Alcohol sales fall as consumers cut costs

Sparkling wine and cider offered rare glimpses of positive news in the latest WSTA Market Report, which shows volume declines across both UK wine and spirit sales.

While UK total alcohol sales have fallen by 2% in the off-trade and 3% in the on-trade during the last 12 months, the sparkling wine category enjoyed 6% growth in the off-trade, while on-trade cider sales saw a 5% increase.

There was an even stronger on-trade performance from the resurgent RTD category, which experienced a 3% sales increase over the 12 months to November 2012, boosted by a 15% uplift in the last 12 weeks. However the category’s volumes fell by 7% in the off-trade over the year.

There was a similarly mixed picture for Champagne, whose 9% decline in the off-trade during the last 12 weeks was mitigated by a 13% increase in the on-trade during the same period.

As inflation on wines and spirits hit 2.4% and 5.9% respectively, the sub-£4 end of the wine market continued to show declines, while all price bands above £7 per bottle saw double-digit growth.

While light wine sales experienced the same 2% off-trade decline as total alcohol figures, there were strong performances from Spain and New Zealand, which saw 16% and 11% volume growth respectively.

The largest volume decreases came from Chile, whose 9% average bottle price hike contributed to a 13% volume decline, and Germany, which saw a 16% decline, again accompanied by a significant 7% average bottle price increase.  Both countries also saw declines in the on-trade, although these were less dramatic.

Commenting on the report, which is compiled using data from Nielsen, CGA Strategy and the Wilson Drinks Report, WSTA chief executive Miles Beale said:  “Overall, the latest market report shows that consumers are continuing to tighten their belts and shop around for the best value in these tough economic times.

“While it is encouraging to see category growth in some areas, market conditions suggest that it remains a challenging time for both the industry and consumers.

“Given these challenging economic conditions the government should think carefully before adding further pressure on the trade, as continuing with the duty escalator and the introduction of minimum unit pricing would do.”

Despite this call, the UK Chancellor’s Autumn Statement this week gave no indication that the duty escalator would change. Meanwhile only last week Home Secretary Theresa May proposed a higher-than-expected minimum price of 45p per alcohol unit.