Price not prejudice drives wine choice

The majority of UK consumers look favourably on screw cap, bag-in-box and lower alcohol wines, although price promotions poses a big threat to brand loyalty according to a new report from research firm Mintel.

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Despite a 2.4% uplift this year in value sales to create a UK wine market worth an estimated £10.6 billion in 2012, the findings highlight a steady decline in UK annual volume sales.

This has seen the market shrink from 1.26 billion litres in 2007 to 1.14 billion litres this year, as constrained household budgets saw 39% of consumers confirm they were “reassessing their purchase of wine”.

In a sign that consumers are becoming increasingly open-minded towards alternative packaging formats, just 26% of those surveyed think that boxed wine is inferior, while only 17% distrusted the quality of wines bottled under screw cap.

Commenting on these findings, Chris Wisson, senior drinks analyst at Mintel, said: “Recent years have seen many wine drinkers reappraising their perceptions and use of wine in differing formats and packaging styles.”

Pointing to the superior flexibility offered by bag-in-box compared to bottled wine, Wisson also remarked: “Reducing wastage, boxed wine provides an ideal solution in a market which is both environmentally and cost conscious.”

Signs of weak brand loyalty were evident from the finding that, despite 73% of consumers trusting leading brands in the market to provide a consistently good product, as many as 63% revealed they would switch from their favourite brand if another was on promotion.

One of the most positive trends of the last year has been the rise of lower-alcohol wine, which saw value sales leap by 40% to around £23 million during 2011/12. Mintel suggested this was due in part to the lower duty on wines with an ABV of 5.5% or below, combined with growing interest in healthy lifestyles and lower alcohol consumption.

However, with just 19% of consumers expressing an interest in lower alcohol wines but only 27% expecting lower-alcohol wines to taste inferior, Wisson suggested that the issue remained one of price rather than quality.

“The issue for producers of these lower-alcohol wines is that they are often more difficult and expensive to produce than standard-ABV wines,” he observed, adding: “operators should continue to focus on improving the efficiency of their manufacturing process to be able to compete with standard wines on price profitably.”

Offering a prediction on the future shape of the UK wine market, Wisson suggested: “With many brands now moving away from unsustainable promotion-heavy models, volume sales look set to continue sliding in the years to come.

“However, many consumers are likely to be reluctant to stop buying wine altogether and depending on the level of inflation, the price rises may be higher than the fall in volume, with potential for further value growth.

“Growing segments such as boxed and low-alcohol wine may help to stimulate some growth and represent a cost-effective means of keeping wine drinkers engaged with the market.”