Online, fizz and craft beer lead the charge for growth in 2013

18 January, 2013

Retailers have been warned to embrace the online revolution and push sparkling wine in 2013 after these were the only growth areas in an otherwise dismal Christmas trading period.

Nielsen figures show off-trade total liquor sales were down 6.1% in volume on the previous year.

It analysed drinks retailers’ performance in the 12 weeks to December 29 and revealed that value sales showed no growth compared with the same period in 2011.

But when the higher duty rate and VAT changes are taken into account, value sales were effectively down 1.2%.

Nielsen analyst Helen Stares told OLN: “For the first Christmas in a number of years, we have not seen value growth in the total liquor category, in spite of increased duty rates.

“In a number of major sectors, including beer, cider, spirits and Champagne, year-on-year performance over the Christmas period was less positive than over the rest of the year.

“There were some pockets of growth, however, with sparkling wine in particular gaining sales as consumers looked to celebrate Christmas with popping corks.”

While Champagne sales were down 9.1% in value and 9.6% in volume on the previous Christmas, sparkling wine – driven by the performance of Prosecco and Cava – was up 8.3% in value and 7.4% in volume.

Stares said: “Sparkling wine, which had a great Christmas, was also in growth over the course of the year.”

Victoria Olivier, brand manager of Piper- Heidsieck, predicted Prosecco would continue to thrive throughout 2013, and believes retailers have a great opportunity to increase profits if they can convince shoppers to trade up to Champagne.

She said: “Most Champagne is seasonal and if Prosecco is convincing people to drink sparkling wine throughout the year that is great. It is our job to build on the fantastic brand equity Champagne has and work with retailers and educate consumers on why Champagne is more expensive and encourage them to trade up and buy full- price Champagne.”

Meanwhile the British Retail Consortium said 2012 was only saved for UK retailers by significant online growth.

BWS followed suit as online retailers bucked the negative Christmas trend, with Majestic and Naked leading the charge.

Majestic chief executive Steve Lewis called Christmas “challenging” after it posted a relatively underwhelming sales rise of just 1.1%, but its online channel grew 15%.

Web wine retailer Naked saw sales rise 33% over the Christmas period compared to 2011.

Chief executive Rowan Gormley said: “It was a great Christmas for us with the recession feeling like a long-distant memory.”

Morrisons, which is still waiting for its transactional wine website to take off, pointed to its lack of online presence as an explanation for a sales decline of 0.6%.

Andrew Bird, head of trading for grocery and drinks at M&S, said online BWS sales in December were 48% up on last year. Similarly, Waitrose saw a 37% rise in online BWS orders over the Christmas period.

Total take-home spirits were up 1.7% in value, but down 3.5% in volume. The winner among the wine-producing nations was Spain, up 25.2% in value and 27% in volume – by far the strongest performance of the top 10 wine exporting countries.

Meanwhile beer was down 3.1% in value and 8.5% in volume, cider fell 1.5% in value and 7.2% in volume and RTDs were down 11.3% in value and 16.4% in volume.

Along with sparkling wine, premium wine, craft beer, small batch gin and vodka will lead the charge as retailers battle to increase profits in 2013, according to Nielsen.

Stares said the drinks trade faces a tough 2013 as the country struggles economically.

And without major events such as the Diamond Jubilee, Euro 2012, the Olympics and the Paralympics to boost sales, she believes retailers will need to pull out all the stops to ensure growth.

She said: “Given the continuation of economic pressures and the duty escalator increasing prices again in the next budget, I expect to see a continuation of the decline in overall sales volume that we’ve been seeing over quite some time.

“We’re seeing a number of new, lower-alcohol products coming into the market, and I would anticipate that more will be launched over the course of the year.

“Niche products, such as craft ales, small-batch gins and vodkas are also gaining consumer interest and can offer incremental sales when placed alongside major brands.”

She sees some light at the end of the tunnel, however, adding: “While overall sales are down over 2012 compared with 2011, there have been some areas of BWS which have been putting in a strong performance.

“Ales are seeing something of a resurgence, particularly driven by premium bottles, along with sparkling wine.

“Higher-priced bottles of wine costing £7 and over have been increasing their share of the wine market throughout 2012, showing that even in a recessionary environment, premium products can perform well.”

Stares also shared some tips with retailers to increase profits in the absence of major events during 2013.

“Manufacturers and retailers should consider what can be done to generate excitement in their stores and their cat- egories to stimulate sales in the absence of external events,” she said.

“With consumers’ budgets still feeling the pinch, consider moving into different pack sizes and formats in order to hit certain price points. The convenience channel has outperformed larger stores, and so getting the mix, availability and placement – such as beer and wines in fridges – correct should help to gain sales.”




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