Power Of The Grey Pound

06 May 2005 By db staff writer

d=”standfirst”>Cheer up, the future’s grey. Ageing demographics could see the UK wine market increase by as much as 14 million cases by 2010

Good news stories are hard to find in the wine trade at the moment. So let us forget about the present day and all that talk of consolidation, shrinking margins and hard-nosed multiple grocers, and think about the future. What will be the nature of the UK wine market in five years’ time? And what can we do now as an industry to improve our prospects for the world of 2010?

Out of all alcoholic beverages, wine stands to benefit most from the ageing of the UK population. There are three reasons why this is so. First, wine has always been a drink that comes to dominate consumer repertoires later in life. While consumers are in their 20s their repertoires are stretched between lots of different beverages: around a third of 18-34s say they drink wine, but only 12% say they drink it every week (Wine Intelligence/WTAG Binge Drinking Study, 2004). For over-55s, 70% say they drink wine, and 34% drink wine every week (Drinks Pocket Book 2005).

Second, the increasing body of evidence linking wine with health is having a marked impact on the behaviour of over-55s. Red wine’s claimed benefits for heart, cholesterol and blood pressure strikes a chord with those people who are being told by their doctors to look after or reduce all of the above.

Finally, there is the political factor. The UK election campaign was marked by all political parties climbing over one another to offer tax breaks, increased allowances and straight cash handouts to the nation’s senior citizens, on the basis that they are more likely than any other group to actually bother casting their vote. Neither of these factors is likely to change at the next election: could the fact that a good chunk of the potential voters in 2010 will be wine drinkers finally tempt the government to cut excise duty on wine? Stranger things have happened.

So what will the size of the (greying) UK prize be in 2010? Let’s get a few numbers about today’s market on the table first. Penetration of wine drinking stands at around two thirds of UK adults, and average annual consumption is around 23 litres a head for UK adults. Our forecasts take account of changes in the population, the continuing growth of wine consumption, as measured in litres a head, of about 4.5% a year, and a marginal improvement in the penetration levels, which we believe will settle at a “natural” ceiling of 70% of the population. 

Of the three factors, the population change will be the biggest driver. In 2010 there will be approximately 18m over-55s, up from around 15m today. If our forecasts are correct, they will be drinking approximately 45% of all wine sold in the UK – around 57m cases, up from the 43m cases that this age group accounts for today.

What sort of wine will this be? The evidence we have suggests that consumer repertoires “harden” with age: they have tried enough wine to know what styles/countries they like and don’t like, but are happy to experiment within a style or country. On the basis of this analysis, the “greys” of 2010 will be drinking pretty much the same kinds of wine they are drinking today – perhaps with a bit more emphasis on red wine because of the health implications. 

So if the chatter of the LIWSF is getting you down, think about this: this mature UK market will need an extra 14m cases of wine in 2010. Some of it could be yours.

About this research and Wine Intelligence

This analysis is brought to you by Wine Intelligence, a research-led marketing consultancy specialising in the wine industry. The company is staffed by experienced wine industry and research professionals and provides research and consulting services to leading producers, importers, retailers and trade organisations. A more detailed version of Wine Intelligence In The Press is available every month by subscription. E-mail info@wineintelligence.com or check out www.wineintelligence.com