Charge of the light brigade

19 April, 2013

A year ago the drinks industry voluntarily pledged to shed one billion units of alcohol within a decade under the Responsibility Deal.

The gesture may be viewed on a par with volunteering to drop off a bag full of unmarked bills at the address of a man holding a machine gun to your loved ones or your collection of rare Burgundies.

But it has proved invaluable in the trade’s mission to convince government it can change UK drinking habits without the need for meddling in the form of minimum unit pricing and advertising bans.

Stripping a billion units from a nation with such a raging thirst while remaining profitable and credible with consumers is a tall order.

But the industry has met the challenge proactively – Stella Artois is now a 4.8% lager, Echo Falls White Zinfandel is down to 11% abv, Paul Gascoigne is in rehab – and the surge towards sobriety continues to gather stream.

The greatest success story has been the meteoric rise in the popularity of lower alcohol wine.

In 2012 it barged Argentina out of the UK’s top 10 wine categories and Nielsen data shows the low alcohol and alcohol free wine market has reached 1 million 9-litre cases, growing at 13.9% volume and 16.6% value (52 weeks to 15/9/12).

Recent launches include Blossom Hill Vie, Brand Phoenix’s First Cape Café Collection and Gallo’s Summer Red and Summer White – which all feature variants at 5.5% abv – and these ranges continue to snatch shelf space from stronger alternatives.

Gallo managing director Bill Roberts says: “The lower alcohol trend we’re witnessing is like the rosé phenomenon a decade ago. It offers a new entry point into wine through its accessible style.”

Fran Draper, marketing manager at alcohol-free wine Eisberg, says: “More than a fad, low alcohol and alcohol free wines are becoming more attractive as the consumer becomes more savvy.

“People are aware of their alcohol and calorie intake and by choosing much lower abv wines they are making positive steps to their overall health without depriving themselves of their creature comforts.”

Accolade’s category insight manager Ian Anderson calls lighter-style wines a “crucial part of the market” and says: “Every single grocery category has a lighter version of the standard product so why shouldn’t wine? It’s socially responsible and retailers should be pushing it.”

Government figures show the drive is working: per capita alcohol consumption dropped 3.3% in 2012 (HMRC Alcohol Bulletin, February 2013), from 8.26 litres to 7.99 litres.

Growing health concerns and a continued obsession with slim celebrities will help the industry remain credible while hitting the magic one billion number by 2022 – Gwyneth Paltrow drinks coconut water and kale juice, not full-bodied red wine.

But the greatest help is the tax break the industry receives on wines at 5.5% abv, meaning the excise duty is about half that of mainstream wines – 81p rather than £1.90.

Kevin Casey, managing director at light wine B by Black Tower supplier EMG, says: “With almost a tax incentive and the healthy lifestyle issue it is hard not to see this part of the market continuing to grow. When the wine delivers on taste and quality – which B by Black Tower certainly does – then the potential market opportunity for continued growth is significant.”

But there is a limit to how successful this tax break will be when it comes to improving public health. 

Richard Halstead, chief executive at Wine Intelligence, says: “Twenty-three per cent of regular wine drinkers in the UK have bought 5.5% abv wines, and say they will continue to buy. “Another 15% are open to the idea but have yet to take the plunge. That’s a respectable audience to aim at.” 

A respectable audience is all well and good, but there is an argument for more help from the government – to meet the “deal” part of the Responsibility Deal.

A tax break at 5.5% abv will only go so far in terms of attracting consumers to light wines with cheaper prices, but a tax break at 8% abv, or even 10% abv, could radically change the face of our wine market and rapidly accelerate the charge to shed units.

At somewhere between 8-10% you can alleviate most consumers’ concerns about light wine – that it tastes more like cherry cola/Ribena/cough medicine/an evil monstrosity than wine – and bring lighter, healthier drinks to the mass market.

Paul Schaafsma, general manager at Accolade, which has pledged to remove 25 million units from products including Echo Falls variants, says wines with an abv around 8.5% would deliver on taste and could also seriously reduce overall alcohol consumption if given the tax advantage.

“You can only go so far at 5.5% - it isn’t going to taste the same as a 12.5% wine,” he says. “But at 8-8.5% you can do a lot more. You are getting a similar style to a 12-12.5% wine.

“I would love to get a duty break at around 8%.”

Even Alcohol Concern agrees, adding: “We would like to see the Government lobby the EU for a lower rate of duty for wines between 5.5 per cent and 10 per cent, to encourage sales.”

CWF has seen growth in its 8% abv brand Silver Bay Point and attributes its success to “the growing demand amongst consumers for wine style drinks that fall in to the lower alcohol category, deliver well on quality and packaging good looks and offer exceptionally attractive price points all year round”.

Marketing manager Julie Ingham says: “The very low alcohol wines will not suit everyone’s palate. Sugar can be used as a substitute for the lack of alcohol but of course this is no good if you want a drier style of wine.”

Delightful wines like dry Australian Hunter Semillon, sparkling moscato d’asti from northern Italy and German Rieslings can be produced at around 10% abv, and it wouldn’t take much to lower the alcohol content in the likes of Echo Falls White Zinfandel to that mark.

The growth in wines at 5.5% abv is encouraging and should be pushed by retailers, but if the trade lobbies for a tax break on higher abv wines consumers, suppliers and retailers could all benefit enormously.

If there’s room for a breakout:

Supermarkets have led the charge for light wines, with Sainsbury’s planning to double sales by 2020 and Tesco listing more than 30 lines.

But Portman Group chairman Henry Ashworth urges smaller retailers to follow suit.

He says: “Businesses need to take responsibility to look at the ABV of the products they're selling.

“Supermarkets are looking at the abv of their house wines now, and smaller retailers should take a similar approach.”

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