By Andrew Starke
Liquor producers and retailers in the UK are bracing for a difficult lead-up to festive season trading with the twin threats of new restriction and mixed off-premise sales volumes.
With Scotland set to introduce tough new legislation to govern the sale of alcohol, the CEO of the Wine & Spirit Trade Association (WSTA) has warned the global suppliers that the days of seeing the UK as one market are over.
The WSTA is the UK organisation for the wine and spirit industry representing over 340 companies producing, importing, transporting and selling wines and spirits.
WSTA CEO Jeremy Beadles said the splintering of the market would cause confusion for drinks companies and consumers alike.
A major clampdown on alcohol sales in Scotland, including a ban on ‘irresponsible’ off-premise promotions, will come into effect on October 1 this year.
Under the new rules it will be illegal for shops and supermarkets to discount with packaged deals such as ‘six cans for the price of four’ or ‘three bottles of wine for £10’.
While the policy is expected to face a legal challenge, the industry is preparing for the worst.
Of further concern for the UK liquor trade is the mixed picture that emerged from the latest WSTA Market Report with volume sales of wines and spirits holding firm over the past quarter but all other categories down compared to the same period last year.
Off trade figures for the 12 weeks to August 6 show wine sales up 5 percent in value and spirits up 7 percent, though most of it is attributable to duty and VAT increases.
Standout performers included Italian wines, with volume sales up 11 percent, and wine in the £7 to £8 range, up 31 percent by volume and value.
By contrast champagne sales for the 12 week period were down 23 percent by volume and 13 percent by value.
In the spirit category for the same period, malt whisky emerged as the strongest performer, with sales up by volume (10 percent) and value (15 percent) yet sales of liqueurs were down 10 percent in volume and 6 percent in value.
It was a similar picture with the on-premise figures for the year to July 9 showing volume falls across all categories except sparkling wine, but value sales up, again largely attributable to the combined impact of duty and VAT increases.
Red wine was the best performing wine category in the off-premise with value up 15 percent.
Wines from Argentina (35 percent), New Zealand (33 percent) and South Africa (32 percent) continued to show the largest value growth.
“The latest figures paint a mixed picture with continuing signs that consumers are cutting back on going out yet there’s clearly still demand for a replacement treat at home,” said WSTA chief executive, Jeremy Beadles.
“However, market conditions are likely to remain challenging, with all the evidence pointing to a further squeeze on household budgets in the months to come.”