Since 1997, the UK wine market has been growing steadily, with wine being a regular addition to consumers’ weekly shopping trolley.
A Mintel report on wine retailing says that it was the building society “windfall wealth” in 1997 that fuelled a growth in wine consumption as consumers felt they had more money for non-essential purchases.
Supermarkets have also made wine more readily accessible, making consumers more likely to include a bottle with the weekly shop.
In addition, the influence of popular images such as Bridget Jones and her Chardonnay helped white wine sales grow significantly in both value and volume in 2000, reaching &£2.8bn and 454 million litres. This year, sales of white wine are estimated to reach &£3.2bn and 495 million litres.
Although sales and volume growth of white wine have been very buoyant, to some extent it has been overshadowed by red wine. Mintel says the reason the red wine market has grown at a faster rate is because it tends to be more expensive. Also, much of this growth is because of the popularity of branded wines, which have grown at a much faster rate than the overall market. In volume terms however, red wine trails a little behind white at 478 million litres.
The major grocers have continued to strengthen their position, mainly at the expense of off-licences and particularly independent outlets. Supermarkets are particularly important in terms of sales of still wine, with Tesco and Sainsbury’s claiming that they are among the UK’s leading wine retailers. Previously, off-licences were able to offer extended ranges and specialist wine knowledge, but now the supermarkets are working hard to erode this advantage.
Supermarkets have always offered wine at competitive prices, but they also score highly in terms of range and convenience. To fend them off, off-licences have had to find ways to differentiate themselves, either by demonstrating superior product knowledge and range quality, or by offering better prices. This has resulted in a polarisation of the chains, with Booze Buster operating at the discount end of the market and chains like Majestic Wine offering a more sophisticated range.
The off-licence trade is also being eroded by convenience store chains because secondary purchases are important for specialist off-licences and the improved and growing number of convenience stores is threatening this.
Convenience stores, like supermarkets, offer a wider range of products under one roof, but locally. In recognition of this trend, many off-licences have changed their positioning and have adopted the convenience store format.
Supermarkets have asserted their dominance, but not without changing their offering. Asda has challenged Tesco on price, and Sainsbury’s is reasserting its presence with the upper/middle classes. Sainsbury’s performs well in the wine sector because its customer profile is well suited to the purchase and consumption of wine.
One of the main developments in the retail sector has been the growth of Internet retailing generally, and specifically in wine retailing. Tesco’s online expertise has enabled it to make successful inroads into this distribution channel. The Internet has also helped brands such as Virgin, which has no wine heritage, to muscle in and steal market share.
Wine drinking in the on-trade sector (pubs, restaurants etc) has also increased significantly.
The arrival of a new millennium brought with it a buying behaviour that helped boost the market. There also appears to be a general growth in the consumption of wine as an everyday drink, which has offset any post-millennium decline in sales. That said, the number of consumers drinking wine has not increased, rather the amount consumed by those who do drink it has increased.
Mintel says that people who like to try different wines has increased by four per cent since July 2000. Half of consumers like to try different wines and this is particularly the case for more affluent consumers, with 61 per cent of AB consumers saying they like to try different wines. The younger wine drinker is also more likely to try different wines, as 56 per cent of those aged 20to 24-years-old like to try different wines, and those in the pre-family lifestage are the most likely group to try a variety of wines.
Expenditure on alcohol and specifically wine varies massively across the UK. Between 2000 and 2001, London had the highest average weekly expenditure on wine (including fortified wine) at &£5, some 47 per cent higher than the average for the UK as a whole. This is perhaps not surprising given the unique profile of the city and its proportionally higher levels of the country’s wealthy inhabitants.
Even so this deviation has increased since 1999/2000, when it was only 36 per cent higher. Consumers in London and the South-east spend significantly more on wine than in other regions, although the South-west is the fastest-growing region.