SPIRITS: GIN – London calling

Beefeater’s Kennington distillery is being revamped as part of the brand’s focus on its London gin heritage, while Gordon’s is recruiting the foul-mouthed Gordon Ramsay to fight its corner. Tom Bruce-Gardyne reports

“Gee! Are you named after that famous gin?” asks yet another group of American tourists traipsing round the Tower of London. The Beefeaters politely shake their heads and explain for the umpteenth time that the link is the other way round, that they were formed as King Henry VII’s bodyguard over three centuries before James Burrough created the eponymous gin. They have been wearing their funny black hats, Elizabethan ruffs and scarlet and gold uniforms since 1552. And no, they are not sponsored by Pernod Ricard, though they do receive a bottle every Christmas.

The French multinational acquired Beefeater in July 2005 when it bought Allied Domecq. At one point it had been a big UK brand with sales over 200,000 cases a year says Nick Blacknell, the new brand manager at Pernod. In 1999 sales were down to 99,000 according to the International Wine & Spirit Record, and by 2004 had collapsed to just 26,000. Blacknell, who used to run Plymouth Gin before its acquisition by the Swedish group, Vin & Sprit AB, is well aware of the challenge he now faces. “It needs rebranding in the UK, but there is a huge amount of goodwill from the trade and consumers,” he says. Under Allied, he believes the problem was one of investment rather than image. “Basically it was not a well-loved brand.”

The link between “mother’s ruin” and Britain’s capital city goes way back. In her book, Classic Gin, Geraldine Coates called it “the crack cocaine of its day” in 18th century London with production running at 14 litres per citizen by 1733. Various Gin Acts followed to suppress demand and gradually the number of distilleries dwindled to almost none. Today, apart from
a tiny, boutique operation beside the Thames, the Beefeater distillery in Kennington is the only one left.

The words “London Dry Gin” have survived and adorn millions of bottles drunk every year. But though consumers may think it is distilled there, the term now refers only to the method of production whether the gin is made in Fife as in Gordon’s, Warrington as in Bombay Sapphire or even Spain as in Larios. A number of regional food and drinks have been able to reclaim their roots, but Blacknell accepts London Dry Gin has become far too generic for that. “It may have been possible years and years ago, but not now.” Yet he is convinced that having a distillery in London is “a massive asset”. It has certainly never been properly exploited in the past.

As of 2004 global sales of Beefeater were 2.4 million cases, with almost a million in Spain, followed by the US, where it claims to be “the number three premium gin”. In December 2005, Pernod launched the Refreshingly London campaign in the US. Print ads feature a bottle splashed in the centre with lines of gin and tonic streaking out to the corners to form an alcoholic Union Jack. The company is considering rolling it out into a global campaign. Back in the UK, the Kennington distillery is being upgraded and given a trendy new bar for tastings and training sessions. The aim is to entice journalists and trade people to the site.

At the same time, Pernod will have to grow the brand here, at least in its home town for the sake of all those visiting Americans who have been told that Beefeater is “refreshingly London”. As Blacknell says, “It simply wouldn’t be credible if it did not have a strong and vibrant presence in the city.” 

Although total gin sales in the UK are static, if not in slight decline, the “premium” sector is growing by 6% in the off-trade according to ACNielsen. Of course, as ever, it depends on how you define “premium”, arguably the most over-used word in the drinks industry. But if you based it on a price of £11-£13, the sector would include Bombay Sapphire, Beefeater, Tanqueray, and Plymouth Gin. Helped by repackaging in June for the main brand and a new advertising campaign in print and outdoor, the latest MAT Nielsen figures to August show Plymouth up 12.8% in the off-trade. Victoria Bowstead, brand manager for Plymouth’s UK distributors, Maxxium, sees this as proof of gin drinkers trading up.

Further evidence comes from own-label gin which accounts for 6.5m litres, or 42% of the off-trade. The sector has been shrinking for some time and fell by just under 10% in the year to June, says AC Nielsen. And yet, the real fall-out has almost certainly been among the bargain basement gins, sold unbranded behind plain white labels with prices as low as £6.19. Such products are made from cold-compounding where the gin flavours appear to be sprayed on like air freshener and soon disappear once poured. It’s therefore not surprising if those seeking simply alcohol have found entry-level vodka a better bet. Meanwhile, the range of upmarket own-label gins has grown together with exclusive labels like Blackfriar’s, produced by J&G Greenall for Sainsbury’s.

Has it got to be Gordon’s?

All of this has an impact on the UK’s top-selling gin which dominates the off-trade with a 32% share, some six times that of its nearest rival, Greenall’s, which retails for £9.99. Gordon’s is clearly a powerful brand, though how much it’s still seen as a premium product is debatable. It is often on special offer from its RSP of £11.50 to match Greenall’s which grew 14% in the year to June. According to Alan Robinson, Greenall’s sales and marketing manager, “The frequency of price promotion down to £9.99 shows Gordon’s is frightened.” Diageo retort this has more to do with the supermarkets using a market leader to drive footfall than pressure from the competition, be it own-label or from the likes of Greenall’s. The company says the latest MAT figures put its growth in the off-trade at 6.6%.

Diageo’s gin brand has decided to back Gordon – not the would-be prime-minister, but the foul-mouthed chef. It is sponsoring Gordon Ramsay’s 10 part TV series, Kitchen Nightmares, from October as part of a £2.5m spend this Christmas. The link with food is said to highlight the aperitif qualities of gin and tonic, a message to be rammed home in a new campaign with the strap-line, The G as in G&T.

Supporting the mother-brand is Gordon’s Sloe Gin which has been good at recruiting new consumers into the sector, and a premium expression in Distiller’s Cut. There’s also the new Classic Mix of Gordon’s and Tonic in a 70cl bottle which was launched in May. Less successful has been the smaller canned version which has been seriously eclipsed by Greenall’s. Alan Robinson claims his can is growing by 55% a year and enjoys sales three times that of Diageo’s. He adds, with barely concealed glee, that Tesco has just delisted Gordon’s G&T. While ready-to-drink gin is one of the few bright spots in an RTD sector down 12% in the UK, it is still way behind Russia. Using a local partner to supply the neutral alcohol, Greenall’s is booming in Moscow where residents enjoy glugging on 330ml cans on their way to work.

A question of strength
Peter Mackay, MD of Alcohols Ltd which supplies a range of gins to mainly continental clients, remembers when UDV cut the strength of Gordon’s a decade ago. “I don’t think the average consumer noticed the drop from 40% to 37.5% ABV.” He was working for the company at the time and says the benefits were huge. By today’s standards, the saving in duty and VAT on retail sales equates to over £5m for the brand. Sadly for Diageo, much of the money is now given back to the supermarkets to support the sort of price promotion that undermines brand loyalty.

“I think there is an argument that stronger strength does signal ‘more premium’ in the consumer’s mind,” says Nick Blacknell. “The question is how many are actually sensitive to alcohol, beyond a certain type of gin drinker who does worry about strength.” Neither he nor Desmond Payne, Beefeater’s master distiller, would claim 40% is necessarily better, just that it is the ideal strength for their brand. Victoria Bowstead, whose Plymouth gin weighs in at 41.2% abv, believes alcoholic content matters. “In consumer research it comes up time and again among gin drinkers who know what strength their G&T should be.” It is also worth noting that premium own-label gins are often at 40% ABV or above if only to distinguish them from the standard offering from Tesco, Waitrose or whoever.

“Five years ago there would be one own-label, Gordon’s, Bombay Sapphire and probably one other premium gin,” says Nick Blacknell about the UK off-trade. “Now, there would be the retailer’s own premium brand to compliment their basic own-label, Gordon’s with its extension Distiller’s Cut, Beefeater, Tanqueray, Plymouth and Bombay.” In addition, a number of superpremium gins have carefully positioned themselves on the shelves, like Hendrick’s which gained national distribution through Waitrose two years ago and sells for £19.99. Such a gin at such a price would have been inconceivable in the supermarkets in the nineties.

“What gin offers,” says Blacknell, “is more product differentiation. In the past gin was considered a pretty blanket sector, almost an industrial spirit. It has come a hell of a long way.” And Geraldine Coates, who runs a dedicated website called gintime.com, would drink to that. “People have talked about a revival in the category since Bombay Sapphire arrived 15 years ago. It is now becoming a reality with the launch of a whole raft of new premium gins.”

© db November 2006