirits meant the category was more severely affected by the channel’s COVID-related closures than wine and beer, despite an increase in spirits sales via supermarkets and online.
The 2021 figures could have been much worse, points out González Byass international marketing director Victoria González-Gordon. “The Spanish drinks market is very dependent on the on-premise and tourism, both of which remained affected by COVID in 2021,” she says. “As a result, the recovery of spirits sales in volume would have been worse had it not been for a strong finish to the year, thanks to the relaxing of restrictions.
“The first six months of 2021 were defined by on-trade restrictions, a slow vaccine roll-out and confusing travel constraints, which got the year off to a slow start. The travel restrictions in Europe seriously affected the Spanish tourism industry which, in turn, affected drinks sales. However, bookings already suggest that things will pick up this summer as tourist numbers and reservations have steeply increased.”
Beveland Distillers marketing director Jordi Sahis agrees that the tourism revival should boost the category. “Hopefully, this summer there will be a boom in consumption because of the high demand for hotel bookings and flights,” he says.
The trend towards increased spirits consumption during the daytime and lower consumption in the evening has been reinforced during the pandemic, says Carmen Giné, Zamora Co’s marketing director for spirits in Spain (and global marketing director for wines). “The time of consumption of spirits has clearly diversified and expanded towards more diurnal moments: aperitif, after meals and during the afternoon,” she says.
González-Gordon agrees: “Daytime and evening consumption have switched around, with consumers moving to drinking more during the day.” Nighttime consumption has increased recently, adds Sahis, as restrictions have eased, but remains far below pre-pandemic levels.
Rum set to outpace gin
As the spirits category regains momentum, González-Gordon expects rum to be the fastest-growing segment this year. “Dark rum sales are seeing new growth in Spain,” she says. “The wider rum segment is expected to outperform the overall spirits category in the short term. The success of penetration for new occasions and innovation at the premium end are helping to give rum increased presence.”
Girona-based Beveland, which has a broad spirits portfolio, is among the companies to benefit from the growth of rum, according to Sahis. “Our fastest-growing category is rum,” he says. “We have rums from Venezuela (Caracas Club), the Dominican Republic (Relicario and Capitan Bucanero), Indonesia (Marama) and Cuba (Varadero and Doble 9).”
At Zamora, where long-term brand-building initiatives have helped make Martin Miller’s Gin one of the group’s fastest-growing brands, Giné thinks that after-work drinkers switching from gin to rum may help drive rum’s growth in the short to medium term. While keeping an eye on this trend, the company continues to develop Martin Miller’s, which it acquired in 2018: Two years ago, Zamora launched a seasonal variant, Summerful, featuring Arctic thyme and rosemary along with the brand’s signature blend of citrus and juniper.
Gin has experienced a resurgence in Spain, but its expansion now seems to have slowed, explains González-Gordon. “Gin has been a key growth category in recent years: the refreshing taste profile and versatility gives a range of opportunities to promote multi-occasion drinking,” she says. “Add to this the emergence of the flavoured sub-segment and gin has been booming for the last five years. However, the absence of British tourists, supply shortfalls and an unexpected surge from both rum and beer has affected growth in gin.”
González-Gordon estimates that gin is unlikely to grow as rapidly as prior to the pandemic, despite the on-premise and tourism revival. “Gin forms an important part of drinks repertoires and retains a strong grip on certain occasions, but the trend has probably peaked,” she says. “The trade prioritised rotation and brand rationalisation continued, leaving just a few leaders within each price segment. This signalled the end of what was once a dynamic gin movement based on proliferation and trial.”
Despite this, González-Gordon notes, the group’s leading gin brands are among its top performers. “The London No.1 and Mom both continue to perform well in the premium gin market. The London No.1 has increased sales by 21% and Mom is doing particularly well, having grown by 38% in the last 12 months.”
Challenges for brown spirits
Another successful brand for González Byass is Nomad Outland. The Scotch whisky, which debuted in 2014, is produced by partners Whyte & Mackay and aged in Pedro Ximénez barrels in Jerez, which González-Gordon says “adds unique character”. She says the release of the super-premium Nomad Reserve 10-year-old has helped the brand’s sales climb 13% in the last year.
Malts are performing well, according to Zamora’s Giné, who says that although the wider Scotch segment is “experiencing significant drops in consumption, due to its high dependence on night consumption, the malt segment is the one that stands out and should have a good future in the coming years”.
Despite this, González-Gordon says Scotch continues to face challenges. “Image still proves an issue in Spain for whisky,” she explains. “Although less exposed to the local population, American and Irish whiskey have been improving as tourists return to the market. Off-trade sales are buoyant, but a failure to fit into daytime consumption occasions and enhanced support for local products saw resident consumers switch from whisky to beer and rum as they ventured back out into the on-trade.”
Another brown spirits sector, Brandy, has been gradually contracting for some years, but remains important. Familia Torres global spirits director Christian Visalli explains: “At a global level, the Brandy category is still suffering a decline and unfortunately Spain is no exception. Nevertheless, we firmly believe that few spirits categories can claim a heritage and history as rich as that of Brandy.”
Visalli views modernisation as vital for the segment’s future development and says innovation has been a key focus for Torres. “We have introduced a number of different innovations that have contributed to differentiating our offer, but also to present Brandy as a modern and active category,” he says. “In 2020, we inaugurated the Torres 10 Barrel Series with the launch of Torres 10 Double Barrel, followed in 2022 by Torres 10 Smoked Barrel, which is our latest innovation.”
Looking ahead, Visalli says: “We do not yet see dramatic changes in terms of consumer habits in Brandy in Spain. In our view, innovation and premiumisation of the category are the key to success in the mid to long term and we have already been moving in this direction for many years.
“We are witnessing how some other brands in the category have also started to take initial steps in terms of innovation and focus on mixology in the on-trade to offer new alternatives to consumers. This is definitely a good sign because we can all reach new consumers faster if all the relevant players in the industry believe in the potential of the category and its uniqueness.”
After-meal trend benefits liqueurs
Liqueurs is another significant spirits segment in Spain that is battling with a somewhat old-fashioned image. That said, Giné highlights the strong performance of Zamora’s ‘sobremesa’ liqueurs, which are traditionally enjoyed after a meal.
“Zoco Pacharán Navarro, with double-digit growth, is strengthening its position as the leader in the [pacharán] category, with more than 40% market share,” she says. “El Afilador Orujo Cream is growing three times faster than the cream liqueur category in Spain.” Giné believes the outlook for liqueurs is good. “With the growth in daytime consumption, it is expected that the after-meal liqueur category will continue to maintain a positive trend in the Spanish market.”
As the spirits category recovers and develops, Giné highlights a growing appetite among consumers in Spain for premium and lower-ABV products as the key emerging trends. “Within spirits in Spain, the premium and super-premium segments have presented the best performance in recent years,” she says. “There is a growing consumer demand for low-alcohol options, due to the ‘healthy’ trend that seems set to continue and grow in the coming years.”
González-Gordon also notes “an increase in drinking lower-ABV beverages”, but Sahis is more cautious. “The no- & low-alcohol trend is growing slower than the spirits sector expects,” he says. “We need to see in one to two years if it’s a revolution or just a small, niche trend.”
This article was initially published in the July/August issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
