RPH.jpg - Good cheer, for some

The UK wine market is finally emerging from recession, but not everyone is in the mood to party

‘Tis the season to be jolly: the UK economy is now in full recovery mode, and the “feelgood factor” so beloved of politicians appears to be creeping through to wine drinking and – crucially for the industry – typical off-trade spend on wine.

For now at least, volume numbers remain stubbornly unfestive. Volume consumption of still wine remains in a declining trend which began with the onset of the global financial crisis nearly 7 years ago. The volume success story remains sparkling wine, and in particular Prosecco, which is posting some truly extrodinary numbers.

While volumes are declining, spend per bottle remains on an upward trajectory. Nearly 40% of regular wine drinkers now say they will spend over £8 per bottle for a formal dinner occasion at home, up from 29% a year ago. Spend for parties and gifts also seems to be experiencing similar increases.

Perhaps the most fascinating changes to report are in the consumers’ choice of retailer for wine purchases. Mainstream supermarkets are hanging on to high spending consumers, but bargain hunters are heading to Aldi and Lidl in droves. The hard discounters’ reach has expanded massively in the past 12 months – in Aldi’s case to 16% of regular wine drinkers, up from 10% a year ago.

How does this square with a consumer feeling flush for the first time in years, and who is spending more? The truth about the UK wine market, and perhaps the UK economy generally, is that we are seeing gaps open up between the haves and have-nots – or more precisely, the have-somes, and have-lesses – as the former start to indulge in modest splurges (still eating at home, but with better food and drink), and the latter must hunt in the diminishing pool of sub £5 offers.

It means exciting times if you’ve got premium brands and iconic products to sell, and you’re willing to dance with supermarket buyers under even more pressure than normal to deliver quick wins. It means a grim process of elimination for mainstream products without strong brand equity which are overpriced (especially if they’ve had to resort to the half-price offer fiction) and undifferentiated.

Author: Richard Halstead

E-mail: Richard@wineintelligence.com