Comfort and joy in short supply as Christmas flops

12 January, 2007

Wine's 6 per cent sales increase a rare bright spot in a festive season which saw declines on 2005

Drinks retailers faced a turbulent Christmas period with a fall in sales - though there was an encouraging performance from the wine category.

ACNielsen figures for the four weeks to Dec 23 showed overall off-trade liquor sales up by just 1 per cent - a decline in real terms, with inflation running at around 2.5 per cent.

But there has been relief that discounting did not reach the excesses of previous years.

Spirits fared worst of all, with a 3 per cent sales fall. White rum turned in a dire performance with a 16 per cent sales collapse while cream liqueurs - usually a banker for the festive season - surprised the market with a 9 per cent decline - 21 per cent in volume terms.

This has been attributed to Diageo's two-for-£25 deal, which took the market-leader away from price-fighting activity, preserving margins but at the expense of sales.

First Drinks Brands managing director Chris Mason said the cream liqueur category was driven down by price-cutting. "Heavy discounting as early as November attracted the early gift shoppers, but was the pressure on value too great?", he said.

There was better news for wine, which showed worrying signs of plateauing in 2006, but achieved a 6 per cent sales and volume increase. Promotions in Sainsbury's and Tesco, which offered consumers 25 per cent off when they bought six bottles or more, gave sales an early boost.

Tesco BWS director Dan Jago said: "Overall for us we had a very good Christmas. The last four weeks were very positive for us and very positive for customers. They came in their droves but they left it very late, which made everyone nervous.

"It was a more managed Christmas because there weren't the silly deals like two-for-£20 on spirits."

Waitrose's spirits sales were up by 8.5 per cent in the four weeks to Dec 23, with gin and vodka driving the growth. Gin was up by 14.5 per cent, followed by vodka at 13.6 per cent, according to a Waitrose spokeswoman.

Spirits buyer Giles Fisher said: "Over the Christmas period, customers were really looking for quality, which very much played to our strengths. This was reflected in strong sales of premium items such as Single Malt Whiskies, Cognac and premium Vodka.

Co-op's spirits sales over the full Christmas sales period (Nov 13 to Dec 31) were static year on year, according to Tom Mill, category buyer for spirits.

Mill said he did not think the big promotions in multiple grocers affected sales at the Co-op.

"We focused on a single-purchase £9.99 deal across a range of products so were not badly affected by the deals, as can be seen by the positive sales results versus the market," Mill said. The Co-op's busiest trading week was the week commencing Dec 23, he added.

Independent retailers reported mixed results. Cooden Cellars, of Eastbourne, East Sussex, has enjoyed its best Christmas since it opened in 1997, according to joint owner Colin Barnes. "Christmas Eve sales will be up about 40 per cent on last year," he said.

Laurie Scott, from Corkscrew Wines in Carlisle, said sales were slightly up compared with last December, but sales from November and October were both down on last year.

"Put the figures together and it's not as rosy a picture as everyone is suggesting. We had a succession of quite busy days over December but we didn't have that utterly manic day that you would usually expect," Scott said.

Christmas Eve and New Year's Eve were the busiest times of trading for independent retailer Mark Johnson, of Celebrations Off-licence in Stockport.

"We made sure we had discounts on lagers and spirits to ensure we competed with the multiples," he said. Despite statistics showing a downturn in cream liqueurs sales in the off-trade, Johnson said brands such as Baileys were strong sellers.

"Our prices were not as competitive as the supermarkets and, despite also stocking Parfett's own-label cream liqueur for £3.99, shoppers were in spending mode and happy to treat themselves."

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