Glimmer of hope in falling alcohol sales

The latest Wilson Drinks Report (WDR) shows UK off-trade volume sales are down 1%, and the on-trade down 3%.

This compounds the view of Mintel that the UK alcohol market will see a 6% decline in real terms over the next five years.

Tim Wilson, managing director of WDR, said: “The drinks industry is having a tough time in the current economic circumstances, and the drop in most people’s net disposable income is reflected in declining sales of alcohol, at least in terms of volumes.

“However, total sales in terms of value appear to show growth, as the total sales value increased by 4% for the same periods in both the off- and on- trade channels. However most of this is attributable to significant increases in duty on alcohol, and the increase in VAT to 20%.”

A couple of positives did shine out amid the otherwise prevalent doom and gloom of the report.

One such island of good news was cider’s continued growth – up 2% in volume and 7% in value – boosted by high profile advertising campaigns from large brands, such as Stella Artois’ Cidre campaign.

This growth comes as good news to cider producers as they prepare for what looks like a bumper crop of apples this year. Similarly, spirits such as vodka and liqueurs were up in both volume and value.

With the RTD and ready-to-serve category putting in the strongest performance of all three categories, the WDR suggests that Mintel’s prediction of a bounceback for the previously ailing category, based on its popular reinvention using pre-mix cocktails, is already well underway.

Hotels, managed-pubs and restaurants (which make up around 44% of all value sales) all did well, with still wine proving to be the real star of the show, with a 6% increase in volume and an impressive 23% increase in value, bringing the total to £1.7 billion. Non-managed pubs, propriety clubs and sports/social clubs, however, all declined in both value and volume sales.

Elsewhere, Wilson continued to talk about the inevitable rise in duty which he cited as the cause of much of this spending reticence.

“Although total volumes have been declining steadily over recent times, the total duty on alcohol collected by HM Revenue & Customs continues to rise,” he said.

“Unfortunately for drinkers, we expect duty on alcohol will continue to be a major contributor to government funding even though we are drinking less year on year.”