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Impact of the UK’s technical recession on drinks
The UK economy slipped into technical recession at the end of 2023, according to the ONS, but research shows that premium alcoholic drinks continue to outperform lower-end products.
The Office for National Statistics (ONS) has reported that UK gross domestic product shrank by 0.3% in the final three months of the year, notching the second consecutive quarterly decline.
London-based research firm Mintel has analysed the impact that the technical recession has had, and will continue to have, on consumer spending. Despite the fall in national economic activity over the second half of 2023, Mintel’s research showed that 28% of consumers say that their finances are healthy, and 44% that they’re at least doing OK.
Toby Clark, director of EMEA research at Mintel, said: “In the real world, a 0.3% decline isn’t going to feel any different than a 0.3% increase. What really matters is how much money you’ve got left in your bank account at the end of the month.”
Food and drink are prime candidates for behavioural changes, as consumers are able to make immediate changes to shopping habits in the face of high inflation.
Rising prices have meant that consumers have had little option but to increase their total spending, but they’re attempting to minimise the impact by cutting back on luxuries, and switching to private label or lower-cost retailers.
Economic pressures have had an impact on spending behaviours, and in response to rising prices, 34% are shopping more at low-cost retailers, while 32% are shifting to private labels, and 43% are being more careful about spending on luxuries.
But people still want to treat themselves, and alcohol is one of the major categories which experiences continued spending on luxury items.
Half (49%) of adults bought premium alcoholic drinks in the 12 months to October 2023, including 42% of those describing their finances as tight/struggling, according to Mintel’s research.
Kiti Soininen, category director – food & drink at Mintel, said of the findings: “This continues to create opportunities for premium products. Among recent examples, premium brands Charlie Bigham’s and Wasabi outperformed the chilled ready meals segment in 2022/23, while brands at the higher end of mass-market like San Miguel and Corona were among star performers in lager.”
Brits are also opting for quality when they go out to drink, CGA data has found. Read more on that story here.
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