The gin market - France (2023)

1.2 Global trends in an increasingly popular spirit drink

Gin is an alcoholic spirit which, in recent years, has gained in popularity across the globe thanks to the cocktail craze [***]. We begin by outlining the trends in the spirits market in which it is situated, before explaining the particular success of gin.

By ****, the global spirits market was valued at $*** billion. According to data from The Business Research Company, this market is set to grow at an average annual rate of *.*% over the coming years..

Global spirits market size World, ****-*****, in billions of US dollars Source: ****

The global market is mainly driven by expansion in developing countries and their growing populations, but also by market premiumization, digitalization and innovation in line with new consumer expectations, particularly regarding environmental and health concerns.

Conversely, the main challenges facing the global market are restrictions on alcohol advertising, high taxation, strict rules and regulations in certain regions, and health problems linked to excessive alcohol consumption.

As for gin, global growth is strong, estimated at *.*% over the period ****-****. This means that global sales will rise from **.* billion euros in **** to **.* billion in ****.

Gin market growth World, ****-****, in billion euros Source: ****

In ****, gin consumption will be mainly concentrated in Europe, where it will ...

1.3 Gin increasingly appeals to French consumers

Between **** and the first half of ****, the gin market in France experienced remarkable growth, with its market value almost doubling. The size of this market rose from ** million euros to *** million euros, reflecting a growing craze for this spirit. This substantial increase reflects the growing popularity of gin among French consumers, stimulated in part by trends such as premiumization and the rise of micro-distilleries.

Gin market sales growth France, ****-**** Source: ****

As part of the highly dynamic spirits market, this sector is enjoying a moment of grace with French consumers. Growth in the gin market is mainly driven by a move upmarket, increasing the added value of the products sold. Gin's appeal can be explained by the popularity of cocktails in pop culture.

Difficulties in the spirits sector due to complex economic contexts.

Despite very good figures for the sector as a whole, a third of French spiritscompanies, including many SMEs, recorded negative results in the last financial year, a rate similar to that of the Covid year. The situation looks set to be difficult, withcosts for glass on the rise (***). Faced with these challenges, companies are having to dip into their cash reserves, affecting **% of them in the first half. ...

1.4 International trade

We will use the data collected on the UN Comtrade website. French gin exports very well internationally, where its premium dimension is recognized and appreciated. So much so, in fact, that the balance of trade is largely in surplus, amounting to **.* million euros in ****. In ****, the balance will be in surplus by **.* million euros .

Foreign trade in gin France, ****-****, US$ million Source: ****

This strong export performance is driven by an ever-increasing diversification of destination countries, with the United Kingdom and the United States at the forefront, where French gin is perceived as a luxury product, creative and full of new flavors.

Share of gin exports by country France, ****, in percent Source: ****

France's trade balance on this market is in deficit only with the Netherlands, the historic home of gin, the United Kingdom, where gin has been popular for centuries and which has played a major role in spreading it throughout the world, and Japan, which offers original, high-end gins that are highly appreciated. Proportionally, however, gin is mainly imported from the UK, as summarized in the table below. This can be explained by the fact that gin is central to British popular culture, as seen notably in James Bond films, ...

1.5 The effects of the Covid-19 epidemic

The Covid-** epidemic has not spared players in the spirits market, with sales plummeting to their lowest level since April ****. The postponement of purchases to supermarkets and hypermarkets was unable to compensate for losses in cafés-hotels-restaurants. In the case of gin, growth was also hampered by the closure of nightclubs.

Monthly sales index for the spirits market (***) France, ****-****, base *** in **** Source: ****

However, business has picked up faster than expected. "The start to **** has been rather good," says Jean-Pierre Cointreau, President of the French Spirits Federation.the intensity of the recovery varied from product to product, with gin showing particularly good momentum.

Sales trends for alcohol categories in supermarkets France, from January *th to May *nd ****, in % Source: ****

However, exports of French gin have fallen back slightly, after several decades of strong growth. Total volume, in number of **-bottle cases, was *,***,*** in ****, for a *.*% change on **** figures. It was in terms of value that the decline took place: the sector exported a total of ** million euros, down *. *% on the previous year.

Change in gin exports by value France, ****-****, € million Source: ****

2.1 Hangover in France: structural decline in spirits consumption by volume

Consumption of spirits has fallen sharply in recent years. In ** years, per capita consumption of pure alcohol has fallen from *.** liters per person in **** to *.** liters per person in ****, under the influence of public policies to raise awareness of the dangers of alcohol. Consumers of spirits are becoming increasingly reasonable, and are increasingly choosing quality over quantity.

Spirits consumption per person France, ****-****, liters per person aged ** or over Source: ****

In terms of frequency of consumption, older people and men are the most frequent drinkers, with men over ** showing the highest rate of daily consumption (***). Similarly, over half of men aged ** to ** claim to drink at least one glass a week, ** points more than women in the same age category. Conversely, women are more likely not to drink spirits: **.*% of them say they don't drink alcohol, compared with **.*% of men. [***]

However, in the midst of this general decline, gin and other"white spirits" (***), which represent only *% of the spirits market in France, are doing well: their consumption by volume per household increased by **% over the period ****-**** [***].

2.2 Sustained growth in premium products

The curve below highlights the premiumization of the French spirits market, with prices up **% in ** years. What's more, the sharp rise in **** is the result of the Egalim law of October ****, which raised the prices of certain spirits by between *% and *%. As distributors need to better remunerate farmers and producers, they have passed this increase on to prices. [***]

Consumer price index for spirits and liqueurs France, ****-****, base *** in **** Source: ****

Premiumization is the most significant market trend. For **% of volume sold, premium gins create **% of total value. From **** to ****, the premium segment grew in value by **%, and the superpremium segment by **.*%. The beverage has strong potential to continue this move upmarket, given the diversity of flavors and ingredients that can make it up.

Weight of the three segments in volume and value France, ****, % (***) Source: ****

In the supermarket and convenience store segment, Hendrick's, famous for its rose and cucumber-infused gin, is focusing on attracting new premium gin enthusiasts. This strategy includes the annual launch of exceptional limited editions, such as Flora Adora in ****, distinguished by its unusual floral infusion. European Union regulations concerning gin, which is traditionally a neutral spirit based mainly on cereals, juniper berries and coriander, offer considerable scope for ...

2.3 Interest in mixology and cocktail culture

Over the years, cocktail culture has become increasingly popular in France. The practice was revived in the **s, and its success has continued ever since. So much so, in fact, that the vast majority of French people drink cocktails: **% in ****, for an average annual consumption of *.* liters per person [***].

Within this trend, gin in particular is inseparable from mixology [***]. More and more bars are dedicating their menus to gin-based cocktails. Gin is well-suited to the world of mixology, since it conjures up images of sophistication, creative recipes, travel and terroir.

The new market for ready-to-drink cocktails

after the first confinement in ****, Stephan Tenhaef, President of Bacardi Martini France, notes a craze for takeaway cocktails [***]. This formula, offered by bars, is becoming increasingly popular. Sanitary constraints are circumvented, but bar quality is still the order of the day. This trend accompanies the rise of digital technology.

There is also a growing offer of canned cocktails. Sales of "pre-mixed alcoholic beverages", or ready-to-drink alcoholic beverages, grew by **.*% between **** and **** [***].

Rosé gin and feminized demand

Historically, gin consumption has tended to be male. In ****, **% of French gin drinkers will be men [***]. However, in recent years, after enjoying success in Spain and England, gin rosé ...

3.1 Value chain

The French gin industry brings together several different players involved in one or more stages of the value chain. The value chain comprises * main phases:

The first is the extraction of agricultural raw materials, in this case juniper berries, as well as the other natural elements that will flavour the drink. These raw materials are then processed to obtain the desired alcohol, notably by fermentation and distillation. Packaging refers to the bottling and packaging of the beverage. Finally, the finished products are distributed through a variety of channels (***)

Source: ****

***,***

However, in ****, we estimate spirits sales at around *.* billion, based on data from the French National Institute for Statistics and Economic Studies (***). Indeed, using the NAF code for spirits, **.**Z, we find: sales index **** * sales **** / sales index **** = ***.* * *.* / ***.* = *.* billion euros in ****. As we have seen, in that year the gin industry produced a value of *** million euros. Gin therefore represents around *% of the spirits market, which allows us to estimate that it creates around *,*** jobs, dividing all the results obtained by ***.

Jobs supported by the gin industry France, ****, in full-time equivalent jobs over one year Source: ****

3.2 Leading brands

The main companies buying gin are in the CHR (***) and nightclub segments, where this drink is very popular. indeed, in addition to offering music and a dance floor, nightclubs are also drinking establishments, whose wide range of spirits represents a significant part of their business.

In France, the three historical players are Gibson's, marketed by La Martiniquaise, Gordon's from Diageo and Bombay Sapphire, marketed by Bacardi. However, in ****, Hendrick's took advantage of the market's confinement and premiumization to win market share.

Market share by gin brand France, ****, % (***) Source: ****

3.3 Distribution

In-store distribution

In B*C spirits sales, hyper and supermarkets accounted for three-quarters of sales volume in ****.

Breakdown of spirits and champagne B*C sales by channel France, ****, in Source: ****

CHR and nightclub distribution

Market share by brand is not evenly distributed within the CHR network. The Beefeater brand, owned by Ricard, has a low profile in supermarket sales, but dominates the on-trade segment. It sells **,*** liters of gin on the out-of-home market, corresponding to a market share of over **% [***]. Gin is particularly strong in nightclubs, where the legendary gin and tonic has a large following.

However, growth in this distribution channel was severely hampered in **** and **** by the Covid-** crisis, which led to the closure of all establishments in the sector. Despite a loss of over *.* billion euros and the permanent closure of one in ten establishments in ****, the market should stabilize again in ****, with the removal of restrictions [***].

The CGA by NielsenIQ study indicates that, in the first six months of ****, gin recorded a *.*% increase in its market share in the CHR sector in France. This growth comes against a backdrop where sales of drinks in this sector were almostthree times higher than in the first half of ****. These ...

4.1 Gin price details

Historically, gin was very successful in Holland and England, and more recently in the rest of the world, because it was cheap to produce and easy to make. Gin doesn't need to age, which makes it easier to manage stocks and cash flow [***].

However, with the growing popularity of this white spirit, the product is becoming available in ever more premium spirits, making it necessary to distinguish between three categories of gin in terms of price:

In ****, **% of companies faced price increases from their suppliers, a trend that continues in ****. Furthermore, **% of companies consider that inflation leads to a **-**% increase in their cost price.

Inflation-driven cost price increases for spirits France, ****, in Source: ****

The Fédération Française des Spiritueux (***) reports that inflation continues to affect production costs in the spirits and aperitif wine sector. After a difficult ****, **** follows the same trend, with worrying prospects for ****. Despite efforts to maintain the purchasing power of the French, any drop in prices would jeopardize the survival of the industry. Although some production costs have stabilized, they remain high. Other costs, such as sugar and glass bottles, have risen by ** to **%. Labor costs have also climbed, as companies seek to preserve their ...

4.2 Development of gin production in France and categorization of its varieties.

French production:

Gin production in France is not rooted in any tradition, and the first brands are barely twenty years old. However, it has grown considerably. In ****, French gin exports continued to grow at a rate of **%.

As for the model adopted, these dozens of young brands rely on artisanal distilleries and liquorizers, where they craft their very bold creations in small volumes. Production has been made possible in particular by the proliferation of whisky micro-distilleries, which are seeking to diversify by expanding into gin.

This trend is driven by the desire to consume locally, but also by the demand of international customers to discover original flavors. French producers are seeking to enhance the French wine tradition by infusing grape flavors into the drink. Such is the case with G'Vine, created in ****, which in just a few years has become a benchmark in the field, taking second place worldwide in the super-premium gin segment [***]. Indeed, according to the President of Maison Villevert, in a wine country like France, "grapes ennoble spirits".

Some French gins are enjoying great international popularity, such as Citadelle (***), used by a famous Spanish chef in his gin and tonic recipe. They are particularly successful in the United ...

4.3 The role of taxes in pricing

The tax burden on spirits is overwhelming for the industry. These spirits account for **% of tax revenues, even though they represent only **% of alcohol sales in France. The price of a bottle sold at €**.** per liter in **** will be three-quarters tax (***).

Breakdown of consumer price for a bottle of spirits sold at €**.** France, ****, amount in € Source: ****

5.1 An increasingly strict regulatory framework

France is concerned by European regulations. In particular, the following regulations are central: Regulation (***) No ***/**** of the European Parliament and of the European Council of January **, **** on the definition, description, presentation, labeling and the protection of geographical indications of spirit drinks; In connection with this regulation, regulations ****/*** and ***/**** update the aforementioned framework. In addition, there is a comprehensive national legislative framework. given that spirits are alcohols of at least **º and that the majority of products have an alcohol content well above the average, spirit drinks are highly regulated. Below is a non-exhaustive list of laws and regulations relating to alcohol (***) in France: Production Bottles of alcohol must be strictly labeled with the following information: type of beverage, ingredients, alcohol content, capacity, allergens, "Zero alcohol during pregnancy" pictogram. Regulation of certain products to obtain the AOC (***) label, as in the case of Genièvre Flandre Artois, a traditional gin produced in the Hauts-de-France region. In all, there are ** products with the AOC acronym in France. [***] Distribution Retailers need a Licence IV to sell spirits in the CHR (***) circuit. Anyone operating a drinks establishment must undergo training to obtain a "permis d'exploitation". There are often restrictions on the hours during which liquor outlets ...

6.1 Different gin recipes

• La Martiniquaise Bardinet
• Diageo
• Bacardi
• William Grant and Sons
• Beam Suntory
• Distillerie de La Roche-Guyon
• Arduenna Gin
• Bombay Sapphire
• Drinks and Spirit
• Ellustria
• Gibson's
• MXO Spirit
• Spirits Station