In the U.K., grocery shoppers are spending more on alcohol thanks to a push in the premium market.
Basic economics tell us that as prices go up, sales often go down. But despite UK grocery stores seeing price inflation at a four year high, alcohol sales have continued to surge—up 5.3 percent this year compared to the same period last year. Though an easy explanation would be that Brits want to drink away the pain of having their annual grocery bill go up nearly £150 per year, an analysis at the consumer insights company Kantar Worldpanel has a different explanation: Grocers are convincing shoppers to spend more on booze thanks to “premiumization”—pushing slightly higher end products at higher prices.
This trend in British supermarkets is being driven by a larger trend in the alcohol industry as a whole: Consumers have becoming increasingly interested in craft spirits and other craft beverages. As a result, stores are both stocking more alcohol drinks from independent producers and trying to improve their own private-label offerings by targeting the premium market. “Supermarkets’ buyers are looking closely at trends that appear in on-trade outlets,” Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, told The Drinks Business. The implication is that though in the past supermarkets may have stuck to more mainstream products, the overall boom in craft booze is reaching grocery store aisles—and it’s really boosting these stores’ bottom lines.
“Premiumization” has specifically been one of the core tenants of growing discount retailers like Aldi and Lidl which go out of their way to instill an air of quality, especially in their private-label products, while keeping prices low. So as an example, when Aldi introduced a £49.99 wine advent calendar earlier this month or when Lidl touted new “hangover-free” champagne, the hope is that specialty products like these can get people to spend more while still providing a sense of value. Apparently, these strategies are working, not just for those two chains, but for many across the UK.