Gin sales up 151% in five years

In its original form, gin is a little bitter. But add a little bit of fruity or floral flavour, and suddenly the market is thirsty for it – as the numbers prove.

Tucked away in Ferreirasdorp in the inner city of Johannesburg is Ginologist, a large purpose-built imported steel and copper distillery. In just three years, its output has led to 50% sales growth year on year.

Ginologist head of marketing Nick Taliakis says Nielsen data shows that major retailers such as Pick n Pay, Checkers, OK and Makro are seeing significant growth in gin consumption across all price points.

Resurgence

“This is particularly interesting because not only have we seen the top end gins grow, but the lower-priced traditional gin brands have also shown a major jump in volume sales,” he says, adding that this has been driven partially by the resurgence in gin drinking, primarily by the craft and small-batch offerings that currently proliferate the retail space.

“The traditional lower priced gins have gained market traction based on their significant retail footprint but also because of the tight economy in 2019,” says Taliakis. “We noticed that South Africans drink cheaper rather than drink less.”

Worldwide gin sales are at an all-time high, he says, with the market showing a continuing appetite for this category in preference to Vodka, which has shown the highest decline in volume terms.

Exports

Ginologist growth has been driven by expanded local distribution and improved consumer off-take as well as significant export partnerships that have given it the opportunity to penetrate foreign markets. Ginologist exports to Namibia, Botswana, Zimbabwe, Germany and the Scandinavian region.

“Furthermore, we concluded a number of partnership deals for ‘own label’ gins as well as manufacturing for third parties, which means we currently manufacture over 20 different gins,” says Taliakis.

Another local gin manufacturer that has witnessed how gin is gaining momentum in South Africa is Sugarbird. Since launching in 2017, it has seen steady growth in sales, with a fourfold increase in 2019.

Sugarbird director Rob Heyns says 65% of sales are achieved during the festive season.

“You may be interested to know that the next biggest alcoholic beverage sales occur over the Easter weekend,” says Taliakis.

Heyns says what he finds astounding about the industry is the rate at which it is growing – in 2014 there were fewer than 10 craft gins available on the market, and now there are more than 100.

According to the SA Wine Industry Information and Systems, gin sales were up 151% – from over six million litres to over 15 million – in the 2014 to 2018 period.

As the graph below shows, 2018 saw a particularly significant increase in consumption.

Source: SA Wine Industry Information and Systems

Gin imports are also on the up, with volumes increasing 381% between 2016 and 2018, as indicated in the following graph.

Imports

Wayne Burrow of the SA Gin Society says SA’s gin imports have increased significantly because the industry is not as well developed as in other countries.

“The other side of it is that we are a country that is full of botanicals. So you have to show someone internationally and take them through the journey [of the various flavours] and they do not always catch onto it as quickly as we hope they would,” says Burrow.

He says this will not discourage SA from exporting larger volumes in the future. “We will start exporting a lot [more] gin as soon as our industry starts to become more mainstream.”

He says gin manufacturers often struggle with pricing internationally because much of the equipment and bottle glass is imported.

Regulatory challenges

Ginologist and Sugarbird both say regulatory requirements make it less than easy to enter the market.

“It requires time and tenacity and attention to detail,” says Heyns.

Sugarbird waited a year to receive a liquor licence. They acquired the national distribution licence within 10 months, and are still waiting for the Western Cape micro-producers licence they applied for last October. They have also been “patiently” waiting for seven months for the South African Revenue Services (Sars) secondary producers’ licence.

“We have found export licensing through Sars to be far more onerous and protracted, which has delayed our export plans for almost a year,” Heyns says.

Ginologist also struggled to secure liquor licences.

“[They are] not easy to obtain,” says Taliakis. “It is becoming more onerous as the government tightens control of the manufacture, distribution and sale of alcohol. Furthermore, in Gauteng a liquor licence is address-specific and cannot be transferred to a different locale.”

He adds: “Alcohol production also carries the added burden of excise and duty which means Sars also takes a very close interest in a company’s record-keeping.”