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Drinking less but better polarising market

UK consumers are drinking less, but buying better quality wines and spirits, according to Nielsen’s Helen Stares.

Wines sales over £10 are increasing at 18% in the UK off-trade but overall volume sales are in decline
(Nielsen MAT to 27.04.13)

During a presentation at the London International Wine Fair this week, Stares used Nielsen MAT data to the end of April to show that shoppers are treating themselves, although the overall picture for drinks is a decline in volume sales.

The off-trade light wine market currently totals 893 million cases, down from just under 900m at the end of last year, however, Stares said that wines priced over £7 were up in volume sales by 16% and those over £10 were increasing at 18%.

She also noted a “strong performance for vintage Port” which has increased by 9% in volume, while “premium Champagne brands” are up 1%.

Other drinks categories are showing similar trends. She said that “world beer”, which commands a 40% price premium over standard variants, was up 11%, with bottled ales in particular outperforming other beers.

Furthermore, in spirits, malt whisky priced over £35 a bottle is up 25%; vodka over £23 is rising at 47%, and “premium gin” is increasing at 42%, with small batch variants experiencing notably strong sales growth.

Echoing such findings, Rabobank released a report this morning indentifying the rise of the “hybrid consumer” – shoppers who trade down when it comes to everyday items such as basic groceries and then use the money saved to buy high end products for special occasions.

As a result of this trend, the bank forecasts a food retail sector that is increasingly polarized into value and premium, with middle ground products struggling to retain market share.

As for trends in value sales of drinks in the UK off-trade, Nielsen’s Stares said that duty increases were to blame for a continued rise in wine prices.

“Value is flat at best if you take out the duty,” she told the drinks business.

She also noted a growth in flavoured beer and spirits. “We are seeing honeyed whiskies coming through as a popular way to get people into whisky – and Jim Beam and Jack Daniel’s have lower abvs than their parent products, so if they are sold at the same price, there’s more margin.”

Meanwhile, citrus flavoured beer such as Carling Zest are in growth, while in cider, apple variants are in decline, but pear ciders and other flavoured ciders are in “strong growth”.

“80% of the growth in spirits and beers is coming from new products that are all flavour variants of their parents,” summed up Stares.

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