Table of Contents
Introduction
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- Definition
- Abbreviations
Executive Summary
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- Figure 1: Forecast for total UK value sales of wine, 2006-16
- Market factors
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- Figure 2: Annual inflation (based on RPI) for wines and spirits, by on- and off-trade, 2005-10
- Companies, brands and innovation
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- Figure 3: Brand value sales and share within the UK off-trade wine market, 2010
- The consumer
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- Figure 4: Attitudes towards buying wine in supermarkets over the past 6 months, May 2011
- What we think
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Issues in the Market
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- Will price rises trigger an inevitable decline in wine purchases over the next few years?
- Is wine branding ready to come of age?
- Is the UK ready to move beyond a heavy off-trade discounting model?
- Is it possible for wine to innovate in order to drive sales?
Future Opportunities
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- Guiding Choice
- Eco and Ego
Internal Market Environment
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- Key points
- Rapidly increasing duty…
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- Figure 5: Duty per 75 cl bottle of wine (5.5%-15% ABV), 2000-11
- …combined with weakening of Sterling….
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- Figure 6: Annual average exchange rates for Sterling, 2005-10
- …leads to escalating prices at the worst possible time…
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- Figure 7: Annual % change in price index (RPI) of wines and spirits compared to all items, 2000-10
- …even (and especially) in the discount-driven multiples…
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- Figure 8: Annual % change in price index (RPI) of wines and spirits, by on- and off-trade, 2005-10
- … leading to a significant decline in alcohol drinking in 2010
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- Figure 9: Trends in drinking total alcohol (including wine), by venue, 2006-10
- Consumers lack brand guidance when buying wine…
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- Figure 10: Proportion of total take-home value sales accounted for by the top ten brands, for selected alcohol markets, 2009
- …something which works to supermarkets’ advantage
- Consumers have been trained to buy wine on discount
- Wine needs to capitalise on the underlying interest in premiumisation
Broader Market Environment
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- Key points
- Consumer income becomes increasingly squeezed…
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- Figure 11: Change in average weekly earnings compared to inflation in the UK, January 2005-April 2011*
- An ageing population plays to wine’s advantage…
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- Figure 12: Proportion of the UK adult population, by age group, 2011
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- Figure 13: How respondents would describe their financial situation, by age group, May 2011
- … as does the continued rise in the AB population
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- Figure 14: Forecast adult population trends, by socio-economic group, 2006-16
Competitive Context
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- Key points
- The bigger alcohol categories see their usage eroded
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- Figure 15: Trends in drink types consumed in the past 12 months, 2006-10
- Wine sees the greatest decline in drinkers between 2009 and 2010
- In real terms, wine is losing ground to competitors in the off-trade…
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- Figure 16: % annual change in off-trade value sales at constant 2006 prices for beer, wine and spirits, 2006-10
- …In particular, spirits…
- …But holding its own in the on-trade
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- Figure 17: % annual change in on-trade value sales at constant 2006 prices for beer, wine and spirits, 2006-10
Strengths and Weaknesses in the Market
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- Strengths
- Weaknesses
Who’s Innovating?
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- Key points
- A challenging market in which to innovate
- Packaging formats become more flexible
- Smartphone opportunities empower wine consumers
Market Size and Forecast
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- Key points
- Tough market conditions impact on the UK wine market
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- Figure 18: Market size and forecast for total UK volume and value sales of wine, 2006-16
- Figure 19: Forecast for total UK volume and value sales of wine, 2006-16
- Forecast methodology
Market Segmentation
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- Key points
- Volume sales in the off-trade will be impacted by spiralling prices…
- …but value sales should benefit from a premium shift
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- Figure 20: Market size and forecast for UK off-trade volume and value sales of wine, 2006-16
- A steadier performance from wine in the on-trade
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- Figure 21: Market size and forecast for UK on-trade volume and value sales of wine, 2006-16
- Rosé and white wine are out-performing red
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- Figure 22: Wine volume sales, by colour, 2009-10
- Australia and France are losing share
Market Share
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- Key points
- A fragmented market where brands have little power
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- Figure 23: Brand value sales and share within the UK off-trade wine market, 2008-10
- South African brands trump Australian
Companies and Products
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- Key points
- Brown-Forman
- Concha y Toro
- Constellation Brands (now Accolade Wines)
- Diageo (Percy Fox)
- E & J Gallo
- Foster’s Wine (now Treasury Wine Estates)
- Pernod Ricard
- Villa Maria
Channels to Market
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- Key points
- Grocery multiples continue to tighten their grip
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- Figure 24: Off-trade sales, split, by major channels, 2009-10
- Pubs/bars move towards a 50% share of the on-trade
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- Figure 25: On-trade sales, split by major channels, 2009-10
- Tesco aims to protect margins from online wine competitors
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- Figure 26: Average monthly unique users (000s), for selected wine websites, over the 12 month period (June 2010-May 2011)
Brand Communication and Promotion
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- Key points
- Supermarkets dominate above-the-line wine spend
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- Figure 27: Main monitored media advertising spend on wine (including Champagne/sparkling wine), 2006/07-2010/11*
- Discounting is more a feature of the market than above-the-line branding
- Laithwaites is the top ad spender
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- Figure 28: Above-the-line advertising spend on wine (including Champagne/sparkling wine), by brands, 2008/09-2010/11*
Consumer Usage of Wine
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- Key points
- Wine penetration nose-dives in 2010
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- Figure 29: Trends in annual changes in the proportion of UK wine consumers, percentage points, 2007-10
- Three quarters buy wine for in-home consumption…
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- Figure 30: Wine bought to drink either at home or in the on-trade, May 2011
- Wine is an acquired taste
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- Figure 31: Wine purchasing, by gender, age and social grade, May 2011
- 55-64-year-olds drink more on average than any other age group...
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- Figure 32: Average number of bottles of wine drunk per month, by gender and age, 2011
- …but the more sizeable 35-54 population drink the most volume
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- Figure 33: Wine consumption per year, by age group, 2010
- More women drink wine, but the average man drinks more of it
- A link between usage and spend per bottle
- White wine is the most popular purchase type for either in or out of home
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- Figure 34: Types of wine bought, to drink either at home or in the on-trade, May 2011
- Rosé is failing to capitalise fully within the on-trade
- Rosé is appealing to young females within the on-trade
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- Figure 35: Index of types of wine bought, to drink either at home or in the on-trade, by gender, age group and socio-economic group, May 2011
- UK wine drinkers opt for variety
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- Figure 36: Crossover in purchasing of red, white and rosé wine in the past 6 months, May 2011
- White wine encourages loyalty from females
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- Figure 37: Red and white wine drinkers, by gender, age and socio-economic group, May 2011
Consumer Spend on Wine
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- Key points
- £8.33 is the average price UK consumers pay for a bottle of wine
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- Figure 38: Typical price people pay for a bottle of wine by wine, for in-home and out of home, May 2011
- The younger the buyer the more they are prepared to pay in the off-trade
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- Figure 39: Typical price people pay for a bottle of wine for in-home, by selected demographics, May 2011
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- Figure 40: Occasions for drinking alcohol at home, 18-24-year-olds versus all drinkers, May 2011
- High earning 25-34-year-olds are the key target for the on-trade
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- Figure 41: Typical price people pay for a bottle of wine for out of home, by selected demographics, May 2011
Consumer Attitudes towards Buying Wine in Supermarkets
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- Key points
- Wide supermarket wine selection seen as a benefit, not a turn off…
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- Figure 42: Attitudes towards buying wine in supermarkets over the past 6 months, May 2011
- …although younger wine purchasers are much more likely to do so
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- Figure 43: Net difference in attitudes towards buying wine in supermarkets, 18-34-year-olds versus 35+, May 2011
- The importance of brand building for women as well as the young…
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- Figure 44: Net difference in attitudes towards buying wine in supermarkets, women versus men, May 2011
- A nation of wine drinkers reared on discounts
Consumer Attitudes towards Wine by Country
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- Key points
- France wins on quality, Australia on accessibility
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- Figure 45: Attitudes towards wine, by country of origin, May 2011
- Italy, Australia and RSA occupy a favourable mainstream position…
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- Figure 46: Attitudes towards wine, by country of origin, May 2011
- …but France and Italy have more premium potential
- Chile outflanks Spain in terms of value
Consumer Attitudes towards Wine Packaging
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- Key points
- Resistance to new wine formats which lack the “sophistication” of glass
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- Figure 47: Views on whether non-glass formats have the same level of style and sophistication as bottled wine, May 2011
- …and to a lesser extent concern about inferior quality
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- Figure 48: Views on whether non-glass formats are the equivalent in quality to bottled wine, May 2011
- Boxed wine has an increasingly relevant USP…
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- Figure 49: Perceived advantages of non-glass wine formats, May 2011
- …but bag in box is a huge turn-off for younger consumers
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- Figure 50: Net difference in attitudes towards non-glass wine formats, 18-34-year-olds versus 35+, May 2011
Appendix – Internal Market Environment
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- Figure 51: GfK NOP Consumer Confidence Index, January 1988-May 2011
- Figure 52: Trends in drinking alcohol amongst the population, 2006-10
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Appendix – Broader Market Environment
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- Figure 53: Forecast of adult population trends, by age group, 2006-16
- Figure 54: GDP, PDI, consumer expenditure and savings, at constant 2011 prices, 2006-16
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Appendix – Consumer Usage of Wine by Type
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- Figure 55: Most popular wine drunk over the past 6 months, by type, by demographics, May 2011
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- Figure 56: Next most popular wine drunk over the past 6 months, by type, by demographics, May 2011
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- Figure 57: Wine drunk at home over the past 6 months, by type, by demographics, May 2011
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- Figure 58: Wine drunk at a pub/bar/restaurant over the past 6 months, by type, by demographics, May 2011
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Appendix – Consumer Spend on Wine
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- Figure 59: Typical price people pay for a bottle of wine, by venue, by demographics May 2011
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Appendix – Consumer Attitudes towards Buying Wine in Supermarkets
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- Figure 60: Most popular attitudes towards buying wine in supermarkets, by demographics May 2011
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- Figure 61: Next most popular attitudes to buying wine in supermarkets, by demographics, May 2011
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Appendix – Consumer Attitudes towards Wine by Country
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- Figure 62: Most popular attitudes towards French wine, by demographics, May 2011
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- Figure 63: Next most popular attitudes towards French wine, by demographics, May 2011
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- Figure 64: Other attitudes towards French wine, by demographics, May 2011
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- Figure 65: Most popular attitudes towards Italian wine, by demographics, May 2011
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- Figure 66: Next most popular attitudes towards Italian wine, by demographics, May 2011
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- Figure 67: Most popular attitudes towards Spanish wine, by demographics, May 2011
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- Figure 68: Next most popular attitudes towards Spanish wine, by demographics, May 2011
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- Figure 69: Other attitudes towards Spanish wine, by demographics, May 2011
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- Figure 70: Most popular attitudes towards German wine, by demographics, May 2011
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- Figure 71: Next most popular attitudes towards German wine, by demographics, May 2011
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- Figure 72: Most popular attitudes towards Australian wine, by demographics, May 2011
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- Figure 73: Next most popular attitudes towards Australian wine, by demographics, May 2011
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- Figure 74: Most popular attitudes towards US wine, by demographics, May 2011
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- Figure 75: Next most popular attitudes towards US wine, by demographics, May 2011
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- Figure 76: Most popular attitudes towards Chilean wine, by demographics, May 2011
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- Figure 77: Next most popular attitudes towards Chilean wine, by demographics, May 2011
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- Figure 78: Most popular attitudes towards South African wine, by demographics, May 2011
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- Figure 79: Next most popular attitudes towards South African wine, by demographics, May 2011
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Appendix – Consumer Attitudes towards Wine Packaging
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- Figure 80: Most popular attitudes towards wine packaging, by demographics, May 2011
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- Figure 81: Next most popular attitudes towards wine packaging, by demographics, May 2011
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