Cider retains fizz as other drinks fall flat

Heavy declines in on-trade volumes for beer, wine and spirits meant that cider was the only alcohol category to experience growth in the UK in 2009, according to latest figures from the Wine and Spirit Trade Association.

However, there are fears that the impact of last week’s Budget, which saw chancellor Alistair Darling slap a 10% above inflation duty increase on cider, could mean even this category will see volumes dip during 2010.

While cider saw a volume increase of 11% across both the on- and off-trades, all other categories saw their volumes decline.

Tim Wilson of the Wilson Drinks Report, which conducted the research for the WSTA’s Market Report for the first quarter of 2010, said: “The UK drinks market continues to experience difficult trading conditions and the significant increases in duty announced in the Budget on 24 March will provide further challenges to the industry.

“Excise duty increases of at least 5.1% for all categories of alcohol, and 13.1% for cider, will mean that drinks inflation will continue to exceed general inflation.
 
“Although claimed to be targeted at the strong 7.5% abv white ciders, this large duty increase is likely to impact the growth performance of the more mainstream cider brands (typically around 5% abv).

“We shall keep a close eye on whether these duty increases will be more effective in raising revenue for HMRC or reducing consumption through higher prices, assuming all duty increases are passed on in full to the consumer.”

Declines in the on-trade were off-set by volume and value growth in the off-trade in most alcohol categories, according to the report, while it emerged that supermarkets are the preferred retail outlet for wine purchases.

Light wine grew off-trade volume and value over the last 12 months, with the average bottle costing £4.34. Rosé outperformed both red and white in the off-trade, while there were big shifts in consumer tastes and the share of the wine market by country of origin.

France, Australia and the US both saw their share of the off-trade wine market decline, by 4.4%, 0.2% and 2.9% respectively, but there were big rises for other countries.

Chile saw its share grow by 29.6%, New Zealand by 40.8%, Italy by 12.1% and South Africa by 15.9%.

The WSTA also carried out some research into consumer preferences and behaviour when it comes to selecting a retail destination, which revealed scope for specialist retailers and independent wine merchants to boost their marketing effort.

A YouGov poll shows that wine drinkers value expertise and variety of choice above price, yet over half (53%) do not buy wine from their local merchant.

While most British adults buy their alcohol from supermarkets (74% for general consumption), specialist shops and local wine merchants are more than twice as likely to be used for special occasions (8%) than for general consumption (3%).

Perhaps surprisingly the research also shows that drinkers aged 45 and over, especially women, are least likely to buy from their local wine merchant.

The research suggests there is scope for specialists and wine merchants to increase the marketing of their business to wine drinkers, whose emphasis on variety and expertise contrasts with other drinkers’ focus on convenience.

London turned out to be the region with the highest proportion of drinkers who might buy from a local merchant.

Alan Lodge, 31.03.2010