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Friday 31 October 2014

Low prices drive low-alc wine sales in UK

13th March, 2013 by Patrick Schmitt

5.5% abv wine-based drinks are booming in the UK due to low prices, not, it seems, their low alcohol content.

Low-alcohol wines

Low-alcohol wine-base drinks are booming in the UK

The sector now accounts for £38 million worth of sales in the UK off-trade, having surged from nothing to almost 1 million cases by the end of last year.

But, as the April edition of the drinks business points out, while the category’s rapid emergence is commonly attributed to health-based factors, actually it’s low prices that are driving growth.

With a duty rate on wine-based products at or below 5.5% that is less than half the level on wines from 5.6-15% – 80 pence compared to £1.90 – low-alcohol labels can be the cheapest products in the wine aisle.

However, they are not actually allowed to be called “wine” – the EU and UK define wine as a product made from fermented grapes with a minimum abv of 8.5% (although there are a few exceptions to this rule, such as German off-dry whites).

Furthermore, while the trade and data analysts Nielsen use the term “low-alcohol” for wine-based products up to and including 5.5% abv, the EU regulation states that low-alcohol can only be used on a label to describe a product with an abv of not more than 1.2%.

Definitions aside, the so called low-alcohol wine category is swelling in the UK as producers create brand extensions to benefit from the reduced duty rate, and retailers list the new blends to retain price sensitive shoppers.

In particular, with an average price of just £3.23, low alcohol wine-based drinks can still be sold as part of a three for £10 offer.

As the latest issue of db records, such a promotional mechanic was once the most effective driver of volume sales for standard wine, but higher duty rates, shorter harvests, altered exchange rates, as well as rising raw material and transport costs have made it no longer attainable.

Indeed, the average price for a standard bottle of wine in UK retail is now £5.03.

The trade is in fact promoting low-alcohol drinks as healthy alternatives to standard wines due to the reduced calorie and alcohol content, and it’s hoped consumers will increasingly choose low-alcohol products for these benefits, rather than just the low price points.

Hence, latest player in the low-alcohol category, Gallo, has chosen to include the calorie content on its label in a bid to lure calorie-conscious consumers.

As previously reported by db, Gallo’s 5.5% abv “Summer White” contains 75 calories per 125ml serve, which is 25% less than the average amount, according to the company’s general manager Bill Roberts.

Surprisingly, shoppers don’t seem to mind that they are actually getting a lot less alcohol for the price.

For a full analysis of the category, including UK taste trends, low-alcohol labeling rules, sales statistics and a list of new product launches, see the April edition of the drinks business.

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