This report studies the effects of cross-Channel shopping on the UK alcoholic drinks market. Despite the fact that duty-free trading was abolished within the EU in 1999, alcoholic beverages are still generally cheaper, even duty-paid, in mainland Europe than in the UK, with the exception of Scandinavian nations. Despite widespread protest from various (alcoholic) drinks trade associations, licensees and brewers, the UK Government has failed to reduce excise duty. Nevertheless, the loss of duty-free trading has cost the UK around £620 million in lost sales and some 3,000 lost jobs, according to the Travel Retail Association.

The ferry companies, together with Eurotunnel, in a bid to compensate for the loss of duty-free sales, introduced higher fares and passenger traffic fell as a result. However, freight traffic has grown some 9% over the same period on the Dover-Calais route, some of which has been driven by grey market trading and smuggling. Nevertheless, the opportunity to buy duty-paid alcohol in mainland Europe, more cheaply than in the UK, still exists.

Mintel last examined this subject in Market Intelligence, June 1999.

Other reports of relevance include:

- UK Drink Market, Special Report 2000

- Drinking Trends, Market Intelligence, November 2000.

Definitions

The phenomenon of cross-Channel shopping began in 1993 with the opening of EU borders and the Single European Market. This report does not necessarily cover duty-free, rather the growing trend to travel to a port in France, Benelux or Germany specifically to purchase duty-paid alcohol to bring back to the UK for personal consumption. Neither does it include illegal imports, (which are now thought to account for 5-10% of all British drink, 75% of all hand-rolling tobacco and 10% of all cigarettes consumed in the UK), nor the grey market trading increasingly being undertaken by the UK multiples.

Both on- and off-licence sales are used to calculate the sizes of the various UK markets and duty-free sales are excluded.

Consumer research

In addition to the standard breaks, Mintel has analysed the consumer research in the following manner.

Lifestages are derived from analysis of the exclusive consumer research and are split into four main groups.

Pre-family	aged under 35 who are not parents
Family	aged 15-54 with at least one child aged under 16 still at home
Empty nesters/no family	aged 35-54 with no children aged under 16
Post-family	aged over 55.

As part of an ongoing policy to find new ways of analysing data, Mintel has created

Special Groups of consumers to typify consumer habits in the early years of the 21st Century.

Unlike the lifestage groups, these groups represent only sections of the population and do not account for all adults.

Benefit dependents	Es aged 35+ - those who are reliant solely on state benefits (around 10% of the adult population)
Families on a tight budget	working C2Ds with at least one child aged under 16 in the household - the majority have limited incomes which must be spent on a relatively large household (around 10% of the adult population)
Better-off families	working ABC1s with at least one child aged under 16 in the household (around 9% of the population)
Better-off empty nesters	ABC1s aged 35-64 who are working with no children aged under 16 living at home. They are, therefore, the classic no family/empty nesters probably with a high income that can be spent on themselves rather than on family (around 8% of the adult population)
Working managers	working ABs (around 9% of the population).
Working women	women in part or full time employment (around 21% of the
	adult population).

Value figures throughout this report are at retail selling prices unless otherwise stated.

Abbreviations

€	euro
ABV	Alcohol by volume
ACNielsen MMS	For more information contact Mary Sneddon at ACNielsen MMS on 01344 627553.
BAA	British Airports Authority
BLRA	Brewers & Licensed Retailers Association
CWS	Co-operative Wholesale Society Ltd
DTI	Department of Trade and Industry
EDLP	Everyday low pricing
EU	European Union
GVA	Gin and Vodka Association
HMC&E	Her Majesty's Customs & Excise
MCB	Matthew Clark Brands
msp	manufacturers' selling price
NOP	National Opinion Polls
NPD	New product development
P&O	The Peninsular and Oriental Steam Navigation Company
PPL	Premium packaged lager
PPS	Premium packaged spirits
RSP	Retail selling price
RTD	Ready to drink
S&N	Scottish & Newcastle
SWA	Scotch Whisky Association
TGI	Target Group Index. For further details concerning this information, including data regarding readership patterns of users/purchasers and details of brands, please contact Peter Shreeve at BMRB International on 020 8566 5000.
TMA	Tobacco Manufacturers' Association
VAT	Value-added tax
WSA	Wine and Spirit Association

06/2001