Rising prices hit on-trade wine sales

The average price of a bottle of wine in the on-trade has increased by 2.36 per cent to £15.31 over the past year in the face of rising duty, according to the latest WineNation Report.

The average price of non-branded wine in the on-trade now tops £17. Price rises have contributed to sales falling by 1.4million nine-litre cases over the past year and by 2.1million nine-litre cases – or 25.2 million bottles – over the last two years.

New World wines’ share of the on-trade market is now at 49 per cent – an increase of two per cent on last year – while 93 per cent of the decline in still wine value can be attributed to Old World wine.

In circuit bars, New World wines have seen volume sales increase by 3.5 per cent while Old World wines have declined by 7.1 per cent. Wet-led bars have followed a similar trend.

The annual report is published by Accolade Wines but covers the whole wine sector in the UK.

One area that has seen growth is branded wines, with two types of consumers seeking well-known brands in the on-trade: “Newbies”, who are younger adult drinkers new to wine, and “Strong Prospects” who are potential wine enthusiasts. On average, branded wines are at least £5 cheaper per bottle than non-branded wines, and the price of branded wine is rising at half the rate.

Paul Schaafsma, general manager for UK, Ireland and AMESCA at Accolade Wines, said: “These figures are food for thought for the on-trade. The whole on- and off-trade is struggling due to ever-increasing tax rises. The information in the WineNation report is another warning sign that the alcohol duty escalator is not working. The government needs to look at the burden it is placing on small businesses.”

The WineNation report outlined that the wine industry is facing further challenges with rising costs, poor harvests and domestic demand in wine-producing markets which will add to pricing pressures in the UK. Italy, California and New Zealand will potentially see the biggest impact from rising prices. Raising grain and oil prices will also add further pressure to supply chain costs.

France remains the largest origin of wines in the on-trade by volume, but Italian wines, driven by pinot grigio, have overtaken French wines when it comes to value and are very close by volume.

New World wine sales are up by almost 900,000 bottles than they were in 2011, mostly driven by prices in relation to Old World wines. On average in the on-trade, a bottle of New World wine is £3 cheaper and going up at a slower rate than Old World wines.

This year restaurants overtook hotels as the biggest outlet type for wine sales by value, while 73 per cent of the still wine value losses have come from hotels where prices have risen twice as fast as the rest of the on-trade.

Accolade Wines, whose brands include Hardys, Echo Falls and Banrock Station, compiles the WineNation report using data from Kantar, Nielsen and CGA.

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