UK suffers record beer sales drop

August’s wet weather and the end of the World Cup brought about the sharpest drop in UK beer sales since at least 1997, according to latest figures.

The British Beer and Pub Association (BBPA) revealed that the sharpest fall came in the off-trade, which saw a 12% decline in the third quarter, as opposed to a 7.8% decline in the on-trade.

The figures represented the biggest decline since BBPA records began in 1997.

“As has occurred after every World Cup, the beer market hit a bump in the road, which was not helped by a wet summer,” said Brigid Simmonds, BBPA chief executive. “But those exceptional factors are underlaid by lingering economic and consumer uncertainty.

Simmonds pointed to consumers’ increasing worries about their disposable incomes as being a major factor both in these figures and in quarters to come in light of government spending cuts and tax rises put in place to help recover the national deficit.

The body went on to call on the government to “lighten the regulatory and tax load which currently burdens the sector and is a brake on growth”.

The immediate outlook for the sector is certainly not good. The previous government increased alcohol duties by 2% above inflation on an annual basis and the coalition has pledged to retain the escalator. Moreover, January will see a rise in VAT from 17.5% to 20%.

In total, beer duties have risen 26.1% since March 2008.

Further announcements are expected in due course after the government completed the consultation period on two reviews of the alcohol industry in Britain – one on licensing and one on taxation.

Among the BBPA figures, however, were hidden some interesting nuggets which suggested UK beer drinkers might just be altering their consumption habits.

Cask ale sales held firm in 2009, according to the body’s volume sales report, while at local brewing level Shepherd Neame recently reported a 12% rise in sales of bottled beer for the 12 months to 26 June.

Meanwhile last week SABMiller, owner of the Peroni Nastro Azzurro brand, reported that volume sales in the UK are rising 20% year-on-year, suggesting that consumers are increasingly happy to spend that little bit more on top-end lagers.

The festive season is likely to see a stabilisation in beer sales, though it is unlikely volumes will recover sufficiently to break even against 2009.

For the beer industry, the figures will make depressing reading. However, with buying habits seemingly shifting – and the off-trade in accelerated decline – for once the on-trade has reason for optimism.

Alan Lodge, 27.10.2010