UK market in growth as price increases slow

The latest figures from the Wine and Spirit Trade Association, for the second quarter of 2015, show that “consumers are finally getting the break they deserve after years of inflation-busting tax rises”.

Duty cuts and lower inflation are cited as the main reason for the positive findings in the report (Photo: Wiki)

The latest report from the WSTA highlights the role that a combination of factors have played in slowing price inflation, a positive result for consumers.

Duty cuts and lower inflation are cited as the main reason for the positive findings in the report, which indicated that the benefits of the slowing price increases were being passed down to the customer by producers and retailers.

This time last year the situation was vastly different. Alcohol inflation was double the consumer price index at 4% due to the lingering effects of the Alcohol Duty Escalator, which was phased out in George Osborne’s 2014 Budget.

Now, the overall situation for the market is positive, if a little fragile, with beer volumes having increased 3%, spirits also by 3%, Champagne by 2%, and sparkling wine leading the charge with volumes increasing by 28%.

Sparkling wine was able to show strong results in the on- and off-trades with growth of 20% and 28% in each sector respectively, and a five-year increase of 29%.

Despite those strong results, wine, fortified wine and cider volumes all fell by two, five and one per cent respectively.

Miles Beale, chief executive of the Wine and Spirit trade Association, said: “It is welcome news that consumers are benefitting from lower taxes and the impact of lower inflation.

“While this is a positive development, the market remains fragile and a recovery unsure – with volume growth very low. The levels of taxation for the wine and spirit trade remain high in absolute terms.”

In relation to the continuing decline in wine volumes, Mr Beale said: “The wine market in particular continues to fare less well with further volume decline for wine in both on and off trade. This highlights the Government’s decision not to include wine in the 2% alcohol duty cut for all other products.”

As well as strong growth in the sparkling wine sector, spirits in the off trade showed strong growth in the past three months with a 6% volume increase, including the period following the 2% spirits duty cut.