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Alcoholic Drinks in the United Kingdom

United Kingdom alcoholic drinks market: Economic austerity impacting industry during 2012

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2014-01-22 17:59:02 - Alcoholic Drinks in the United Kingdom - a new market research report on

In 2012, economic austerity and financial uncertainty remained prevalent and impacted the growth of the UK alcoholic drinks industry. Sales of alcoholic drinks were restrained in 2012 as consumer confidence had yet to pick up. On-trade consumption continued to suffer as most consumers cut back on costs and focused on at- home entertainment due to it being cheaper. Off-trade volume consumption grew in many areas, largely as a result of price promotions, with value sales growth being somewhat constrained.

In 2012, the coalition government officially announced plans to tackle minimum pricing on alcohol, which, in effect, would tackle excessive drinking habits in the UK. This legislation had the potential to affect pricing across all categories of alcoholic drinks, particularly wine,



as spirits are already subject to a high level of tax. Many alcoholic drinks brands which contain a high number of units are currently being sold at low prices, often as ´multi-buy´ offers, and these products would have seen the greatest shift in price. The new minimum price was set at £0.45 per unit in England and Wales and £0.50 per unit in Scotland, which equates to a 13% ABV (9.8 units) bottle of red wine having to be sold at no less than £4.41. The new minimum price had the potential to change the alcoholic drinks landscape in the UK, but in July 2013, due to lack of ´concrete evidence´ the plan has been shelved.

The leading multinational brewers continued to dominate sales of alcoholic drinks in total volume terms at the end of the review period. In 2012, the top four players were Heineken, Inbev, Molson Coors and Carlsberg, with these players together accounting for close to half of total volume sales. These players have strong distribution in both the on- and off-trade, invest heavily in marketing and new product development and benefit from well-established brands such as Molson Coors´ Carling and Heineken´s Foster´s. Heineken and Carlsberg both lost share in 2012, however, as price competition increased and many consumers began to shift away from beer.

Grocery retailing remained the strongest distribution channel for alcoholic drinks as consumers continued to buy alcohol in the off-trade. Consumers are trading up slightly to nicer wines, for example, as they are still saving money from not frequenting on-trade establishments. As a result of consumers finding more unique wine varietals, the internet channel performed well in 2012. Although supermarkets, hypermarkets and discounters are performing well currently, the potential introduction of minimum prices may affect retailers offering ´deals´.

Alcoholic drinks is expected to see only marginal value growth over the forecast period as a result of ongoing economic uncertainty, and particularly the EuroZone debt crisis. Manufacturers and retailers will have to work hard to convince consumers to spend their shrinking disposable incomes on alcoholic drinks. Government discussions on minimum pricing are also likely to erode alcoholic drinks consumption, with premiumisation and value-added niches thus being the main hope for value growth.

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Mike King
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