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News
UK alcohol market set to shrink
The UK’s above-inflation tax hikes will see alcoholic market decline by 6% in real terms over the next five years, according to market research firm Mintel.
Data for the last decade saw initially strong growth slow in 2008 thanks to the combined impact of health conscious social attitudes, the economic downturn and the duty escalator.
Overall the value of the UK’s alcoholic drinks market increased by 15.6% between 2000 and 2010 to £37,913m. This growth was driven by wine, which saw a 53.3% value increase, with the spirits and liqueurs sector also seeing strong growth of 22.8%. By contrast, the RTD and alcoholic mixables category shrank by 39.6%.
The company attributed wine’s strong performance to “its popularity among both the genders and deep discounting from the supermarkets.” However, it predicted that the category would suffer over the next five years “as a result of its reliance on imports which, alongside higher taxes, is driving up prices.”
Beer was also predicted to decline of 11.5% by 2016, with lager expected to perform particularly poorly, due to the category’s “over-reliance on the rapidly declining pub sector, combined with a lack of sufficient product/brand innovation.”
Image proved the downfall for RTDs, which “fall victim to negative publicity around their perceived associations with underage drinking.” However, Mintel forecasted a “sea change” for the category, which it maintained is “set to enjoy the greatest growth to 2016.” The company based this on the strength of the recently emerged ready-to-serve cocktails and canned spirits with mixers.
Across the total alcoholic drinks market Mintel anticipated a 3.1% value sales decline for 2011, with further smaller declines until 2016. It explained: “Rising prices will continue to mean people migrating towards in-home drinking and some people will be priced out of the market altogether.”
Click here for further details from the report or to ask questions directly to Mintel senior drinks analyst Johnny Forsyth via the company’s online video link.