The UK monthly wine drinking population is shrinking, and those that remain are drinking less often. Our latest market report explains why
2018 has turned out to be another challenging year for the wine industry in the UK, with continued decline in still wine volumes and ongoing price increases thanks to a shorter harvest and weak exchange rates, along with rising labour costs and property taxes. In October, the Government Budget announced that wine is excluded from the duty freeze, which delivered another hammer blow to the sector.
Wine Intelligence’s recent UK Landscapes 2018 report, which tracks UK regular wine drinkers’ consumption patterns and ‘sentiment’, has found another significant decrease in wine consumption frequency in the past 12 months, carrying on a trend that dates back to 2015. Back then, around 29.5 million people were drinking wine at least once a month, and around 80% of these people were drinking wine at least once a week. Today, our data suggests that the overall monthly drinking population has fallen by about 1 million, to 28.5 million, and the weekly drinking population has also declined by 1 million, to just over 22 million adults, or 78% of the (now smaller) monthly drinker population.
We think there are four main reasons for this change:
- Wine being squeezed by other beverages. The alcoholic beverages market is an exciting place these days, and wine no longer has ownership rights to the more sophisticated end of beverages. Craft beer now talks about provenance, ingredients and style, and gin has become a remarkably vibrant and attention-grabbing category. Both of these trends are reflected in wine drinker behaviour: the proportion of UK regular wine drinkers who say they also drink beer and gin has increased significantly between 2017 and 2018, from 52% to 63% and from 36% to 44% respectively.
- Wine is becoming an expensive drink. Thanks in part to duty increases, but also negative currency movements, consumers are now having to spend more on wine. Compared with a year ago, on average, consumer spend on wine has risen by 30p per bottle for consumption occasions at home, and 50p per bottle in the on-trade. Stated average spend on wine for a formal dinner party at home is now £8.40 a bottle, and £17.30 a bottle for a formal dinner in a restaurant. During the last 12 months, an increased proportion of UK regular wine drinkers think ‘wine is an expensive drink’. On a positive note, they are also showing increased levels of involvement in the wine category, so they are thinking more about their purchase. There could also be a desire to trade up if people are drinking less frequently (see also Reason 3 below). However it is not surprising to see demand levels change in light of increasing prices at a time of zero real wage growth in the economy, and the sense of uncertainty among consumers caused by the potential exit from the EU next March.
- People are moderating their alcohol consumption, driven by the younger generation. The UK Landscapes report reveals that 43% of UK regular wine drinkers are actively seeking to reduce their alcohol consumption. This is most evident among the Millennial drinkers, with 59% of wine drinkers under age 35 reporting cutting down (and this is a group who were not drinking as much alcohol as previous generations at the same age to begin with). The capital is leading this trend – 62% of regular wine drinkers in London are cutting down compared with 40% of all the regular wine drinkers outside London reducing alcohol consumption. For now, volume declines are being mitigated by what one might call ‘core wine drinkers’, those aged 55 and over who account for 42% of total wine drinking population, are more likely to carry on with drinking, with only 33% of this age cohort moderating alcohol consumption.
- Brexit is casting a shadow over the sector. While our data suggests that consumer attitudes to specific wine producing countries of origin are seemingly unaffected by the impending departure (or not) from the EU, the trade are reporting tough market conditions in the run up to Christmas, and of course there remains the potential for widespread disruption in supply chains, and currency exposure, if the country moves towards a disorderly ‘no deal’ Brexit scenario.
More information on the Wine Intelligence UK Landscapes 2018 report can be found here.