Looking back to this time last year, we were anticipating the impact that a winter football World Cup would have on the beer, wine and spirits industry. Increased secondary display space was given to beer, which translated into an estimated additional £41 million in beer sales leading up to Christmas Day, fuelled by the tournament running until December 18. So, what can we expect for 2023?
Consumer research from CGA by NIQ has revealed that 35% of UK & Ireland consumers are opting to go out less frequently due to concerns over the cost of living and inflation. Consequently, more shoppers may turn to the off-trade to treat themselves at home with family and friends, giving BWS a key role to play.
While food inflation is expected to slow, higher prices will still contribute to increased value sales. Given the financial constraints shoppers might face, any discretionary spending will be carefully considered. As we approach October, retailers are expected to roll out enticing promotions to encourage forward buying.
This year, secondary display space will likely be redistributed across categories as we lap the World Cup held last year. This will mark Christmas 2023 as extremely important for the spirits category. From the beginning of 2023 until August 12, the spirits category lost 0.6% of BWS value share in the off-trade to wine (+0.6%) and beer (+0.1%).
The relative affordability of beer and wine for a night in threatens to squeeze spirits spend in the fourth quarter. With shoppers keeping a keen eye on their spend, duty changes from August 1 could heavily disrupt the market this year. How these changes are reflected on the shelf will have a considerable impact.
For instance, core litre deals for spirits usually attract keen attention during Christmas. If these deals increase from £17 a litre last year to £18 this, we may observe a shift in volume towards other BWS categories or even a shift away from BWS altogether.
Duty relief on sparkling wine could well tempt more shoppers to celebrate Christmas with a bottle of bubbles this year, should the price gap between it and still wine narrow. Private-label wine may benefit as a more affordable option.
Brewers are proactively launching and reformulating products below the 3.4% abv threshold, which could unlock tempting price points as the category tries hard to replicate the uplift experienced during last year’s World Cup.
Low/no-alcohol drinks have been on an upward trend for some time, and we can expect this to continue over Christmas. Notably, Waitrose has recently launched dedicated low/no areas in 253 of its stores across the UK, highlighting the importance of this category. Low/no could tick multiple boxes for shoppers as it offers cheaper price points and healthier options.
This year, beer has increased its lead in the low/no category. Consequently, manufacturers of spirits and wine should view this crucial period as an opportunity to gain within the ever-growing low/no category.
Undoubtedly, Christmas 2023 is expected to present challenges. Nevertheless, a valuable lesson from recent years is that British consumers consistently show enthusiasm for commemorating significant events. Given the considerable market shifts, there is no doubt that offering attractive deals will yield favourable results this year.
