Food & Drink articlesHigh Spirits(01 April 2005 00:00)The statistics say so: in terms of value, spirits are the second-most important part of any pub or bar's drinks offering after beer. Volumes may be slipping, down a half of a per cent or so year-on-year, but value is still rising, and at around 3.4b a year, on-trade sales of spirits are not far off 1b greater than on-trade sales of wine.
That value translates powerfully into margin, too: spirits are the second-most important contributor to pub profit, at about 17%, equal to packaged lagers, second only to draught lagers at 23% and well ahead of draught ales at 12%, soft drinks at 11%, food and machines at 7% and 5% respectively, and wine at a poor 3%. Suppliers like to point out that a round of two alcopops and two pints of standard lager will deliver up to 30% less margin value than a round of two gins and tonics and two rums and colas. Article continues below
But are licensed retailers making enough of the opportunities spirits offer? Is there more they could be doing to extract greater margin, moving customers up towards more premium offerings, adding value through selling cocktails? Or is there a danger that trying to sell more spirits will bring on the wrath of the anti-binge-drinking campaigners? After all, one bar operator, JD Wetherspoon, found itself having to reduce the strength of its jugs of cocktails and end double-spirit discounts last year, a move interpreted as an attempt to appear more socially responsible. Ironically, the anti-bingers protesting about jugs of cocktails at 5 a throw have fallen for one of the myths about spirits - that any spirit-based drink must be strong. As Adam Martin, marketing director at Mitchells & Butlers, points out, a double vodka and Red Bull in a bar actually contains less alcohol than a pint of Stella or a large glass of Chardonnay. In any case, what appears to be happening in the on-trade spirits market is a distinct move towards quality instead of quantity, as customers go for more premium drinks, particularly premium vodkas - two-thirds of pubs say vodkas are their main growth area. At spirits supplier Maxxium, which deals in such brands as Jim Beam and Absolut vodka, brands development manager Jim Grierson reckons the big high street multiple bars "have done a good job in the past 18 months", opening up their lists to include more premium spirits, and bringing in a different type of consumer as a result, one who is more knowledgeable about what is available - and who is prepared to pay for what he or she wants. Part of this heightened awareness is down to the rise of specialist operations such as Inventive Leisure, whose Revolution vodka bars have been hugely influential in educating the younger spirits-drinking consumer about what is available. To compete, mainstream high street operators have had to make more than a nod in the direction of range, presentation, staff training and so on. Suppliers are willing to help. Diageo and Halewood have been working with the Brannigans chain, for example, while Maxxium has fitted out a 1950s American Airstream bus as a mobile cocktail classroom, with an on-board mixologist, Wayne Collins, who travels the UK giving lessons to bar staff. At importer Wine & Spirit International, managing director Dale Sklar believes the big attraction that spirits ought to hold for high street bar operators is that, unlike the big beer brands, they are not "known-value items", to use a supermarket expression. "With Stella and Strongbow, everybody knows what the price is," he says. "When it comes to Calvados or Absinthe, they're much more price-elastic, and higher margins can be achieved." Sklar, too, believes the big chains are doing a good job supplying what their particular customers want in the spirits line, but he reserves his real admiration for the smaller operators, such as Revolution, and Liverpool's Baa Bar group. Baa Bar, he says, has taken the idea of the "layered shooter", a multi-hued mixture of differently coloured spirits and other ingredients, and made it the company's trademark, something that will be hard for others to copy without punters knowing it's at best a homage to Baa Bar. Cocktails The role of cocktails - and particular sorts of cocktails - in forming the image of a chain is important. As Martin at Mitchells & Butlers points out, Browns has been known for more mainstream cocktails since the chain started in the 1980s, and a strong range of cocktails continues to be important as part of its customers' expectations. Fellow M&B chain All Bar One lists only a half-dozen or so cocktails, preferring to be known for wits wines and its premium Continental lagers. Yet another take is supplied by Whitbread's 43-outlet TGI Friday's. Marketing operations manager Ray Weeks says one in four drinks sold is a cocktail, and every bar carries 120 different cocktail ingredients. TGI underlines the efforts needed to specialise in cocktails: every bar-staffer starts off as a "bar back", shadowing the bar tenders. They undergo four weeks of training, and learn 100 cocktails, before they work at the "service bar", out of sight of customers. After a year, they are then ready for their "master bar" certificate, by which time they will be expected to know 500 cocktails. One chain looking to lift its cocktail offering is Brannigans, the high street bar group owned by Trevor Hemmings. It is testing out a new and more "female-friendly" concept aimed at the party market. Cocktails won't work for everybody who is looking for a high-margin way to improve spirits sales, however. Rhys Oldfield, a co-founder of London-based specialist cocktail bar chain Be at One, now with four outlets, warns that operators need to play to their strengths - and weaknesses. If staff turnover is high, for instance, they can't be trained to supply anything but the most basic cocktail list. If outlets are using specialist ingredients, such as fruit pures, only once or twice a week, product quality is going to suffer. Cocktail-making needs specialist equipment, and the disgust is clear in Oldfield's voice when he dismisses pubs that measure spirits into cocktails from optics. Each to their own, Oldfield insists: "We don't serve pints - we leave that to the specialists, the pubs." Source: Chain Leader UK |
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