Drinks industry struggles to match summer 2018 sales

The latest Nielsen stats make sobering reading for the BWS trade as they show year-on-year value sales decreased by 2.8% this summer. 

The trade was boosted by a prolonged spell of balmy weather and England’s run to the World Cup semi-finals last year, so it was always going to be difficult to match that strong performance. 

Yet it is still disappointing to see that value sales declined by £116 million in the 12 weeks to August 10. Volume sales suffered far sharper declines, dropping 7.9% and showing that retailers have been successful in trading shoppers up to more premium drinks. But the value decline piles even more pressure on the industry to deliver a strong Christmas performance.

We surveyed a number of the independent retailers that fall outside of Nielsen’s coverage, and a third said that business has been worse this summer than it was last year. A further 29% said it has been better, while 38% said it has been the same.

The wider UK economy received an unexpected boost when ONS data revealed that it grew 0.3% in July, averting fears of Britain sliding into its first recession in a decade.

But the BWS industry failed to keep pace. Year-on-year sales in the week to July 6 were down by £41 million and the following week saw a decline of £23.7 million, according to Nielsen. 

The trade grew year-on-year sales by £15 million in the second half of July, but overall the picture was gloomy. 

The off-trade beer category was down 8.8% in volume and 7.7% in value during the 12-week summer period. Cider was also down by more than 17%, as both categories suffered from poor weather and a lack of sporting events. 

Spirits did well to hold flat volume sales, while value increased by 1.2% to break through the £1 billion barrier in the 12 weeks to August 10. 

Sparkling wine and Champagne was down 5.9% in volume and 4.7% in value. Table wine enjoyed a 1.8% value increase, despite volumes dropping 1%, while fortified wine and “near wine” both showed growth. 

Once again the star performer was the RTD category, up 5% in volume and 10.4% in value to 
£94 million during the 12 weeks.

“Where this format was once a hit with the younger shopper, today’s key RTD shopper is aged over 45, thanks to the influx of premium offers and well-known brands,” said Nielsen analyst Gemma Cooper in this month’s DRN column. 

“This shift is important to note for two reasons: over-45 shoppers are one of the key demographic groups for FMCG products because of their spending power and are much more willing to splash their cash than younger shoppers. If RTDs aren’t on your growth plan, they should be.”

Drinkaware chief executive Elaine Hindal urged retailers to champion the low and no-alcohol BWS category to a greater extent. It currently accounts for just 0.7% of BWS sales, according to Nielsen, but Hindal said the category has huge potential, and it could make up for declining sales of full-strength products. 

“There’s genuinely a commercial opportunity in no and low,” she said. “We are seeing price parity with alcoholic versions, but without the duty. 

“Ten years ago, we didn’t have the best tasting options. They have improved massively, particularly in the beer space. The quality of the offer is phenomenal now. It’s here to stay. There’s enough interest by consumers. We see that in our web traffic. People are looking for lower-alcohol and lower-calorie options.

“Consumers are ready for this. They are more knowledgeable. It’s a great way to enjoy the experience and look like you’re having an alcoholic drink, but without the alcohol and the calories.

“Don’t just assume that only younger adults are going to be interested in no and low products. You’ve also got a slightly older shopper for whom this could be a great strategy.”

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