With pubs closing, brewers struggling and cash-strapped consumers staying at home, sales of wine in the independent sector were supposed to offer some respite for a drinks trade feeling the squeeze from supermarket promotions. In theory.
However, last week The Grocer revealed wine volumes had dropped 1% in the year to 21 March - some 12 million fewer bottles than the previous year - and it was indies that suffered most. C-stores and forecourts' volumes fell 6% and value 1%, while off-licence volumes fell 9% and value 6%, according to Nielsen. And with fears that next week's budget will include further duty hikes on alcohol, c-stores and off-licences could face a further hit on sales.
Duty on alcohol, which has increased 17.5% in the past year, is partly to blame, says Gavin Partington, head of communications at the Wine and Spirit Trade Association. "Everything is working against the wine sector at the moment. Not only do independent retailers need to push through the costs caused by higher duty, grape shortages and packaging, there is no sign as yet of the Government being prepared to end the hikes."
Partington has every right to be pessimistic. Last year the Treasury committed itself to a four-year, 2%-above-inflation tax escalator, a move that prompted the drinks industry to make a submission to the Government calling for a reduction on alcohol duty.
"It's too early to predict what will happen with 2009's budget, but it's fair to say I am not hugely optimistic we will see any improvement," says Partington. "The Government's sums make for some pretty grim reading."
The promotional tactics used by the multiples aren't helping either. The number of featured-space wine promotions across the big five retailers rose 23% to 6,370 in the past 12 months, according to Assosia.
"The sheer aggressiveness of these offers, which often include premium wines as well as less expensive bottles, is naturally attracting customers to buy wine as part of their weekly supermarket shop, unless they have a great deal of loyalty to a particular off-licence," says Assosia MD Kay Staniland.
The recession-fuelled change in consumer spending habits has made matters worse, says wine industry consultant Angela Mount. " Consumers feel they have more control over their spend if they buy everything from groceries to wine in the same place - and being a nation of promotion-junkies, if they can get a bargain, even better."
So what can be done? Indies need to raise some David and Goliath spirit and play to their strengths, says Mount. "There will always be consumers interested in finding out more about what they are drinking," she says. "Indies should be going after exactly this kind of customer, by getting out into their communities and setting up tastings, as well as building a range that offers greater breadth and clarity than a supermarket."
Shore Capital analyst Clive Black claims the likes of Oddbins, which was sold by French wine giant Castel Freres last year following falling sales, and Threshers' owner First Quench Retail, which has closed 230 unprofitable stores in the past 18 months, are struggling to differentiate themselves from the multiples. Instead it's the small specialist wine stores that are winning, he adds. "The off-licences that have managed to generate more robust sales are the ones providing a more distinctive and unusual range than the multiples."
However, interest in unusual grape varietals and regions of the world remains a middle-class preoccupation, Black admits, so these tactics will be heavily dependent on where the store is located.
"There's no doubt this is a challenging time," concludes Mount. "But if off-licences focus on service and a specialist, innovative range, they stand a fighting chance."
Following Wednesday's Budget, the gloves may have to come off.