MARCH TOWARDS DEEP DISCOUNT RETAILERS 'BREATHTAKING', SAYS RESEARCH FIRM

Overpriced wine in UK mainstream faces ‘grim process of elimination’: Wine Intelligence

By Ben BOUCKLEY contact

- Last updated on GMT

Kiss of life to the UK wine category? Wine Intelligence says a rise in people willing to splash out £8/bottle signals precisely that, but warns that overpriced mainstream brands could suffer as consumers also flock to lower-priced wine (Photo: Matt Bidulph/Flickr)
Kiss of life to the UK wine category? Wine Intelligence says a rise in people willing to splash out £8/bottle signals precisely that, but warns that overpriced mainstream brands could suffer as consumers also flock to lower-priced wine (Photo: Matt Bidulph/Flickr)

Related tags: Wine intelligence, Cabernet sauvignon

Wine Intelligence warns that a bifurcating UK wine market means that more consumers are trading up, while more are also trading down, and predicts this will leave scant space for the mediocre in-between.

Introducing Wine Intelligence’s newly released Wine Market Landscape Report for November 2014, COO, Richard Halstead says that more of the UK’s 23.7m regular wine drinkers are willing to buy wine at £8+ ($12.50) per bottle – 40% in a survey of 1,001 regular wine drinkers undertaken in August, versus 29% the year before.

But Halstead also glosses a “march towards the deep discounters”​ Aldi and Lidl – since 16% and 11% of regular wine buyers polled in August say they shop for wine there, compared to 48% at Tesco and 34% at Sainsbury’s.

“The pace of the hard discounters’ advance is breath-taking,”​ Halstead writes. “Both have grown their consumer reach in the region of 50% in 12 months, an unprecedented shift in a measure which generally stays quite stable over time.”

'Have nots' flee category as £5 bottles disappear

So how does this discount drive square with a wine market where – due to an apparent economic recovery, many consumers are feeling flush for the first time in years, and are expressing this through wine buying?

“The truth about the UK wine market, and perhaps the UK economy in general, is that we are seeing gaps between the haves and the have-nots,” ​Halstead says.

“Or more precisely, the have-somes and the have-lesses, because the have-nots exited the category some time ago when prices per bottle rocketed above £5 as a result of the duty escalator.”

Heralding exciting times for premium brands and iconic products, Halstead warned that mainstream wines without strong brand equity faced a “grim process of elimination” – ​especially if they are overpriced and wedded to what he calls the “half-price offer fiction”.

“The truth about the UK wine market, and perhaps the UK economy in general, is that we are seeing gaps between the haves and the have-nots,” ​(Richard Halstead, COO, Wine Intelligence)

So what tickles the public's fancy, in terms of ‘choice cues’? Wine Intelligence’s Vinitrac survey of 1,001 regular UK wine drinkers polled in August shows that 70% cite grape variety as ‘important’ or ‘very important’ when buying wine, 67% a promotional offer, 61% brand awareness, 60% country of origin and 55% region of origin.

Taking brand awareness alone, 87% of this group have heard of Jacob’s Creek, 87% Blossom Hill, 82% Echo Falls, 80% Hardys and 73% Gallo. And Wine Intelligence reports that brand awareness is growing in importance as a ‘choice cue’ – only 55% of regular drinkers said it was important in August 2013.

South Africa creeps up on the rails...

What’s selling well, and where does it come from? Well, Australia still leads the pack in still light wine with 24m nine-liter cases sold in 2013 and a CAGR of 1% in 2012.

In the context of the UK still wine ‘Top 5’ it’s the only nation in growth. Second-place France sold 17m cases in 2013 but endured a 4% CAGR decline, as did Italy (17m cases); the US and Spain also saw declines.

Fancy a flutter on a dark horse? Well, South Africa is creeping up on the rails – with the strongest growth among importers from 2012-2013, with volumes consumed up 14% overall.

The same nations do battle for the hearts of UK wine drinkers in sparkling too, but here Italy has surged into the lead given Prosecco’s runaway success – the country sold 3.5m nine-liter cases in 2013 (CAGR a stunning +43%), followed by Spain (3.2m, -1%), France (2.8m, -4%), Australia and the US.

In terms of varietals, Sauvignon Blanc, Chardonnay, Merlot, Pinot Grigio and Cabernet Sauvignon still predominate, although Chardonnay and Cabernet Sauvignon posted slight declines in 2014 versus 2013.

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