Sunny 2014 forecast for UK wine market

10th February, 2014 by Gabriel Stone

A report from Rabobank predicts a brighter 2014 for the UK wine market as it highlighted a number of key opportunities that suppliers should target.

sunshineThis optimistic outlook was based on the combination of an improving UK economy and recovery in the global harvest, which, the bank reported, “has allayed concerns over the potential tightening of global wine supplies.”

Although France has experienced two consecutive small harvests, Spain saw its 2013 crop jump by almost 40% to 49.5 million hectolitres. Another major producer, California, is likely to report a crop of similar size or possibly even larger than its record breaking 2012 harvest.

Turning to the UK, the Dutch bank noted that wine consumption “took a severe hit” with the economic downturn in 2008 and “has struggled to regain traction ever since,” but went on to highlight a number of areas where it believes there are opportunities for the wine industry to bounce back.

Identifying “middle-aged women and the Baby Boomer generation” as a core consumer demographic for the UK wine trade, Rabobank noted: “there are signs that these consumers are becoming more and more responsive to more diverse offers and even more premium offers when they are given a convincing reason to shift.”

In support of this claim, the bank cited a report from Majestic Wine that its sales of bottles priced above £20 showed particularly strong growth during the 2013 Christmas trading period.

With the shift toward at-home consumption or, if people do go out, a move towards drinking wine with food, Rabobank noted the challenges this trend presents for brand building. However, it added: “Incumbent market leaders, such as Australia in the off-premise and France in the on-premise, will need to adapt to such trends as consumers look for more food-friendly offerings.”

The report also pointed to the opportunity represented by the 25-34-year-old demographic, a group it picked out as “the biggest spenders on alcohol in the UK.”

Noting that “the wine category needs to do more to engage with younger generations who think and behave very differently than older consumers,” Rabobank described this group as “even more receptive to new messages and product innovations.”

Linked to this, it also highlighted the “new and exciting platform” offered by today’s online media and distribution channels. To illustrate the importance of a strong online presence, Rabobank drew a contrast between the success of Tesco’s Christmas wine sales, which saw an 11% increase in the number of grocery orders made online, and the “much less flattering numbers” from Morrisons, which attributed some of its poor performance to a weaker online platform than many of its competitors.

Within this online growth, smartphones are playing an increasingly important part in e-commerce sales. While an estimated 1% of online sales were made by phone in 2010, the Internet Advertising Bureau (IAB) has predicted that this will exceed 30% in 2014.

Despite this online uplift, Rabobank noted that more needs to be done to understand and capitalise on the opportunities offered by this channel, commenting: “wine supplier strategies to harness the power of the internet have a long way to come.”

Summarising the report’s findings, Rabobank analyst Marc Soccio emphasised the close link between wine’s recovery and that of the wider UK economy. “Improving economic fundamentals should begin to provide more support to wine consumption,” he remarked. “However, old pressures remain as suppliers continue to deal with rising excise tax rates and a concentrated grocery retail sector.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our newsletters

Job vacancies

Administrative Assistant

Swig Wines Ltd
Chiswick, London, UK

HR Manager

Amathus Drinks PLC
London, UK

Beer Development Specialist

Matthew Clark
London, UK

Senior Sales Manager

Haynes Hanson & Clark
Gloucestershire, GB

Customer Services Administrator

Speciality Drinks Ltd
London, UK

National Business Development Manager

Speciality Drinks Group
London, UK

Inventory Analyst

Bibendum PLB
London, UK

Events Executive - Atom Supplies

ATOM Supplies Limited
London, UK

Off-Trade Sales Account Executive

Domaine Direct
Nationwide, working from a combination of home & London office.

Sales Executive/Brand Ambassador

Ballindalloch, Speyside, UK

Client Manager

Noble Rot
Wandsworth, London, GB

Spirits Investment Director

London, UK

Junior Brand Manager

Enotria Winecellars
Park Royal, London, UK

Content & Digital Assistant

London, UK

Sales Manager

Cellar Trends
London, UK

Champagne Masters 2017

Deadline : 7th July 2017

The Global Sparkling Masters 2017

Deadline : 10th July 2017

The Global Malbec Masters 2017

Deadline : 10th July 2017

The Global Syrah Masters 2017

Deadline : 18th July 2017

Click to view more

The Drinks Business Awards 2017

Now in its 15th year, the db awards have become the most authoritative, internationally respected badge of achievement in the alcoholic drinks industry.

The Asian Cabernet Sauvignon Masters 2017

the drinks business Hong Kong announces its first year of The Asian Cabernet Sauvignon Masters.

Rioja Masters 2016

Now in its fifth year, the competition will recognise and reward the finest Riojas on the world stage.

Fortified Masters 2016

Now in its third year, The Fortified Masters will reward the best fortified wines on offer.

Click to view more