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Australia’s commanding performance and recent market trends in the United Kingdom

Market Bulletin | Issue 139
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15 Jan 2019
tagged with market bulletin , UK , trends
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The United Kingdom (UK) is the sixth largest wine market in the world, consuming 138 million 9-litre cases of wine in 2017[1], nearly all of which is imported. As with many other Western markets, the UK wine market is well established and total consumption is declining. In 2017, the total wine market declined by 2 per cent in volume and 1 per cent in value. Australia is the number one country of origin for wine (see Figure 1) and, likewise, the UK is Australia’s number one export destination by volume.

Figure 1: 2017 UK wine consumption by volume share

Source: IWSR

In the year ended September 2018, the total off-trade still wine market increased by 2 per cent to £5.3 billion in value and declined by 2 per cent in volume to 78 million 9-litre cases[2]. This reflects the premiumisation trend; the market below £6 per bottle has declined by 4 per cent to 52 million cases, while the market above £6 has increased by 4 per cent to 26 million cases.

Still wine is struggling in the on-trade, down 5 per cent to £3.1 billion[3]. However, sparkling wine is bucking this trend, up by 27 per cent to £604 million.

Image: Wine Australia

Recent market trends

Sparkling

While UK consumers drink less still wine per person than most of their Western European counterparts, they rank much higher when it comes to sparkling wine consumption per capita. Brits consume about 2.6 litres per adult of sparkling wine per year and 20 litres of still wine. Portugal, Denmark, the Netherlands and Sweden drink less sparkling wine per person, but have much higher levels of still wine consumption. 

Total consumption of sparkling wine increased by 4 per cent in 2017 to 15 million cases[1]. Champagne sales declined by 9 per cent as consumers look for better value for money. As illustrated in Figure 2, Italian sparkling has been the driver of growth, although year-on-year growth slowed to 11 per cent in 2017, from 18 per cent in 2016.

English sparkling continues to make waves as consumers look for new and interesting products. Consumption of domestically produced sparkling increased by 7 per cent in 2017 to 310,000 cases and has shown consistent growth in recent years.

Australian sparkling wine will be the theme of one of the masterclasses at the Australia Trade Tasting in London on 22 January. Presented by House of Arras winemaker Ed Carr, the masterclass will feature sparkling wines from several regions including Tasmania, Adelaide Hills, Orange and Henty. In November 2018, Ed Carr was awarded a Lifetime Achievement Award at The Champagne and Sparkling Wine World Championships, the only non-Champenois winemaker to receive the award.

Figure 2: Top five consumed sparkling wine countries of origin in UK

Source: IWSR

Image: Wine Australia

Decline in consumption

As previously mentioned, wine drinkers in the UK are following the health and premiumisation trends by shifting towards quality over quantity. According to Wine Intelligence, the number of adults drinking wine at least once a month 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.

Wine Intelligence explains that the main reasons for this trend are:

  • wine now must compete with craft beer and spirits when it comes to provenance and individuality
  • wine is becoming more expensive, thanks in part to duty increases (with another duty increase due on 1 February 2019 equal to £0.07 per bottle), but also currency movements
  • 43 per cent of UK regular wine drinkers (59 per cent of regular wine drinkers under the age of 35) are seeking to reduce their alcohol consumption, and
  • Brexit-induced uncertainty is causing tough market conditions.

Image: Wine Australia

Australia’s performance

In the 12 months to September 2018, Australian wine exports to the UK increased by 9 per cent in value to $380 million and 6 per cent in volume to 239 million litres (27 million 9-litre case equivalents).

Laura Jewell MW, Wine Australia’s Regional General Manager, EMEA, said ‘The UK continues to show growth by both value and volume, driven mainly by the larger brands packing in the UK for distribution across Europe while it is still straightforward to do so. Brexit negotiations continue apace, which will have some impact on freedom of movement of trade, but until they are finalised the uncertainty remains, and brand owners are putting contingency plans in place for both worst- and best-case scenarios.’

Australia’s performance in the off-trade market continues to be positive, growing by 3 per cent in value to £1.2 billion in the year ended September 2018[2]. This growth in value is driven by growth in premium wine, with Australian wines priced above £6 per bottle increasing at a rate of 11 per cent, outpacing the total market. Further data on the UK off-trade can be found here (for levy-payers only).

The Australia Trade Tastings return to London, Edinburgh, and Dublin from next week. There will be more than 1000 wines from 250 producers across the three-city roadshow, which will give a taste of Australia’s exciting and diverse styles of wine, from classic to contemporary, rogue to the refined.

This annual trade tasting provides people based outside of Australia with the best way to get up-to-date with the category, meet producers and explore the new: new vintages, new releases and new styles. Some of the wineries at the event may be familiar names, but others will be new discoveries. This year, several producers will be exhibiting for the first time, an indication that the UK is a vibrant and important market for Australian exporters large and small.


[1] International Wine and Spirit Record

[2] IRI Worldwide

[3] Nielsen


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