SPAIN IS THE WORLD'S THIRD-LARGEST CONSUMER OF GIN, after the Philippines and US, and its appetite is only getting stronger. Perhaps it’s an exaggeration to say the past five years or so have seen Spain’s version of the UK’s 18th century Gin Craze, but there is a curious comparison to the fact that the country’s thirst for the spirit also comes in times of hardship.

While Spain’s GDP has been steadily dropping since 2009 – and unemployment has reached 20% – gin’s volume increased 11% in the period (2008-2013) and is expected to rise a further 14% by 2018, says Euromonitor International.

“I’m not an economist, so I can’t comment broadly about recovery, but what I can say is that the growth of gin seems to have bucked the economic difficulties in Spain,” says JC Iglesias, Beefeater global brand director. “While the economy has struggled and some spirits categories have faced challenges, gin has continued to grow.”

Give or take, there are about 300 gin brands active in the Spanish market, of which approximately 100 are indigenous. 

Charles Maxwell, Thames Distillers director and master distiller, told Drinks International about the struggle Spanish gins are experiencing when trying to get a foothold in such a saturated market. “In Spain indigenous brands have seen volumes decline by several million cases. In nearly all established gin markets, while volumes may not be increasing the value of the sales is markedly on the rise – this is especially true of the US, Spain and the UK and other markets are showing clear signs of following.” 

Euromonitor figures show sales value has increased in both the Spanish on and off-trade over the past five years – 1%, 30% respectively. 

Larios, Beam Suntory’s locally produced mid-market gin, is one that has suffered in the volume stakes. The brand was the market leader until 2008 but dropped off the million case mark in 2009 and has yet to regain the leading position and case sales experienced in 2007 (1.32m.) This brand’s fate is symptomatic of the trends towards premiumisation. 

According to Euromonitor, from 2008-2013 economy gin dropped 17% in volume, the mid-priced segment fell 1.5%, premium increased 9% and super-premium rose 200%.

What’s more, premium gin increased by 14.8% in volume last year, while super-premium gin rose by 2.4% from 2012-2103. 

Maxwell describes Spain as the “best market in the world per head for premium gin”.

Lewis Johnstone, sales director at Hayman Distillers agrees. “It is incredibly important to have a stake in the Spanish market if you are serious about your premium intentions,” he says. 

Fabien Callais, export manager for Eurowinegate, adds that the Spanish market is “definitely the most dynamic and most important premium-segment gin market in the world”.

But there’s a warning from Paul Kerstens, export director of Casalbor, which handles Bayswater gin and launched Wint & Lila, a London dry gin earlier this year. “The category has won over the whole concept of premium gin. But after the boom, when other categories gain favour, only up to 15 premium gins will survive in the Spanish market. There is absolutely not enough room for all these brands and some will undoubtedly fall out.” 

Launches 

With demand comes supply. “A lot of new brands have entered the market – premium and super-premium – and a few have gone just as quickly. But most of the big and recognisable brands, such as ours, have seen steady growth,” says Beefeater’s Iglesias.

With such a proliferation of brands, many question the sustainability of growth. The forecasts may be good for the category, but it is up to the individual brands to find a way of staying in such a competitive arena. 

This is something Hayman’s Johnstone acutely appreciates: “One cannot underestimate the importance of having a strong local partner. Many brands get into Spain and find themselves having to re-set their sights and change their partners. 

“Getting it right first time is key.”

Big players 

At more than one million cases, Beefeater Dry is the number one selling spirit in Spain – that’s spirit, not gin. “In the premium segment you cannot ignore the significant presence of the big-spending large multinational brands such as Beefeater, Tanqueray and Bombay Sapphire, with some strong super-premium offerings such as Hendrick’s,” says Johnstone.

Iglesias says the on-trade is key for such big names. “Generally speaking, Spain has a unique spirits market that is driven by the on-trade with brands at the centre of it all,” he says 

“We very much see ourselves as competing with not only other gins, but also with other on-trade driven spirit brands,” he adds. “We’ve seen consumers shift from locally produced, standard-grade products such as Larios to imported premium and super-premium products such as Beefeater and Beefeater 24. Because the serve often happens in the on-trade with the product poured at the table, the choice of brand is always important.”

Hayman’s gins might be small by comparison, but Johnstone says they are making steady progress with placements in key on-trade premium accounts and listings in premium off-trade areas such as El Corte Ingles. 

“We are coming to market with our new packaging now and this makes a difference for a discerning consumer,” he says.

G&T and cocktail culture

The G&T is now a highly developed art and, much as it may bore some readers to read about balloon glasses and garnish-gin-tonic combos, the Spanish are showing no signs of fatigue. 

According to Juan Carlos Moroto, marketing director of Global Premium Brands, which owns Gin Mare: “There are always categories coming up and down in Spain but we have never seen a boom like that of the G&T.” Spain accounts for 30% of global sales of Gin Mare.

“Spain has always been important to G&T consumers as long drinks are really big here,” Paul Kerstens says. “If you watched the World Cup, people were drinking G&T – it is the only thing they have. If you entertain people, the only spirit on offer is gin.” 

But what many may not know is that repeated attempts to create or develop a cocktail culture have been in place for many years. “Some isolated outposts of experienced bartenders can and do offer gin cocktails, but there isn’t a strong and sustained need for a classic cocktail culture,” Johnstone says. 

According to Eurowinegate’s Callais, this is all about to change. In the UK, a cocktail culture already existed and people were, as a consequence, interested in the base spirit. “In Spain, it is the other way round,” Callais says. “Gin has been created for premium brands and the mantra is ‘drink less, drink better’. 

“Premium gins open the door to a cocktail culture for bartenders and consumers. The cocktail culture in Spain is going to get much better and is evolving fast.” 

Eurowinegate’s G’Vine works closely with bartenders for this reason, launching Escape to the Grape last year – a global cocktail competition aiming to find the best serve to complement its grape-based, French gin.

But as long as the G&T is king, the T will remain the loyal sidekick and perhaps here is another opportunity.

A tonic exporter, Kerstens appreciates the importance of a good one. “For me, what is key for all people in the market and category is to be able to bring Spanish style. Not all of the 300 or so gins available are complemented by every tonic.” 

Where Schweppes was once the standard, as a result of the G&T trend, new tonic brands have been created and are appearing in the Spanish market, but it is a far less prolific category than the gin sector. 

“Tonic water doesn’t have so many competitors,” Kerstens adds. “I’d say there are five serious contenders and I don’t think there will be any more.” 

The Spanish Gin Craze may be a far cry from the debauched antics of London in the 18th century but it is a trend that just keeps on going and keeps on premiumising. 

Talking to the major gin players, the consenus seems to be: If you’re not in Spain, you’re not in gin.