Wine hit by consumer exodus

05 September, 2008

Growth theories debunked as analyst tells of

fall out at lowest price point


Wine volumes are "grinding to a halt" in the off-trade as cash-strapped consumers abandon regular purchases at the lower price points.

That's the grim conclusion of Nielsen analyst Stewart Blunt,

pouring cold water on theories that wine retailers are

benefiting from a trend towards home entertaining.

Blunt said

although duty increases had given the impression of growth in the market, the latest figures pointed to a mere 1% volume increase compared

with 5% at the end of last year.

"We're going through a period of adjustment," he said. "You've got the impact of duty coming in, exchange rates changing and, of course, the general downturn in the economy.

"Common wisdom has it that we can't afford to go out so often so we're drinking in , and you would expect the light wine market to be growing - but it's not."

He added: "The

fall out has happened at the bottom end of the market and has not been reflected in the higher levels. You have to wonder if a significant proportion of the population who were only buying at the £2.99 end have fallen out of the market.

Volume is grinding to a halt."

Sources estimate that in the past quarter

some 800,000 cases have disappeared from the wine market, despite the efforts of supermarkets to court budget-conscious consumers with deals such as three-for-£10. There are anecdotal reports of consumers trading down, but Blunt believes many

have given up discretionary purchases of wine altogether.

Figures revealed

Latest Nielsen figures show that off-trade drinks volumes generally are now comfortably ahead of those in the on-trade, which continues to struggle.

The split is now 52%-48% in favour of the take-home market, with off-trade volumes up 3% and on-trade down 8%.

The figures, which cover the year to Aug 9, show that total liquor in the

off-trade saw the value of sales increase by 5% while the on-trade declined by 3%.

Australian wines remain the off-trade market leaders, despite registering no growth in the 12-month period. French sales were down 1% while the next biggest sellers, the US

and Italy, were up 7% and 12% respectively.

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