Wine prices have been rising for two reasons, the first being the poor 2012 wine harvest in some of the world’s most important wine producing regions and, secondly, the UK government’s strategy in 2012 to crack down on minimum unit pricing on alcoholic drinks.
The International Organisation of Vine and Wine (OIV) estimated that the poor grape harvest in 2012 in Argentina, Italy and France will lead to a global production shortage in the coming years. On the other hand, the UK government is expected to introduce a price of £0.45 per unit, which means that a 13% ABV bottle of wine will equal 9.8 units, making the minimum price for that bottle no less than £4.41. As a result of this, wine declined in volume terms and grew in value terms in 2012.
Accolade Wines Ltd led wine in 2012 with an 11% total volume share. Accolade Wines is the owner of many successful wine brands in the UK, such as Hardys, Echo Falls, Banrock Station, Kumala and Stowells. These are some of the top still red wines in the UK, are heavily marketed and are usually also on offer. In addition, these wines are available in a wide range of channels, spanning grocery stores, hypermarkets and convenience stores, and have a presence in the on-trade arena.
Wine is expected to post a 1% CAGR decline over the forecast period. Rising unit prices, higher duties and unpredictable harvests, including that of 2012, are all expected to contribute to this grim forecast. The off- trade will continue to grow as the cocooning trend remains popular and more people entertain at home, supporting more multi-buy deals. The on-trade channel for wine in the UK is not diverse enough, offering the top five brands of red, white and rosé wines which are available in grocery stores for double the price. Consumers are only getting to try new grape varietals and learning more about different wines if an on-trade establishment is a specialist wine bar.
Republished with permission from Euromonitor Market Research Blog, originally posted on September 2013
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