Trends 2007

UK wine boom turns sour

By Chris Mercer

- Last updated on GMT

Related tags: Wine

Not everyone jostling for space on the UK wine market is going to
survive over the next five years, but those who do are set to
become some of the industry's biggest earners.

Consumers in Britain will spend more on wine than any of their European counterparts by 2010, when retail sales are expected to push the £5.5bn mark, a report by VINEXPO and IWSR says.

Their forecast will help to allay industry fears of a drop in value in the UK, but will not console wine firms sobering up to the end of a decade-long consumption boom in the country.

Britain's chart-topping wine spend has more to do with price inflation than volumes, figures in the VINEXPO report show.

At £3.11, the average price for a bottle wine already exceeds that in most other European nations, thanks to a 40 per cent rise in sales of bottles costing more than £2.90 between 2001 and 2005.

The rise will add some comfort to an industry increasingly concerned about rising duty taxes and ever greater pressure from retailers to discount wines.

The average discount on branded wine is now around £1.50 in major supermarkets, an industry source said. Constellation Brands, which owns Hardys and Stowells wines, recently dropped its earnings estimates because it had failed to pass on cost increases in the UK.

Figures from VINEXPO suggest some in the wine industry should be more concerned about slower consumption growth, however.

Britons will only be drinking an extra 1.5 litres of wine each in 2010, compared to the 27-litre per person rate in 2005. That is a far cry from the 75 per cent leap in wine drinking over the previous 15 years.

"Some companies are not going to survive. People in the middle will find it very hard,"​ said Anne Burchette, managing director of Castel UK, which owns Oddbins wine stores.

Wine firms needed both a branded and a private label offering, as well as experienced staff capable of navigating their products through the web of supermarket negotiations and onto shop shelves, she told BeverageDaily.com​.

Supermarkets account for more than two thirds of UK wine sales.

Castel UK is set to launch its own wine brand this year, something Burchette described as a big move for the firm. It is an offshoot of France's Castel Goup, one of the world's largest wine merchants, but has maintained a low profile until now - even keeping Oddbins at arms-length.

The brand emphasises Castel's family ownerhsip and, at £5.99, will be aimed at adults aged 30-55 years. Feedback from retailers has been positive and Burchette would like to see two of the big four supermarkets on board within the first year of launch.

Related topics: Markets, Beer, Wine, Spirits, Cider

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