Testing times spark innovation across Britain’s gin industry

The COVID-19 outbreak and the closure of bars, restaurants and shops has resulted in unprecedented changes in consumer behaviour. Combine this challenge with Brexit, and distillers across Britain have needed to implement innovative strategies to get their bottles to lips.

Brexit’s economic shockwaves had many small and medium-sized distillers already thinking about innovation at the start of the year.

Will Edge, Founder of Greensand Ridge Distillery, sees opportunity to increase his brand’s appeal. He said: “We can differentiate ourselves as a home-grown, domestic brand, as I think there’s a drive for localism all around the world. However, a lot hangs on how ‘Britishness’ is viewed by the population after Brexit.”

Others have implemented wider export strategies, such as Michael Kain, Managing Director of 6 O’clock Gin. He explained: “We are looking to the USA and Canada to increase sales there, but we certainly haven’t given up on Europe. We’ll just have to work our best with different import and export rules.”

As coronavirus suddenly swept the globe, it quickly became clear that making greater changes was vital for British distillers in 2020.

The closing down of on-trade venues, such as pubs and restaurants during lockdown, saw the main sales route and income generator for many small and medium-sized brands quickly evaporate. Kathy Caton, Founder and Managing Director of Brighton Gin, said: “Like many within the industry, we in effect lost 90% of our route to business sales overnight, with hospitality being plunged into the deep-freeze.”

The company’s exporting ambitions in response to Brexit uncertainties have also been put on ice for the time being. Kathy continued: “Focusing on export had been the chief goal for 2020, but [with Brexit] it feels that the entire deck of cards has been thrown in the air.

“Longer term, I really hope that Brighton Gin has a bright future in exporting, but the handbrake has gone on that in the short term.”

Tours of popular rural distilleries across the country also came to a halt, along with on-site revenue generated from distillery linked shops and cafes. Daniel Szor, CEO of Cotswolds Distillery, which usually runs tours seven days a week in Stourton, said: “It was hard when we had to cancel fully-booked tours. We had also just opened two new shops in Bourton-on-the-Water and Broadway, which hit us very hard when we had to close them.”

Sudden demand for alcohol-based hand sanitiser to combat the virus gave some distillers something in the early days of lockdown to allow them to do their locally bit to helping out. Gin Guild members such as Brighton Gin produced not-for-profit sanitisers to do their part and increase their brand awareness. Kathy explained: “We partnered with locally-based skincare company A.S Apothecary to ensure what we produced was suitable for long-term use.

“For each one sold through the website, two are donated to frontline NHS staff, care homes, charity and community organisations looking after those in isolation, delivery drivers and other food and drink producers to keep them working.”

However, hand sanitisers aren’t the long-term solution Will at Greensand Ridge is looking for. He said: “It’s a very short-term market and is already dying off. It’s great that we’re helping the public, but we needed to do more.”

Relief has come from a boom in direct-to-consumer sales for many distillers through their websites, which in some cases have surpassed orders from off-trade wholesalers. It has been reported that online gin sales have outstripped all other spirits since lockdown began, with Fever Tree mixers also reporting a 24% increase in online sales in the first month of lockdown.

Daniel Szor said: “Wholesalers such as Waitrose and Majestic have been quite strong, but not enough to make up for the on-trade loss. The strength of online sales through our own website, on the other hand, has surprised all of us.”

Cotswolds Distillery is relieved to have hired a digital marketing agency at the start of the year and begun improving its online presence before lockdown. Daniel described: “We’ve effectively created a war cabinet in our digital marketing group. We go crazy on search engine optimisation and every day push ourselves a little further up the page.”

Even distillers without a preemptive digital plan have bolstered their websites to meet the new demand. Michael at 6 O’clock Gin said: “We’ve ramped up our own online sales – these have gone through the roof. We’ve turned our online business on its head in six weeks.”

Karl Mason, Director of Masons Yorkshire Gin, added: “We have increased by perhaps 400% our online activity, so that is making up some of the lost business.”

Greensand Ridge Distillery has capitalised on the trend by increasing its social media activities, including online tasting sessions for influencers. Will explained: “We’ve had good relationships with spirits influencers and provide stock for them to taste and promote to their followers.

“Consumer engagement can be expensive for a small and growing distillery like ours even outside of lockdown, and digital marketing is a powerful remedy to that.”

Logistics have been severely affected by the COVID-19 outbreak, something Cotswolds Distillery has for example experienced with glass imports from Italy. Brighton Gin decided to take no chances with its increased website orders and has begun delivering products directly to consumers where possible. Kathy said: “Local deliveries are done by ourselves, largely on a Brighton Gin pushbike, following safe non-contact delivery best-practice.

“We also offer nationwide next-day delivery via couriers who are also following best practice.”

Many attribute the shift in purchasing behaviour to the fact drinking and socialising from home is currently the only option for consumers, especially when looking to relax from lockdown restrictions. Michael said: “I don’t see gin consumption falling, it’s just moving around. My feeling is we’re drinking the same amount, just at home rather than in pubs, bars and restaurants.

“Drinking gin is a social thing, but people are still meeting up online for a drink.”

The popularity of direct-to-consumer sales through the internet has seen effective and quick strategy changes to meet the demand. However, Karl warns fellow distillers against putting all their eggs in one basket: “The biggest opportunity is online, but it is highly competitive with every brand jumping on it at the same time.

“People may change their habits in the long term, but the biggest threat is still just how long the hospitality sector stays closed and the worry is at what speed it comes back.”

Just as distillers have been flexible in adapting to Brexit and the COVID-19 pandemic, James Hayman, Co-Owner of Hayman Distilleries, believes the industry should be ready for the hospitality sector when it eventually returns, even if it does so in a more limited form. He said: “New trends and ways of living will emerge from COVID-19, but as humans we are pretty good at returning to our comfort zone.

“There is a general acceptance that 30% of the on-trade won’t re-open, which is probably a fair assessment. Longer term I expect it will take 18 to 30 months for us to return to normal.”

Increased digital sales can’t replace the hospitality sector for distillers like Kathy, who still sees on-trade as well as growing retail sales as Brighton Gin’s biggest opportunities, despite the brand’s successful direct-to-consumer ideas. She said: “The threat is absolutely about cash flow. What if hospitality doesn’t reopen for the rest of the year? What happens to our wonderful sector and what happens to the gin industry in particular?”

However, the government allowing the hospitality sector to reopen too early may do more harm than good, according to Will. He opined: “I think any attempt to reopen too quickly will really harm public support.

“Public sympathy is critical and the hospitality industry has a responsibility. We depend on public trust to come in and support our businesses and consume our products safely.”

James Hayman believes the government can help most of all by revising its furlough scheme to help employees hit the ground running upon returning to work. He said: “The flexi-furlough scheme is very welcome as it allows us to manage the uncertainty of how hospitality re-opens.

“Ideally, it would have been flexible from the start to allow those furloughed to have had some involvement. When flexi-furlough starts, we will have teams who haven’t worked for several months.”

Innovation over digital and direct-to-consumer sales now may secure distillers with another long-term source of revenue once on-trade businesses return to the scene. The aftermath of Brexit and the coronavirus outbreak will undoubtedly present distillers with further changes in consumer behaviour, however, the first half of 2020 has proved the industry is ready to adapt to meet demand.