On- and off-trade consumer spend continues down in UK
With the Budget due to be announced later this afternoon, wine & spirit sales continue to fall in the UK as year-on-year tax rises hit consumers there.
Print20 March 2013
The latest Wine & Spirit Trade Association UK market report shows that year-on-year alcohol duty rises have hit consumer spending on alcohol in both the on- and the off-trade. The volume sales drop of 4% in the on-trade and 3% in the off-trade in the last year shows consumers are cutting back due to cost-of-living pressures after five consecutive years of above-inflation duty increases.
Despite the drop in volume sales, tax increases of over 5% in 2012 helped to push up prices by 2% in the off-trade and 3% on the on-trade there. If the alcohol duty escalator continues in this afternoon’s Budget, duty on wine will have increased by 50% and spirits by 44% since 2008.
The report places more pressure on the Chancellor to act in today’s budget to support consumers by scrapping the Alcohol Duty Escalator which has automatically increased alcohol taxation by 2% above inflation since its introduction in 2008. If the Alcohol Duty Escalator continues until 2015, it will have led to a duty increase on wine of 50% and spirits of 44% since 2008, stated the WSTA
There wasn’t even any cheer from the usually buoyant Christmas period, which is traditionally the trade’s strongest quarter. In the last 12 weeks of 2012 total alcohol sales fell by 4% compared to the same period in 2011, it reports.
The WSTA Market Report draws on data and analysis from Nielsen, CGA Strategy and the Wilson Drinks Report. The data reveals that:
Off-trade
– Total volume sales have continued to slide, down 3% annually and 4% over the latest 12 weeks
– while value performance is up 2% in the past 12 months, this is largely being driven by elevated duty rates
– sparkling wine is the only major category to grow in volume, up 8% over 12 months and 12% in the last 12 weeks due to the decline in Champagne and consumers looking for a cheaper alternative
– RTDs are falling in value, down 3% for the past 12 months with volumes down by 9%
– spirits’ volume sales are down 1.5% overall mainly due to a drop in vodka sales.
On-Trade
– Total volume sales were down 4% annually and down 4% over the last 12 weeks, largely due to falling beer sales
– spirits sales were up slightly in both the short-term and long-term with a 1% increase in each period
– the Liqueurs category has enjoyed strong growth, up 13% in volume over the past 12 months and an even stronger 12-week performance where it was up by 16%
– rum and brandy continue to experience strong volume growth in the short-term, up 8% and 12% respectively in the last 12 weeks.
Commenting on the latest market report WSTA Chief Executive Miles Beale said that it shows that consumers are continuing to cut back, with falling sales in both the on- and off-trade.
“While it had been hoped that Christmas would provide a small boost for the industry these figures show that there was subdued festive cheer over the Christmas period,” he added, “This is a further sign that the Government needs to think again before increasing prices through the unpopular duty escalator which risks damaging jobs and growth.”
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