Wine slump is worst since WWII

14 April, 2009

Wine sales have declined for the first time in 50 years as price rises drive more consumers out of the bottom end of the market.

In the year to March 21, volumes were down 1% to 96 million cases while value sales grew 4% to 4.9 billion, according to Nielsen.

The slump came as four-week volume sales plunged 6% – compared to a four week period in 2008 which included an Easter boom in high street sales, when consumers stocked up on alcohol amid

fears the Budget would bring a massive excise duty hike.

In the four weeks to March 21 this year value sales also took a hit, dropping 1%.

The light wine market has not declined for as long as Nielsen has records – and analyst Stewart Blunt believes you would have to go back more than half a century to see a similar slump.

“I have got figures that go back 18 years and it has been successive growth with the exception of a slight blip in 2006. I think you would have to go back to World War II, when the market was only about 5 million cases in the first place, in order to find a time when it slid,” he said.

“You could say the market has been in growth almost forever, and then it took off with the supermarkets because they made it more accessible.”

Blunt blamed changing lifestyles and the health lobby, as well as the economic downturn and punitive duty increases that have forced price rises, for wine’s slump – and said we can expect the market to look very different by the end of the year.

He predicts that France will continue to lose sales because the bottom end of the market, where it has traditionally been very strong, has simply fallen away over the past six months. Its third place in the wine league table could be taken by Italy, which is growing well, and South Africa is also tipped for success thanks to its good exchange rate and dynamic marketing.

“The market is quite fast-moving and volatile. Although it may look pretty dull on the surface, there could be quite a lot of change beneath. It will be quite a different picture by the end of the year,” Blunt said.

Steve Barton, director of Brand Phoenix, added: “Duty is forcing prices up. Sales should be buoyant in a recession as more people drink at home.

“These figures quantify how the combined effect of duty and exchange rates is interfering with the market.”

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