UK Off-Trade Analysis 2010

Where do you buy yours?


Multiple grocers lead the retail fold, but other exciting sectors include online and specialist shops

 

THE WORD recovery was doubtless the most commonly used term of 2010 and while UK retail certainly saw some alcoholic drinks growth over the course of the year, it was, it must be stated, irregular. Primary winners in the increasingly cut-throat battle for consumer spend were once more the multiple grocers, while overwhelming losers were, like last year, those in the so-called “impulse sector” – essentially convenience stores and multiple-specialist off-licences. Within this general picture there were pockets of dynamism in the online and independent arenas, where clever positioning and eclectic offers enticed curious consumers and gave hope to suppliers of the small volume and little-known labels.

Thankfully the intense round of shop closures that characterised UK drinks retailing in 2009 was not repeated in 2010 and the worst of the damage was done when First Quench Retail (FQR) – Britain’s largest off-licence retail chain – filed for bankruptcy on 29 October 2009. At the time, commentators blamed declining discretionary spending for this high-profile collapse, but hindsight has shown two important aspects to the demise of almost all of FQR’s 1,200 shops. Firstly, the UK high street had gone beyond saturation point when it came to convenience retailing and secondly there was a need – sadly not comprehensively supplied by FQR – for a specialist drinks retailer with a genuine point of difference from the supermarkets because there is simply no way to compete with them on pricing.

MULTIPLE GROCERS

However, for producers and importers there are advantages to the supermarket sector. The most important of these is the opportunity for incredible distribution through even a single listing. This is because any one of the major multiple grocers, dubbed the “Big Four”, has a massive market share. In total, the supermarkets account for 80% of the UK off-trade in terms of wine sales by value, and are growing at 6% (NielsenMAT to we 04.09.10). Of this, the largest portion is held by Tesco (over 32.8%) followed by Sainsbury’s (18.6%),Asda (16.4%) and thenMorrisons (13.8%).

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