As record unemployment worsens in debt-ridden Spain, consumers are seeking solace in a bottle of gin.
The country’s recent economic woes hit liquor demand hard. Spain saw a 5.1% drop in consumption between 2006 and 2011, the most recent year for which data are available, according to data group International Wine & Spirit Research.
But despite a cutback in premium spirits across southern Europe, gin is proving a surprising tonic for producers.
The volume of gin sold rose 3.5% between 2010 and 2011 to 3.2 million nine-liter cases, according to IWSR, making Spain the world’s third-largest gin market by volume. By contrast, whiskey fell 9.5% and rum volume declined 6.7% in the country over the same period.
Gin’s resurgent popularity is particular to Spain—world-wide volume fell 2.9% in 2011, and even in the U.S., which is the second-largest gin market by volume after the Philippines, volume fell 1.6%. The juniper-flavored spirit is resistant to evolving trends in Spain, said Ed Pilkington, Diageo DGE.LN -0.82% PLC’s director for vodka, rum and gin. “Whiskey took over from brandy. Then there was the rum boom. [But] gin was always there.”
Charles Rolls, co-founder of upscale tonic water and mixers group Fever-Tree, agreed that gin in Spain is taking market share from other categories, notably golden rum and whiskey. This is linked to Spain’s warm climate, he said.
“[There is] a decline in the interest for whiskey as a post-lunch or post-dinner drink. It is very heavy. Gin is the perfect spirit because it is a diuretic. It opens up the blood vessels and makes you less full after a big meal,” he said.
The spirit is helped in Spain by the popularity of “long-drinks”—alcohol and a soft drink—usually drunk with generous measures. “Gin tonics” served in large balloon glasses with lemon or lime are a staple of the buoyant bar and club scene, while classic gin cocktails are returning, like the Negroni, made with embittered red vermouth, and the French 75.
A wave of specialist gin bars, like Del Diego in Madrid and Bobby Gin in Barcelona, are keeping the category fresh. Long gin menus and imaginative garnishes like nutmeg and peppercorns have elevated the spirit to an art form by bartenders and chefs.
Fernando del Diego, the 64-year-old proprietor at Del Diego, said he noticed an increase in gin consumption in the past year. He attributed the boom to better brand advertising and a proliferation of gins and gin-mixes that make the drink attractive to a wider clientele.
“Gins are evolving toward premium brands infused with botanicals,” he said, standing behind a bar that offers 40 different brands. “As a dry drink, it is a man’s drink. Now there are very nice gins with fruity flavors especially for women,” he said.
Mr. del Diego said gin had long been popular in Spain as a digestif after lunch and as an afternoon refreshment. “What’s new is that it is being taken as an after-dinner drink,” Mr. del Diego said.
William Grant & Sons’ rose and cucumber-infused gin Hendrick’s, distilled in the Scottish seaside village of Girvan, has made inroads by capturing the consumer zeitgeist of drinking less but better, according to Euromonitor International analyst Spiros Malandrakis. “[It has] a very convincing narrative [by] tying into the eccentricity of the British,” he said.
“About the time when Hendrick’s was launching in Spain, we were also launching. Now six years later, there are 120 brands of gin on the Spanish market and 15 tonic waters,” said Fever-Tree head Mr. Rolls.
“The category has always been large in Spain. It was a sleeping giant [that] has awoken,” said IWSR analyst Jose Hermoso.
Europe’s beverage giants are making the most of the Spanish gin resurgence and plowing marketing money into launches of new flavors and variants. Diageo’s softly spiced Tanqueray Malacca, for example, is only distributed in selected markets, such as Spain and the U.S. Malacca, which was sold briefly in the U.S. more than a decade ago, has now been relaunched, but with 100,000 bottles released world-wide only to hotels, bars and restaurants.
Diageo said that the growth of ultra-premium gin is most vibrant, although lower-price brands are also doing well. Spain is the world’s biggest market for premium gin by demand per capita. “For many years, Tanqueray was the priority in gin [in Spain], but we are getting Gordon’s back,” Mr. Pilkington said. The group is launching Gordon’s Crisp Cucumber in May and will also consider twists to its higher-strength yellow label range.
Pernod Ricard SA’s RI.FR -1.15% Beefeater gin is also a top-seller in Spain, rivaling Bacardi Ltd.s Bombay Sapphire and Beam Inc’s BEAM +0.68% Larios brands. First-half global sales, excluding acquisitions and disposals, and volume of Beefeater rose 5% and 2%, respectively, outpacing the growth of some the company’s main Scotch whisky marks. Seagram’s gin, popular in the U.S., is also showing strong growth in Spain, the company said.
As always with gin, a tonic mixer is never far behind. For Fever-Tree, founded in 2005, Spain’s desire for gin represents a commercial boon in the multibillion-dollar spirit and mixer market. After private investment this month of close to £50 million ($75.5 million), the U.K. company aims to more than double its annual sales in three years to £40 million, with annual revenue in Spain growing 25% on average.
Mr. Rolls admits that Fever-Tree’s business in Spain kicked off fortuitously after Ferran Adrià, previously the renowned chef at the El Bulli restaurant in the Catalan town of Roses, recommended its Indian tonics, blended with quinine, spring water and botanicals flavors. A Mediterranean variant launched two years ago, with lemon oils from Sicily, as well as thyme, geranium, rosemary and mandarin, now accounts for 10% of the company’s total tonic sales in Spain.
“Gin is the big love that continues to power forward,” he said.
Source: Wall Street Journal