1. An Exploration of Trends in The Spirits Category
Behind The Bottle
An Exploration of Trends in The Spirits Category |

2. Contents | Background and Objectives Industry Overview
Research Results
- Consumer Purchase Behavior
- Gifting and Entertaining
- Touchpoint Influence
Best Practices |

3. Background, Objectives, Outcomes
Through a combined Havas/Evolve Media research partnership, we wanted to deepen our knowledge of sentiment, decision-drivers and purchase behavior of the Spirits consumer to support targeting efforts, and enhance our understanding of the role of media touchpoint
Objectives
Business Outcomes
Uncover trends in Spirits consumption
Understand the relationship between consumer behavior and brand adoption
Identify key drivers of seasonal gifting
Uncover the impact of each media touchpoint in the decision journey
Understand the role of digital media in driving consideration
Inform communication strategies across consumer cohorts
Develop guidelines/best practices for communi- cation strategy across media channels
Develop tactics that drive trial and brand choice
Identify opportunities for increasing digital advertising campaign efficiency and effectiveness
Inform Creative messaging |

4. Industry Overview |

5. Consistent YOY category growth
2015 vs 2014
Consistent YOY category growth
4.1 %
Growth Up
3.4 %
U.S. spirits supplier 2015 revenues $24.1B
Growth Up
Volume growth up 2.3 % Revenue growth up 4.1 % Export volume growth up 3.4 %
2.3 % V V
Growth Up V |

6. Spirits is pulling share from the beer category
55.5 %
49.8 %
48.8 %
48.3 %
47.8 %
47.5 %
28.7%
33.3%
34.3%
34.7%
32.5%
35.4%
15.7%
16.9%
16.9%
17.0%
17.0%
17.0%
2000
2010
2012
2013
2014
2015
wine
spirits
beer |
Source: DISCUS Distilled Spirits Council of the US – February 2015

7. Growing interest in Dark Spirits reflected in sales trend
Dark Spirits Bourbon, Rye, Whiskey
White Spirits Vodka, Gin, Rum, Tequilla
9-Liter Cases
%Change
9-Liter Cases
%Change
58 MM
0.0%
100 MM
0.0%
2010
2010
58 MM
1.1%
105 MM 5%
2011
2011
59 MM
2.5%
110 MM
4.1%
2012
2012
60 MM
3.4%
110 MM
1.4%
2013
2013
63 MM
2.3%
113 MM
0.7%
2014
2014
65 MM
2.5%
114 MM
0.8%
2015
2015 |
Source: The Beverage Information & Insights Group, Liquor Handbook 2015/Mintel

8. Media investments have followed the shift to dark spirits
Ad Spending (MM)
Ad Spend ($00)
$150
$130
$110
$90
$70
$50
$30
$10 $0
300
275
250
225
200
175
150
125
100 75 25
-$56 MM
-29% |
Vodka
-9% |
Tequilas
+$52 MM
14% |
Rum
63% |
Bourbon Whiskey
-9% |
Whiskey
79% |
Scotch Whiskey
78% |
Brandy &
Cognac
-12% |
Gin
2011
2015
2011
2015
7% |
Canadian Whiskey
White Spirits
Brown Spirits
2011
2012
2013
2014
2015 |
Source: Kantar Stradegy,

9. With the proliferation of smartphones,
consumers have more access to each other and to new ideas
% of Adults Who Own…
In 2016, people spend
2 hours and 11 minutes
MORE on digital media
Than they did 5 years ago.
45%
2015
92%
2015
83%
2011
68%
2015
10%
2011
35% 2011 v
Tablet
Smartphone
Cellphone |
Source: Pew Research; eMarketer

10. 68% of Millennials Agree:
“I like to experiment with new cocktails” |

11. We wanted to know more
How are On-premise vs. off-premise experiences are impact brand choice?
What is the Opportunistic potential of Gifting and Entertaining?
Where are consumers finding inspiration and information?
How can brands win in this environment? |

12. Executive Summary
BRAND MATTERS -- There is a very high level of brand preference in the Spirits category both on and off premise. Implications for Spirits Brands; brands are built (and market share) before consumers/shoppers enter the premises.
AFICIONADOS BUILD BRAND AMBASSADORS -- Knowledge of spirits is rapidly becoming social currency, especially among Millennials, who will order name brands as a way of impressing others. Millennials are more interested in top shelf brands than other age segments. Implications for Spirits Brands; on location “intelligence” matters.
LIVING ROOM LOUNGE -- The high level of brand loyalty and preference for off-premise consumption is driving the movement to “bring the bar home”
GIVE THEM A REASON TO SPLURGE – Presentation, aesthetics and personalization trumps budget when purchasing a gift. Presentation matters. |

13. What We Learned? | On and off premise brand preference
How entertaining and gifting affect spirits choices
Key consumer influences and touchpoints |

14. Location Bias? Depends on the Spirit…
Does location put consumers in the mood for specific spirits? Results from our study suggest that there is such a thing as location bias. While all spirits are consumed everywhere, certain types tend to be consumed more heavily in certain environments.
Gin:
Cognac:
125 Index
At a home
75 Index
At a restaurant
After Dinner Cordial
147 Index
At a restaurant
40 Index
At a bar/nightclub
162 Index
At a bar/nightclub
57Index
Special Occasion/Event
Bars: Gin, Irish Whiskey
Restaurants: After Dinner Cordials
Home: Cognac
To Read: Gin drinkers are 62% more likely to drink Gin at a bar/nightclub vs other locations
Q3: Where did you drink these beverages in the past 30 days? |
Source: Havas/Evolve Spirits Study 2016

15. Brand Matters: High level of brand preference in spirits category
Brand choice for personal consumption slightly outpaces on-premise preference
On-Premise
Brand
Preference
Agnostic
72%
70%
64%
71%
76%
63%
78%
28%
30%
26%
29%
24%
37%
22%
Off-Premise
Brand
Preference
Agnostic
83%
80%
88%
74%
79%
84%
85%
17%
20%
12%
26%
21%
16%
15% |
Source: Havas/Evolve Spirits Study 2016

16. Personal favorites |

17. On premise | 52% 28% 20% Typically Order
While brand selection begins before entering – nearly half of patrons can be influenced on premise
52%
Typically Order
Prefer Specific Brand or Top Shelf
Not Picky
28%
20%
Bartender/ Server Recommendation
Q4: When ordering drinks while out at a bar, restaurant or nightclub,
what type of brands do you typically order/ |
Source: Havas/Evolve Spirits Study 2016

18. Millennials rely on server recommendations more than other cohorts
When it comes to driving trial among brand agnostics, Servers and Bartenders are more likely hold sway over Millennials relative to older cohorts- regardless of the type of spirit. That doesn’t mean that older generations aren’t open to suggestion..
Index: v
Millennial (21-34) v
Gen X (35-54) v
Boomers ++
240
210
180
150
120 90 60 30 -
Millennials: Vodka, Rum, Bourbon, Scotch, Single Malt, Irish Whiskey, Cognac
GenX: American Whiskey, Canadian Whiskey
Boomers: Tequila
Scotch Whiskey
Irish Whiskey
Tequila
Base: Rely on server recommendations |
Source: Havas/Evolve Spirits Study 2016

19. Millennials more interested in impressing peers than other cohorts
I sometimes order a premium brand name just to impress my peers (% agree)
Millennial
Gen X
Boomer
28%
20%
11%
White non Hispanic n=1209 Multicultural n=391 Millennial (21-34) n=497 Gen X (35-54) n=611 Boomers ++ n=497 Less than 100K n=822 Income of 100K+ n=745 Emerging Affluent n=165
Q17: On scale of 1 to 5, with 1 being the highest, how much do you
agree with the following statements? |
Source: Havas/Evolve Spirits Study 2016

20. Going for the Best: Millennials more interested in top shelf brands than older generations
Total Millennials (21-34) Gen X (35-54) Boomers ++
Typically Orders Top Shelf Brands (on premise) 40 30 20 10
Vodka Gin Tequila Rum Bourbon Scotch American Canadian Single Irish Cognac After
Whiskey
Whiskey
Whiskey
Malt
Liquor
Whiskey
Q4: When ordering drinks while out at a bar, restaurant or nightclub,
what type of brands do you typically order? |
Source: Havas/Evolve Spirits Study 2016

21. Buying in Store | 61% 23% 15% Typically Order
Consumers decision to purchase are more defined; opportunity exists for more in-store activation
61%
Typically Order
I Buy Preferred or
Premium Brand
Not Picky
23%
15%
Rely on Store Assoc. Recommendation
Q6: When purchasing for yourself to drink at home, what do you typically buy? |
Source: Havas/Evolve Spirits Study 2016

22. Top shelf brands see less generational bias for off-premise consumption
Total Millennials (21-34) Gen X (35-54) Boomers ++
Typically Purchase Top Shelf Brands to Drink at Home
Top Shelf
Preference
Strongest for
Vodka and Tequila
Irish Gin Single Malt Rum Bourbon Scotch Tequila Vodka Cognac After Dinner
Whiskey
Whiskey
Whiskey
Brandy
Cordial
Q6: When purchasing for yourself to drink at home, what do you typically buy? |
Source: Havas/Evolve Spirits Study 2016

23. Top shelf brands rule at the bar; preferred brands are brought home
On-Premise
Brand
Preference
Agnostic
72%
70%
71%
76%
63%
78%
28%
30%
29%
24%
37%
22%
Off-Premise
Brand
Preference
Agnostic
83%
80%
88%
74%
79%
84%
85%
17%
20%
12%
26%
21%
16%
15%
28%
30%
72%
28%
72%
28%
37%
28%
22%
22%
24%
28%
29%
28%
28%
26%
64%
26%
74%
Q4 & 6: When (…), what type of brands do you typically order/purchase |
Source: Havas/Evolve Spirits Study 2016

24. Consumption behavior implications
The high degree of brand preference in the Spirits category may pose a challenge to increasing market share. Conversion may be difficult, but the payoff is worth it.
Bars are a great place for top shelf discovery, but Brand Agnostic consumers may need prior familiarity with the brand before deciding to try it.
Server and bartender recommendations have a relatively low influence over brand discovery, except among Millennials who tend to rely on server suggestions especially for Brown Spirits.
Knowledge of spirits is rapidly becoming social currency among Millennials, who will order name brands as a way of impressing others. Servers can take the role of social currency “bankers” by helping to educate customers on brand differentiation.
The high level of brand loyalty and preference for off-premise consumption, especially among Millennials, is driving the movement of the Living Room Lounge, ie bringing the bar experience home. |

25. What We Learned? | On and off premise considerations
How entertaining and gifting affect spirits choices
Key consumer influences and touchpoints |

26. 39% have given spirits as a gift
More common among younger, affluent and multicultural segments
% have purchased
spirits for gifts
50%
48%
46%
44%
42%
40%
38%
36%
34%
32%
30%
43%
37%
45%
Millennial 21-34
Gen X 35-54
Boomers 55+
Less than 100K
Income of 100K+
Emerging Affluent
White Non- Hispanic
Multicultural
Q5: In the past year, did you purchase any of the following beverages in the store for your own personal needs or give a gift? |
Source: Havas/Evolve Spirits Study 2016

27. Spirits interest spikes in Q4 holiday season|
Source: Google

28. Brand Name is Primary Factor in Driving Purchase
All Use Average 1
Brand Name
Tried and True/Favorite Brand
Primary Purchase Drivers 2
Recommendation from friend/family
Low Price/Value
Secondary Purchase Drivers 3
Bottle/ Package Design
High Price
Tertiary Purchase Drivers
Q10: In addition to taste, which are your THREE most important
factors you consider when choosing an alcohol brand |
Base: Total Respondents (n=1605)

29. Top 5 factors when purchasing…
But for gifting and entertaining, other factors affect brand selection
Top 5 factors when purchasing…
Q10: In addition to taste, which are your THREE most important
factors you consider when choosing an alcohol brand to… |
Base: Total Respondents (n=1605)

30. Top 5 factors when purchasing…
At home, experience and value trump
experimentation. Brand name is less important
Top 5 factors when purchasing…
Q10: In addition to taste, which are your THREE most important
factors you consider when choosing an alcohol brand to… |
Base: Total Respondents (n=1,605)

31. Tried and true / Favorite brand
At home, brand name and origin matter more to boomers. Value and mixability matter more to millennials.
Most important factors when purchasing for myself for drinking in my home
Millennial (21-34) Gen X (35-54) Boomers ++
61%
57%
49%
47%
39%
39%
32%
35%
29%
19%
15%
11% 9% 9% 8%
Tried and true / Favorite brand
Brand Name
Country of Origin
Low Price / Value
Mixability
Q10: In addition to taste, which are your THREE most important
factors you consider when choosing an alcohol brand to… |

32. Personal favorites |

33. Top 5 factors when purchasing…
When entertaining, brand is more important. Spirits must please the crowd and be versatile (mixable)
Top 5 factors when purchasing…
Q10: In addition to taste, which are your THREE most important
factors you consider when choosing an alcohol brand to… |
Base: Total Respondents (n=1,605)

34. For entertaining, price and mixability matter to Millennials more than older segments
Brand matters to Millennials, but when entertaining, additional levers such as price and mixability factor into the purchase decision
Most important factors when purchasing for guests/entertaining
Millennial (21-34) Gen X (35-54) Boomers ++
55%
48%
47%
44%
43%
35%
35%
26%
23%
22%
16%
14%
11%
10% 8%
Tried and true / Favorite brand
Brand Name
Low Price / Value
Mixability
Bottle / Package
design |
Source: Havas/Evolve Spirits Study 2016

35. Parties = stock the bar | "cover all the bases" vodka rum whiskey gin
variety - list (whsikey gin and vodka); "beyond" jager and tequila
Cara
Brad
Chris
no preset budget, whiskey and brandy, in-store impulse choices, no budget |

36. Top 5 factors when purchasing…
When gifting spirits, image matters
Top 5 factors when purchasing…
Q10: In addition to taste, which are your THREE most important
factors you consider when choosing an alcohol brand to… |
Base: Total Respondents (n=1,605)

37. Gifting conveys an image
Caroline
5-option 5 (packaging)
0:01-0:20 AND
bought boss Grey Goose
Brad
4-gift
0:04 - 0:11 AND 1:06- 1:21
JW Blue with engraved initials
Beth
4-gift
0:18 - 0:25, 0:38-1:04
best brand I can afford, put a basket togheter with glasses |

38. Gift packaging more important to millennials vs. older generations
Most important factors when purchasing for a gifting
44%
47%
58%
Brand Name
Millennial (21-34) Gen X (35-54) Boomers ++
39%
37%
30%
29%
19%
18%
Bottle / Package
design
Tried and true / Favorite brand |
Source: Havas/Evolve Spirits Study 2016

39. Compared to other categories, whiskey and
Cognac are most likely to be gifts
Q5: In past year, did you purchase any of the following beverages in
the store for your own personal needs or to give a gift? |
Base: Total Respondents

40. Gifts more likely to carry high price point
When it comes to the amount consumers will spend on Spirits, gifts are meant to impress. More people will spend $30 or more on a gift than they will for themselves or for entertaining
% Spent $30 or more on a bottle
Among consumers who…
Purchased for Themselves
Purchased for Entertaining
Purchased
for a Gift
50%
53%
67% |
Source: Havas/Evolve Spirits Study 2016

41. Gift occasions reduce price sensitivity among lower income
“Low price/value” is top 3 consideration
20%
17%
Gifting
$100K+ Income (B)
20%
28%
20%
Entertaining
20%
<$100K Income (A)
32%
For Myself
Q10: In addition to taste, which are your THREE most important
factors you consider when choosing an alcohol brand to… |
Source: Havas/Evolve Spirits Study 2016

42. Gifting conveys an image
Caroline
5-option 5 (packaging)
0:01-0:20 AND
bought boss Grey Goose
Brad
4-gift
0:04 - 0:11 AND 1:06- 1:21
JW Blue with engraved initials
Beth
4-gift
0:18 - 0:25, 0:38-1:04
best brand I can afford, put a basket togheter with glasses |

43. Holiday season implications | 1 2 3 4 5
Brand matters. Brand name is #1 factor for gifting and entertaining in the spirits category. Personal recommendations are crucial. Recommendations from friends/family are important in all use occasions. With personal consumption, factors related to personal taste, value, and authenticity are most important (tried and true/favorite brand, price, and country of origin). When entertaining, mixability is a top consideration, especially for Millennials who tend to serve up cocktails over straight drinks. When giving a gift, package design and the appearance of the bottle matter more. Price matters less, even for lower income consumers. 1 2 3 4 5 |
Source: Havas/Evolve Spirits Study 2016

44. What We Learned? | On and off premise considerations
How entertaining and gifting affect spirits choices
Key consumer influences and touchpoints |

45. Planning against spheres of influence
Promotions
Content Publishing
TV/Video Content
CRM
Paid Social
Word of Mouth
Branded Events
Organic Social
Programmatic
Advertising
Partnerships
Search
Influencer
Consumer PR
Mobile
Cause Marketing
User-Generated
Tools and Apps
CULTURAL Networks
Create Relevancy
COMMUNITY Networks
Build Trust
PERSONAL Networks
Drive Action and Stay Connected |

46. Inspiration begins before entering the store or restaurant
Experience is part of the inspiration
TRADITIONAL
TV, Print, Radio
24%
IN STORE
Retail
29%
DIGITAL
Search, digital newsletters,
mobile apps, social media
42%
ON PREMISE
Restaurants, Bars
or Nightclubs
44%
WOM
Recommendations from
Family, friend or co-worker
59%
Design Note:
This is a KEY slide in terms of how brands market and advertising. Key takeaways:
Advertising is a necessity – engage before the ZERO MOMENT OF TRUTH
Media Mix matters and one size does not fit all needs – reach influencers
Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? |
Source: Havas/Evolve Spirits Study 2016

47. Family, friend or co-worker
Inner circle has most influence
Spirit Drinkers Media
WOM
Recommendations from
Family, friend or co-worker
59%
WOM is particularly influential for:
Boomers 67%
…also rely on:
44% On Premise
41% Digital
30% In Store
18% Traditional
Design Notes:
Digital both promotes and support the conversation reinforcing the experience
Brands need to earn the right to be a part of the conversation – digital plays a role in the relationship the brand needs to create with the consumer – offering cocktail recipes, ingredients and background similar to how the wine industry focuses on underlying ingredients
Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? |
Source: Havas/Evolve Spirits Study 2016

48. On premise experiences motivate experimenting
Restaurants, Bars
or Nightclubs
44%
On Premise is particularly influential for:
Affluent 51%
Gen X 47%
Emerging Affluent 46%
…also rely on:
59% WOM
39% Digital
28% In Store
17% Traditional
Design Notes:
Digital both promotes and support the conversation reinforcing the experience
Brands need to earn the right to be a part of the conversation – digital plays a role in the relationship the brand needs to create with the consumer – offering cocktail recipes, ingredients and background similar to how the wine industry focuses on underlying ingredients
Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? |
Source: Havas/Evolve Spirits Study 2016

49. Digital encourages conversation, experimenting and reinforces the experience
45% agree: If an article I read on the Internet is relevant to me, it doesn't matter whether the article is written by the publisher of the website or an advertiser. (48% of Millennials)
Top 3 Touchpoints
DIGITAL
Search, digital newsletters,
mobile apps, social media
42%
Digital is particularly influential for:
Millennial 62%
Gen X 48%
Lower income <$100K 52%
Emerging Affluent 63%
…also rely on:
53% WOM
32% O Premise
20% Traditional
16% In Store
Design Notes:
Digital both promotes and support the conversation reinforcing the experience
Brands need to earn the right to be a part of the conversation – digital plays a role in the relationship the brand needs to create with the consumer – offering cocktail recipes, ingredients and background similar to how the wine industry focuses on underlying ingredients
Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? |
Source: Havas/Evolve Spirits Study 2016

50. Digital discovery focused around food and cooking content
(search,digital newsletters, mobile apps, social media)
Design Notes:
This slide confirms need to be a resource for ideation and a valued source
Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? |

51. Information at the moment of need
Spent 1hr+ researching spirits online in past 30 days
43%
of Millennials spent
an hour or more
researching spirits on
mobile devices in
the past 30 days (mostly on mobile)
Total Millennials Gen X Boomers
42%
34%
32%
32%
26%
25%
25%
22%
20%
20% 9% 9%
Computer
Tablet
Smartphone
Q18: In the past 30 days, how many hours did you spend researching liquor brands and products on each of the following devices? |
Source: Havas/Evolve Spirits Study 2016

52. Food and beverage content provide further inspiration
53% agree: "I'm more likely to pay attention to an ad if it contains a recipe" (57% of Gen X)
Q16: Which would you consider your top three touchpoints to get ideas and recommendations about what spirits to buy? |
Source: Havas/Evolve Spirits Study 2016

53. 39% Agree: Sources of inspiration |
“I would rather see an advertisement that tells a story about the product rather than shows facts and information” |

54. Media Implications 1 2 3 4
Identify expert influencers and amplify Experience drives experimentation Tell a story. Digital powers the conversation. Balanced media mix, targeting complementary passions
Identify influencers and amplify [WOM] – personal networks
Experience drives experimentation [ON PREMISE] – community networks
Tell a story. Digital powers the conversation. [DIGITAL] – cultural networks
Balanced media mix, targeting complementary passions [CULTURAL TOUCHPOINTS AND TRADITIONAL MEDIA] |

55. Best Practices |

56. Appendix

57. Our approach | Quantitative and Qualitative Phases:
Online Interviews to hear the voice of the consumer, in their own words, focusing on spirits heritage, gifting and holiday entertainment (n=20)
Online Survey to interview 1, adults in December 2015, exploring behaviors, influences and attitudes pertaining to alcoholic beverages
Cognac drinkers n=305
Whiskey/whisky/bourbon drinkers n=963
Rum drinkers n=575
Vodka drinkers n=765
Tequila drinkers n=536
$100k+ HHI n=504
Millennial n=498
Emerging affluent n=184
Multicultural n=375 |