Wine sales down in 2012
Wine sales in 2012 fell by 1% to 8.9 million cases from 9 million in 2011, contributing €231 million in excise duty (27% of the total excise collected on alcohol) and €215 million in VAT. So states the Irish Wine Association in its 2012 report on the wine market in Ireland, just published.
Print19 August 2013
Before the Government’s excise increase of €1 a bottle in the Budget at the end of 2012, the year had already proved difficult for the industry, reports the Association.
“Sales, which had begun to improve in 2011, faced a slowdown of almost 1%,” it states, “The value of the Irish wine market also contributed to the drop. The majority of wine sold in Ireland in 2012 was purchased in the €6-€6.99 price range.”
This means that values remained negative with price the key decision factor for consumers as opposed to brand loyalty. However the IWA reports that the average price of table wine rose by 3.2% to €7.72 in 2012 from €7.48 in 2011.
The biggest growth in volume was in the €7 to €7.99 range, accounting for a 0.8% increase while the biggest decrease in volume purchasing was in the zero to €5.99 range (0.6%).
Not surprisingly, we remain one of the lowest consumers of wine in Europe at 17 litres per capita compared to Denmark’s 30 litres. With around half the cost of a bottle of wine going to the Government, Ireland has the highest level of excise on wine in the EU, making this one of the most expensive countries in which to purchase wine. For example, a 28% difference exists between our wine excise rate and that of the UK (itself no shrinking European violet when it comes to excise tax).
With the VAT difference between the two countries running at 3% there’s a real danger that consumers could re-ignite the purchasing trail to Northern Ireland and abroad, believes the IWA.
Wine remains a huge source of profitability for hotels and restaurants and so the IWA warns that the Government cannot continue to impose huge increases in wine excise and expect the Irish wine sector to remain capable of supporting the Irish hospitality industry.
It has therefore called on the Government to reverse the disproportionate excise duty increase that was introduced on the wine industry last year. Speaking on the publication of the Review, Chairman of the Irish Wine Association Michael Foley said that the excise increase of 41% is damaging this important sector.
He said that the large excise increase introduced by the Government at the end of 2012 was significantly higher than the increases imposed on any other alcohol beverage category. The reversal of this unfair increase and the protection of the sector is crucial for many small family-run businesses and for the Irish hospitality sector, which employs 10% of the entire national workforce.
“In basic terms, if we look at a standard €8 bottle of wine, a massive 53% of this price is attributable to tax (excise & VAT),’’ he stated.
“Despite the many challenges that the sector has faced, it continues to grow in importance for the Irish economy. In terms of tourism, we all know that wine is a key source of profitability for restaurants. At present one restaurant per day is closing in Ireland, while 80% operate at a loss. This is clearly a vulnerable sector and if the Government continues to impose huge increases in wine excise, it cannot expect the Irish wine sector to remain capable of supporting the 1,711 restaurants with wine licences and 413 other with full licences.”
Michael Foley believed that recovery would be not be helped by the Irish economy “which will most likely remain weak in 2014”.
Biggest country sellers
Australia remains the biggest seller of wine by country here. It sold 2.08 million cases in 2012, down 9.6% from the 2.3 million cases in 2011 which was reflected in its share of the wine market dropping to 24% from 26%. With unchanged sales of 1.82 million cases, Chile retained its second-top status as well as its market share of 21%.
France fared better in 2012, increasing case sales by 6.1% from 1.14 million to 1.21 million cases, thereby increasing its share of the overall Irish wine market by one percentage point to 14%.
The US retained its fourth place but it sold less wine in 2012, dropping by nearly a percentage point from 875,000 cases to 866,450. Spain had a good year, selling 866,430 cases last year, up nearly 10% on the 790,000 it sold in 2011, thus increasing its market share to 10%. However Italian wines had the best year in 2012 with a 23.8% increase in sales, also to 866,430 cases from 700,000, pitching it up two percentage points to share 10% of the market.
South Africa, New Zealand and Argentina all suffered a loss in sales while Germany seems to have had a disastrous year witnessing sales dropping by 51.9% from 180,000 cases to just 86,640.
Wine share & distribution channels
The white/red/rosé breakdown remains unchanged from the previous year’s 50% white and 46% red.
But wine’s share of the overall alcohol market shrunk from 26.4% to 26.1% in 2012 while beer’s share slipped slightly from 46.7% to 46.6% as did cider’s share (going to 7.6% from 2011’s 7.8%) in 2012. The only winner here was spirits which grew share in 2012 going from 19.1% to 19.7%.
Channel breakdown remains unchanged with 81% of wine being sold through off-trade, 15% from hotels and restaurants and just 4% over the pub counter.
Off-trade channel
The bad news for independents is that their share of the wine market has again shrunk from 15% to 13%. Interestingly, discounters too have suffered a more severe depletion of their share from 18% to 12%. Multiples and symbol groups are the net winners growing their share from 50% to 54% and from 11% to 12% respectively.
A full copy of the report is available at: www.abfi.ie
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