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 *

Please note that comments are subject to our posting guidelines in accordance with the Defamation Act 2013. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved.

Subscribe to our newsletters

New Business Development Manager Nordic

Concha Y Toro
Stockholm, Sweden

Experienced Administrator

The Drinks Business
Central London, UK

Sales Executive (London – Craft Spirits)

Bimber Distillery
London, UK

2 x Buying Assistants

Berry Bros. & Rudd
Battersea and Basingstoke, UK

Temporary Christmas Sales Support - Wines & Spirits

Knighsbridge, London, UK

Head of Wholesale

Hispamerchants Ltd
London, UK

Sales Manager

Hispamerchants Ltd
London, UK

The World Bulk Wine Exhibition

20th Nov 2017

The Drinks Business Green Awards 2017

London,United Kingdom
20th Nov 2017

The Global Spirits Masters Lunch

London,United Kingdom
1st Dec 2017
Click to view more

Green Awards 2017

Deadline : 25th October 2017

The Global Riesling Masters 2017

Deadline : 30th October 2017

Click to view more

Champagne Masters 2017

The only Champagne blind tasting in the UK, the competition will reward the best wines in the following categories:

The Global Rosé Masters 2017

With wines from the palest of pink to almost ruby red, bone dry to almost cloyingly sweet, reductively handled to barrel-aged, as well as gently spritzy to fully sparkling.

Click to view more