The drinks trade has an Eeyore complex. Suppliers and retailers are prone to spotting real or imaginary storm clouds on the horizon. Yet even as the gloom gathers and a vicious Christmas price war and second major duty hike are regarded inevitable, there are visible rays of light for the drinks sector.
Fine wine sales are doing surprisingly – even obscenely – well. Majestic chairman Simon Burke, unveiling a sluggish set of results this week, was still able to report brisk business at the upper end of his range. Consumer confidence may be haemorrhaging, but rich people still want expensive wine.
“Fine wine continued to grow with sales of still wine priced at £20 and above increasing by 10.7% on last year,” Burke told investors.
It’s a story repeated across the country in the UK’s 500-plus specialist wine merchants. Anecdotally, they report solid sales of premium wines. They underline these boasts by managing to stay in business while other retailers, equally reliant on discretionary spending, fail. Some, such as London’s Planet of the Grapes, specialising in £20-plus wines, go one step further by expanding stores.
“The Bordeaux from £30 to £100 are just flying, no problem at all, and so are high-end Italians,” says owner Matt Harris. “Wine sales are all right – the monthly take is up on last year. Private clients are drinking more at home than out.”
Robert Boutflower, sales director of Tanners, also reports that fine wine sales are doing well, even if the dynamics are changing. “Nervous businessmen are not going to spend £30 on a bottle of Meursault – they’ll probably trade down to a white Burgundy in the £20s,” he says. But still they buy.
Champagne may no longer be the toast of the off-trade, but it remains the fastest-selling category in the on-trade, with sales up 30% according to recent Nielsen stats. Majestic reports a 6.4% fall in Champagne sales, and after years of meteoric growth, some believe it’s gone as far as it’s likely to go in the take-home sector. The baton appears to have been handed to sparkling wine, which reports impressive 11% growth and is one of the sector’s star performers.
The rising popularity of Prosecco and English sparkling wine are having some effect, and cava enjoys a solid consumer base. Perhaps the main driver of the sparkling wine market is that quality is improving and it remains cheaper than Champagne. If trends continue, sales could overtake Champagne in the next two or three years.
Cider’s prospects also remain bright, because of its ability to steal market share from wine and beer alike. Off-trade growth remains around 20% and according to Simon Russell, spokesman for the National Association of Cider Makers, there is potential to grow.
“There’s still considerable headroom,” he asserts. “Premium cider can take market share or consumer spend from wine – it might be because it’s cheaper, or lower in alcohol, or because people are wary about their carbon footprint. At the more mainstream end of the market it’s a challenge to beer.”
The multiple grocers are “still powering ahead”, he says. “The off-trade cider market is slowing slightly, but that’s only relative to a mature market that’s grown for the last four years. But cider is recruiting new consumers. What’s behind this is the innovation and investment of cider makers .”
Anyone looking for other positives in a fairly flat off-trade market will be encouraged to see vodka is still in double-digit growth. Liqueurs and specialities are doing almost as well, as cash-strapped cocktail fans indulge in a spot of DIY. And golden rum continues toward the mainstream with growth that eclipses even that of cider. Value sales are up 26% year-on-year.
The off-trade has its problems, but its star performers are cancelling out the declines of the strugglers, in value as well as volume terms. Or, if you prefer, a glass that is arguably at least half full.