Argentina tops UK off-trade growth in 2016

Argentine wine saw the biggest growth in UK off-trade sales during 2016, followed by New Zealand, according to figures released by the Wine and Spirit Trade Association (WSTA) in its Q4 end of year Market Report.

Argentina saw the biggest growth in terms of UK sales in 2016, driven by demand for Malbec

While the WSTA said Australia remains the biggest-selling wine producing country in terms of UK sales, Argentina and New Zealand wines showed the most growth in the 12 months to 5 November 2016.

OFF-TRADE

UK off-trade volume sales of Argentine wine reached 20 million litres in volume, the equivalent of almost 27 million bottles – up 32% on the same period last year. By value, off-trade sales of Argentine wines reached £155m during the same period – up 31% on the same period last year. The organisation attributed the growth to UK consumers “going mad for Malbec”.

Argentina was followed, in terms of growth, by New Zealand, which in comparison sold 42m litres in the UK off-trade, up +16% on the previous year.

By value, New Zealand saw growth of 13%, with value sales reaching £401m.

The off-trade growth reported by both countries comes at a time when many of the top 10 countries importing wines in the UK are in decline. In the off-trade Australia, Italy, the USA, France, South Africa, Spain and Germany all posted declines in volume and value sales. Chile was the only other country to see growth, up 3% by volume and value.

ON-TRADE

In the on-trade, New Zealand was the strongest importer, selling 56m litres of wine, up 5% on last year, reaching a value of £145m, up 16%.

New Zealand was followed by South Africa, which achieved a 5% uplift in volume sales to 109m litres, and 8% rise in value sales to £218m.

Italy was the only other country to post growth in the on-trade, with volume and value sales rising by 2% and 4% respectively.

And while Argentine shone in the off-trade, its volume and value sales in the on-trade declined by 8% and 2% respectively.

“We know that large volumes of these sales are down to two particularly popular grapes,” said Miles Beale, chief executive of the WSTA. “The clean and aromatic notes of a New Zealand Sauvignon Blanc have gone down a storm with British wine drinkers and it is also clear that the punchy spices in an Argentinian Malbec are proving a real hit too.”

Beale also used the publication of its last report of 2016 to highlight the continued importance of the UK as the “global hub of the international wine trade”, a position which he said needed to be protected following the uncertainties arising from the UK’s vote for Brexit. The UK is currently the second largest trader by volume (behind Germany) and by value (behind USA).

“It is not well understood that the UK is the global hub of the international wine trade, a position we need to ensure we maintain,” said Beale. “The fall in the value of Sterling is having a serious and immediate impact on importers who have shouldered the burden of the fall of the pound until now, but this is not sustainable.

“Any increase in duty, on top of the post-Brexit Sterling devaluation, would have dire consequences on Britain’s wine trade. It is not only consumers who will feel the impact of price rises, but also by more than a quarter of million employees in the world leading UK wine industry.”

Brits currently pay a corking £4bn in wine duty in the UK, around £2.08 per bottle of still wine or £2.67 for a bottle of sparkling wine. This means that for the average bottle on supermarket shelves around 55% of the cost is taken up in duty and VAT. The UK contributes 67% of all wine duties collected by EU member states.