Key UK trends

We take a look at key trends in the UK alcohol beverage market

The UK off-trade continues to dominate alcohol sales in the UK - 80% of wine sales, for example, were made through the off-trade in 2016. And while total annual sales of alcoholic beverages in the UK off-trade were flat in terms of volume in 2016, they grew by 1 per cent in terms of value according to Nielsen data presented in the WSTA Market Report for Q4 2016.  

Beer is the biggest category by volume but still wine is the number one by value, ahead of spirits, beer, cider/perry, sparkling wine, Champagne, fortified wine and ready-to-drink (RTDs). Still wine sales were valued at £5.3 billion, spirits at £4 billion, beer at £3.8 billion and cider/perry £1 billion.  Combined, sparkling wine and Champagne sales totalled £1.1 billion. 

Sparkling growth

Sparkling wine was the fastest growing category in the UK in 2016, with double-digit value growth ahead of Champagne, spirits and beer.  The other categories, including still wine, saw sales fall; indeed, in the last quarter of the year still wine sales were flat which actually represented an improvement on the annual results.

Mixed fortunes in the spirit sector

Within spirits, gin was the outstanding category with double-digit value growth. Other spirits that enjoyed success in the off-trade included liqueurs and rum. The value growth in rum sales was driven by flavoured and spiced rum, which recorded double digit growth, while sales of white, dark and golden rum declined. 

Whisky sales were flat. Blended scotch remains the biggest category within whiskies but sales declined over the year. This was offset by growth in imported and malt whisky. Sales of brandy declined and traditional vodka sales also fared poorly, but the emerging flavoured vodka sector enjoyed growth. Cream liqueurs recorded double-digit growth, outperforming non-cream liqueurs.

Wine: Premiumisation continues

Within the wine market, performance varied according to the price point. The strongest growth came at the high-end and there was double-digit growth at £10+ per bottle and solid growth at £9-£10 and £6-£7. On the other hand, the value of sales in two biggest price points, £4-£5 and £5-£6 declined. 

Australian wine remains the clear leader in the wine category with sales £1.2 billion, well-ahead of nearest rivals, France, with £697 million and Italy with £695 million. Argentina was by far the fastest growing country of origin. 

White wine, 47 per cent value share, is the biggest still wine category ahead of red wine, 42 per cent, and rosé, 11 per cent.  Over the year, white wine sales were flat while red wine and rosé sales declined.  Within the red wine market, Merlot and Shiraz recorded solid growth while Tempranillo sales were flat.  Within white, Sauvignon Blanc sales recorded double-digit growth offsetting declines in Pinot Grigio and Chardonnay.

On-trade trends

Sales of alcoholic beverages in the on-trade increased by 2 per cent in the 12 months to September 2016.  Beer is the largest category by value ahead of spirits, still wine, cider/perry, Champagne, sparkling wine, RTDs, and fortified wine. 

Sparkling wine was the stand-out growth category in the on-trade with double-digit value growth.  Other categories to grow were spirits, cider/perry, fortified wine and beer.  Still wine sales were flat while RTDs and Champagne sales declined.

High spirits in the on-trade

Within spirits, the sales of all categories except brandy grew. Like the off-trade, gin was the fastest growing spirit and tequila and rum also enjoyed double-digit growth. According to CGA Strategy, 20.8 million UK consumers drink spirits in the on-trade. Spirit drinkers also spend 19 per cent more than non-spirit drinkers. They are also more engaged, with 46 per cent drinking weekly in the on-trade compared to the UK average of 31 per cent. CGA Strategy identified four key trends driving growth in spirits sales:

  • Premium spirits are driving growth – one-in-five spirits sold is now a premium brand
  • Spirits allow bar staff to be creative and consumers are 18 per cent more likely to try new drinks compared to two years ago
  • With thirteen food-focused venues opening every week for the last decade, food is currently the fastest growing part of the on-trade market and cocktails play an increasingly important role. CGA Strategy report more and more restaurants and casual dining chains adopt chains adopt cocktails as a way of driving spend per head, both before and after the main food event
  • Consumers are becoming increasingly concerned about healthy living but balanced with indulgence – 34 per cent of consumers would always choose a low-calorie option where available.

On-trade wine results

Within the wine category France, £1.4 billion, and Italy, £1 billion, are the clear leaders in the on-trade, with Australia third with £372 million. Italian wine sales increased while French and Australian wine sales declined. New Zealand was the stand-out country of origin with double-digit growth. And other countries that grew their sales included South Africa, Spain and Chile.

White wine has a bigger share, 52 per cent, of on-trade sales compared to the off-trade. Red wine holds a 39 per cent share and rosé 9 per cent. White wine and rosé sales declined, offsetting growth in red wine sales. Off a small base, Chenin Blanc posted the strongest growth in white wine sales.  Chardonnay was the biggest seller but sales declined and ground was made by Pinot Grigio and Sauvignon Blanc.

While Merlot increased in the off-trade, its sales declined in the on-trade, and like the off-trade, Shiraz was the stand-out red variety in value growth ahead of Cabernet Sauvignon, Pinot Noir and Zinfandel.

Consumer insights

Research conducted by YouGov on behalf of the Wine and Spirit Trade Association (WSTA) shows that three-out-of-four people drink wine ‘nowadays’, making it the UK’s most popular drink. Spirits were the second most popular category, with three-out-five people drinking spirits ‘nowadays’. The younger the respondent, the more likely they are to drink spirits ‘nowadays’. There is less disparity between age groups for wine. 

Within spirits, men favour whiskies while women favour vodka. Whiskies are the only spirit which is more popular among males than females. 

58 per cent of spirit drinkers are willing to try new brands, even if they haven’t heard of them before. Younger respondents are the most willing to try new brands and they tend to get recommendations either from friends, family or bar staff.

At restaurants wine holds four of the top five favourite drinks. Red wine is marginally more popular than white wine and lager comes in at number three. Outside the top five in order of popularity in restaurants are cider, ale, vodka, gin, rum, whiskey, fortified wine and spiced rum. Interestingly, 45 per cent of respondents indicated they had not drunk any alcohol at a restaurant in the last month.

In pubs and bars, lager is the most popular alcoholic beverage ahead of ale and cider. White wine is the most popular wine ahead of red wine. Vodka is the most popular spirit and is also the most popular drink among the younger age groups and its popularity between genders is fairly even.

Disclaimer

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