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UK market conditions ‘tough’ for drinks

UK market conditions continue to be tough as consumers 'tighten their belts and shop around for value', the Wine and Spirits Trade Association has warned as it releases its latest market report.

In the last 12 weeks, off-trade sales of Champagne have declined by 9%, while wine under £4 has continued to decline, according to the WSTA’s 12-week round-up of statistics from various analysts such as Nielsen and CGA.

While off-trade Champagne is down, the sparkling, non-Champagne, category is one of the best performers. According to Nielsen it is the only major alcohol category in growth over the last year, up 6% in the last 12 months and up 9% in the last 12 weeks.

In a separate report, UK supermarket Waitrose says sales of English sparkling wine have shown a year-on-year increase of 30%, thanks in part to the Olympics and the Queen’s Diamond Jubilee.

In the on-trade, Champagne is still a very strong performer, growing in volume by 13% in the last quarter.

Nielsen points out, in terms of Champagne, ‘The key Christmas trading period is just underway and promotions are starting in earnest, so all may change as we enter the final few weeks of the year.’

In still wines in the off-trade, New Zealand and Spanish wines are still in double-digit growth, along with South Africa and Argentina. German and US wines are losing popularity.

On-trade still wines showing growth are New Zealand, Argentina – the strongest performance at 4% – and the USA. All other countries are showing declines in volume.

In general off-trade sales of wine declined by 2%, with cheaper wines suffering most. However, all price bands over £7 per bottle showed double-digit growth.

WSTA chief executive Miles Beale said the government should take extra care over increasing taxation pressure on business in such difficult 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 businesses operating in the sector, as continuing with the duty escalator and the introduction of minimum unit pricing would do.’

Written by Adam Lechmere

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